Surprise Medical Billing Update

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

The Debate Over Surprise Medical Bills Will Start to Heat Up

Although Congress is now back in session, things still remain fluid on surprise medical billing. In other words, no one really knows how the surprise billing debate is going to play out. And no one really knows when members of Congress will start coalescing around a particular surprise billing proposal. At this point, the Committees of jurisdiction in the House (e.g., the Education & the Workforce, Ways & Means, and Energy & Commerce Committees) are all tussling with each other over which Committee has primary jurisdiction over the surprise billing issue. While this drama continues to play out, it’s been reported that the Education & the Workforce Committee may be “marking-up” a surprise billing proposal this week. And the Ways & Means Committee will be “marking-up” their version of a proposal some time over the next few weeks.
- Analysis: It is becoming clear to me that we will NOT have a resolution of the surprise billing issue until at least the end of the year, with a surprise billing proposal likely being included in the “omnibus” end-of-year legislative package, as mentioned above. It is also becoming clear to me that a surprise billing proposal is going to include a mix of (1) a “benchmark” rate and (2) an arbitration process that is triggered if the cost of the “balance bill” exceeds a specified dollar amount. As I have explained in the past, the surprise billing proposal that the Energy & Commerce Committee “marked up” back in July would require – in cases where a “balance bill” is lower than $1,250 – an insurance carrier or an employer self-insured plan to pay a health care provider the excess of the “balance bill” based on a “benchmark” rate equal to the median negotiated price for the medical service rendered in the geographic area. BUT, if the “balance bill” is above $1,250, then the provider or the insurer/self-insured plan could elect to go to arbitration to determine how much the insurer/self-insured plan must pay the provider. Regardless of what comes out of the Education & the Workforce and the Ways & Means Committees, I firmly believe that we are going to see a mix of (1) a “benchmark” rate and (2) an arbitration process as the base-line proposal that members of Congress ultimately coalesce around. Which – at least to me – means that the “real” fight will be over the specified dollar amount that will determine whether and when an insurer/self-insured plan and the provider go to arbitration. Here is the problem I see with a proposal calling for a “benchmark” rate/arbitration process with a specified dollar amount: This is a one-size-fits-all approach. As we all know, one-size-fits-all approaches never work in any context, let alone in health care. Soooo, in my opinion, members of Congress are going to have to get “more granular” with their surprise billing proposal. What I mean by “more granular” is this: While data shows that a majority of “balance bills” are below $5,000, this data really doesn’t show how many “balance bills” are, for example, $100,000 and above. As we all know, it is the “balance bills” that are $100,000+ that are the problem. After all, how many news articles highlighting the surprise billing issue have talked about a patient getting hit with a $6,000 “balance bill”? NONE. Rather, the egregious situations are instances in which a patient is hit with a $100,000 “balance bill” even though they only went to the hospital because they broke their leg, or a patient getting an appendectomy has to pay a $200,000 “balance bill” because they were treated by a “specialist” who was out-of-network, or a patient giving birth to a child receives a $250,000 “balance bill” because the anesthesiologist was out-of-network. Based on all of these stories – which we have all heard of, and maybe even personally experienced – I do NOT accept the argument that the specified dollar amount for determining when an insurer/self-insured plan and the provider should go to arbitration MUST be lower than $5,000. These low-dollar “balance bills” are NOT the problem. Again, it is the “balance bills” that have an extremely high dollar amount attached to them.

How Can a Surprise Billing Proposal Be “More Granular”?

