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Analysis

Payers, Providers Butt Heads on Surprise Billing Solutions

By Alexandra Wilson Pecci  
   May 22, 2019

Stakeholders agree surprise billing is a problem but offered different solutions for how to tackle it during a congressional hearing.  

Hospital, physician, and insurance stakeholders agree that surprise balance billing is a major problem and patients shouldn't be stuck in the middle of disputes between payers and providers. But how to solve the problem remains a sticking point.

That was the major takeaway from a House Ways and Means Health Subcommittee hearing yesterday about protecting patients from surprise medical bills. During the hearing, lawmakers shared patient horror stories about surprise bills— things like a $5,751 ice pack and bandage—and Congresswoman Katie Porter shared one of her own.

Many states are acting to curb surprise medical bills; