Surprise Medical Billing Update

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

The House Education and Labor Committee Goes First

The House Education and Labor (Ed & Labor) Committee went first this week, “marking up” its surprise billing proposal yesterday.
- Analysis: Who is the Ed & Labor Committee, and why have I not talked about them before? The Ed & Labor Committee shares jurisdiction over health care-related issues with the Energy and Commerce (E&C) and Ways and Means (W&Ms) Committees. However, the Ed & Labor Committee typically keeps a lower profile relative to E&C and W&Ms. Some argue that Ed & Labor’s jurisdiction is more limited than the other Committees. For example, Ed & Labor has primary jurisdiction over ERISA, along with self-insured employer-sponsored plans, while E&C has primary jurisdiction over the Public Health Service Act, and also the ACA, which picks up “individual” market plans, fully-insured employer plans, and also self-insured employer plans. E&C also has primary jurisdiction over Medicare and Medicaid. W&Ms has primary jurisdiction over taxes (not so much health insurance), but W&Ms does share jurisdiction with E&C over Medicare and Medicaid. Regardless, E&C and W&Ms typically like to take the lead when it comes to health care-related issues, and especially high-profile issues (like the fight over surprise billing). As stated above, Ed & Labor not as much. BUT, Ed & Labor is an important player here because States that have enacted their own surprise billing protections CANNOT reach self-insured employer plans because of “ERISA preemption.” The only way for surprise billing protections to apply to self-insured plans is (1) for the plans to voluntarily adhere to the State surprise billing requirements – OR – (2) for Congress to amend ERISA to impose surprise billing-related requirements directly onto self-insured plans. Note, Congress can amend ERISA to impose surprise billing-related requirements onto self-insured plans WITHOUT having to go through the Ed & Labor Committee. BUT, as you have always heard me say: Rank-and-file members of Congress (and the long-tenured institutionalists) like to process legislation through “regular order” (i.e., the Committees with jurisdiction over the issue hold a public hearing, then “mark-up” and favorably report out the legislation, which then tees the legislation up for a full House vote (same process in the Senate if you want to go “regular order” over there too)). And that is what is going on here. Members of Ed & Labor Committee want their fingerprints on efforts to solve the surprise billing problem. So, the Committee wanted to process its own surprise billing proposal. Sooooo, we now have THREE surprise billing proposals in the House. But do we?!? Interestingly enough, Ed & Labor’s surprise billing proposal is virtually identical to the E&C proposal. That is, the Ed & Labor proposal calls for (1) a benchmark rate equal to the median in-network rate for a particular medical item or service in a geographic area for health claims up to $750 and (2) an arbitration process for claims above $750. The proposal requires the same process for air ambulance balance bills, but the threshold is $25,000. Also important is this: The Ed & Labor Committee includes a bunch of transparency-related proposals, similar to the transparency proposals in the Senate HELP’s Lowering Health Care Costs Act that was introduced last year. I think that these transparency provisions are important because they have some relation to the proposed transparency regulations that the Trump Administration issued last November. Also, transparency is something that shows up in the W&Ms surprise billing proposal, which we will talk about below (p.s. – I will provide more detail on some of the transparency provisions included in the Ed & Labor and Senate HELP bills in a future update).