Okay, so if a “benchmark” rate/arbitration process with a specified dollar amount is NOT the best proposal, what is the right solution? Here is something to consider:
- Analysis: As I have explained in past updates, there are 2 scenarios where a surprise medical bill arises: (1) A patient is receiving medical services at an in-network hospital, but the patient is treated by an out-of-network provider(s) or (2) A patient receives emergency medical services at an out-of-network hospital. In this latter case, where a patient receives emergency medical services at an out-of-network hospital, you can’t help but have some sympathy for the hospital rendering the medical service. What I mean is, it wasn’t the hospitals fault that they treated someone on an emergency-basis, and it generally was not the hospitals fault that they were NOT in the patient’s network. Soooo, in this case, a strong argument can be made that this particular hospital should be allowed to go to arbitration to determine how much an insurer/self-insured plan must pay the hospital. And, a lower dollar threshold for determining when the arbitration process is triggered seems somewhat reasonable. HOWEVER, do I think the specified dollar amount should be $1,250?? NO. I believe the amount should be at least $5,000. Now, some of my friends may be cursing me for my comments above, while other friends will be supportive of my sympathy. Look, I am not trying to curry favor with anyone, nor am I trying to make people mad at me. What I am trying to do is be realistic, especially as I continue to hear that members of Congress are getting a lot of pressure from their home-State hospitals to go with an arbitration process in any surprise billing proposal. The reality is this: Members of Congress are ALWAYS going to try to help their home-State hospitals. And, even if a particular member of Congress is dead-set on a “benchmark” rate ONLY, this member of Congress is likely going to change his/her tune if he/she feels that their home-State hospital is going to be hurt by a “benchmark” rate ONLY proposal. Actually, what I am really trying to do here is this: I am trying to find a reasonable compromise where those members of Congress that want a “benchmark” rate ONLY proposal can at least show their home-State hospitals some love and allow these hospitals to go to arbitration in an out-of-network emergency situation. And, I am trying to convince these members that the specified dollar amount for triggering arbitration should be no lower than $5,000. Now, with respect to the scenario where a patient is treated by an out-of-network provider at an in-network hospital, I am NOT sympathetic at all. To me, this scenario is egregious. So much so that I am adamant that these out-of-network providers should be punished for their egregious activities that – over the past 5 to 10 years – has ultimately led to the increased attention over surprise bills. From my perspective, you reap-what-you-sow, and these out-of-network providers should NOT be rewarded for bad behavior. Soooo, in this scenario, I think members of Congress should limit the excess payment of a “balance bill” to a “benchmark” rate ONLY (based on the median negotiated price for the medical service in the geographic area). More specifically, I do NOT believe that these out-of-network providers should be afforded the opportunity to go to arbitration under ANY circumstance. Again, it is the fault of these types of providers for why we are even talking about ways to curb surprise bills in the first place. Now, in the event that the “dark money” from private equity and other non-health care-based stakeholders STILL convinces members of Congress to offer these out-of-network providers a mix between a “benchmark” rate/arbitration process, I believe that the specified dollar amount for triggering arbitration MUST be much, much higher than $5,000…because – again – to do otherwise would simply be rewarding bad behavior.

A Surprise Billing Proposal Must Produce Savings

You have heard me talk about the importance of “savings” when it comes to legislating. That is, House and Senate Leadership is ALWAYS looking for proposals that either reduce spending or increase tax revenue. This is because most legislative proposals moving through Congress cost money. And, the only way these legislative proposals will get through Congress is if these costs are “offset” by something (again, either reductions in spending or increased taxes, or both). Yes, we have seen instances where Congress will pass UNoffset legislation (e.g., for Republicans, it has been tax-related legislation and for Democrats, it has been spending on domestic programs). BUT, these are exceptions to the general rule.
- Analysis: As I have also told you, the surprise billing proposal that calls for a “benchmark” rate ONLY (where the “benchmark” is equal to the median negotiated price of a medical service in a geographic area) saves $20 to $25 billion. That is a TON of money that members of Congress can use to offset other legislative priorities. For example, in the case of the Senate HELP Committee’s “Lowering Health Care Costs Act” (which I talked about in my last update), the “benchmark” rate ONLY proposal pays for the Committee’s other proposals to extend and expand various health care-related public programs. Without the “benchmark” rate ONLY proposal, the Senate HELP Committee’s bill would end up costing money. So, for example, for those Senate HELP Committee members who want these various health care-related public programs to be extended and/or expanded, it is in their best interest to support a surprise billing proposal that will generate enough savings to offset the spending. For example, if members of Congress move away from a “benchmark” rate ONLY proposal to one with a mix of a “benchmark” rate/arbitration process with a specified dollar limit, members are going to have LESS money to play with. In other words, a “benchmark” rate/arbitration process with a specified dollar limit proposal will NOT save $20 to $25 billion like a “benchmark” rate ONLY proposal will. AND, a “benchmark” rate/arbitration process is likely to save very little if the specified dollar limit is low, like $1,250. So to me, members of Congress face a choice: (1) Go along with what the provider community is lobbying for (i.e., an arbitration process that is triggered by a low dollar threshold), and risk losing a TON of savings that these members can use for other priorities or (2) Push back on the provider community and set the dollar threshold on the high side, like even $10,000. OR, maybe members of Congress can adopt the “more granular” approach I discussed above. That is, members can show some love to their home-State hospitals and support an arbitration process in an emergency out-of-network situation with a specified dollar amount of say $5,000 – AND – require out-of-network providers at an in-network hospital to accept a “benchmark” rate equal to the median negotiated rate for the medical service in the geographic area. While I have not seen a CBO “score” on the above idea, I know enough to know that yes, this idea is NOT going to produce $20 to $25 billion in savings. BUT, this idea will definitely produce MUCH MORE savings than a one-size-fits-all proposal of a “benchmark” rate/arbitration process that is triggered if a “balance bill” is more than $1,250. Last comment: I believe that my “more granular” approach discussed above can be made even more granular. What I mean is, a surprise billing proposal could base the “trigger” for the arbitration process on specific medical conditions, or procedures, or episodes, and a different dollar threshold could be attached to each medical condition, or procedure, or episode. For example, maybe in cases of child birth, you only go to arbitration if a “balance bill” is higher than $100,000. Or in the case of surgery – like an appendectomy – you only go to arbitration if the “balance bill” is more than $50,000. I have even heard of a forthcoming amendment to the base-line surprise billing proposal that would treat private equity-backed health care providers differently from other providers, and arbitration would only be available to these private equity-backed providers in very narrow circumstances.