The W&Ms Committee Is “Marking Up” Its Arbitration ONLY Proposal Now

As I told you last week, the W&Ms proposal is an arbitration ONLY proposal. No benchmark rate. A strong argument can be made that W&Ms is causing headaches for House Democratic Leadership, which seems to lean toward the E&C – and now – Ed & Labor proposals of (1) a benchmark rate and then (2) arbitration after a specified dollar threshold. However, others may argue that having competing proposals will – in the end – make any final proposal better. They say, there will likely be some sort of compromise that takes the best parts of the W&Ms proposal and the best parts of the E&C – and now – Ed & Labor proposals, and all will be well in Mayberry. I’m NOT holding my breath…
- Analysis: So what does the new W&Ms proposal do? Well, the W&Ms proposal – like the E&C and Ed & Labor proposals – rightly addresses the two situations where surprise bills are generated: (1) Emergency out-of-network situations and (2) Instances in which medical services are performed by an out-of-network provider at an in-network facility. The W&Ms proposal – like the E&C and Ed & Labor proposals – also cuts the patient out of the equation entirely (i.e., the patient NEVER pays a balance bill). However – UNLIKE the E&C and Ed & Labor proposals – if a surprise bill is generated, an insurance carrier or self-insured plan will have 30 days to come to an agreement on what the carrier or the plan will pay to the provider over-and-above the in-network rate for the medical item or service. If the carrier or the plan CANNOT come to an agreement with the provider, then the carrier/plan and the provider will enter into a “baseball-style” arbitration, where (1) the carrier/plan will name its price and (2) the provider will name its price, and an independent arbiter will pick between the two numbers and determine how much the carrier/plan will ultimately pay to the provider. Interestingly, the W&Ms proposal appears to place a “guardrail” around the information that the independent arbiter can take into account when determining what the ultimate payment amount should be. Specifically, the arbiter CANNOT take into account the Usual, Customary, and Reasonable (UCR) charges for the medical or item service in the geographic area. The arbiter also CANNOT take into account the provider’s “billed charges.” Rather, the arbiter will consider “a median contracted rate specific to the type of plan or provider, or type of service, and geographic location.” Interestingly, this is somewhat similar to the “guardrails” that we saw in the Senate HELP/E&C compromise proposal last year. HOWEVER, the W&Ms proposal does NOT have the “90-day cooling off period” that was included in the HELP/E&C compromise (as I mentioned last year, the provider community DESPISED this requirement, so it is NOT surprising not to see it here). The W&Ms proposal includes a couple of other provisions like requiring an insurance carrier and a self-insured plan to provide up-to-date information on the providers that are participating in their network. This is a no-brainer, and something that we have seen before. Something we have NOT seen before is this: The W&Ms proposal requires an insurance carrier and a self-insured plan to provide participants with an “Advanced Explanation of Benefits” in cases where a participant has scheduled a medical procedure at least three days in advance of the procedure being performed. It appears that this “AEOB” will include information relating to the “expected cost” of the medical service and whether or not the chosen provider is in-network or not. The W&Ms proposal also requires an insurance carrier and a self-insured plan to “offer a price comparison tool for consumers.” BTW, this sounds similar to what the Trump Administration’s proposed transparency regulations are trying to accomplish, where these regs would require an insurance carrier and a self-insured plan to provide participants with their cost-sharing liability information for a particular medical item or service through an on-line, self-service tool. The W&Ms proposal is NOT as detailed as the proposed transparency regulations, but you cannot ignore the similar policy goals.

The W&Ms Proposal Is Not Really a Legislative Solution, Rather the W&Ms Proposal Calls for a Regulatory Solution

Ummm…so speaking of regulations, the W&Ms proposal “kicks” ALL of the above described requirements relating to determining the payment amounts for surprise medical bills to the Federal Departments. That’s right, the Federal Departments MUST develop regulations to solve the surprise billing problem.
- Analysis: Specifically, the W&Ms proposal requires HHS to “establish an independent, unbiased process for resolving payment disputes over out-of-network charges.” The W&Ms proposal also requires HHS to spell out how the insurance carrier or the self-insured plan and the provider will select an independent arbiter to mediate the dispute. In addition, the W&Ms proposal requires HHS to develop the “process for determining the median contracted rate” through regulations. REALLY?!?!? All this does is “punt” all of the HARD decisions that members of Congress are supposed to make to the Federal Departments. And all this will do is prolong the intense lobbying that is currently going on to maintain the status quo (i.e., it will simply shift that lobbying to HHS, the White House, and OMB, and away from Congress). More likely though, because the “new normal” these days is that certain stakeholders sue the Federal Departments to nullify their regulations, there is NO doubt in my mind that certain providers will sue the Federal Departments to to invalid any regulations that the W&Ms proposal is requiring the Departments to develop and issue. Even if the regulations are upheld by a court of law, you’re talking 2024 before the requirements are fully effective. Is this any way to “protect the patient”?? I don’t think so. I also don’t think House Democratic Leadership is going to think so, and thus, I believe our discussions of the W&Ms proposal may be short-lived. We’ll see if I am right or wrong in a couple of months…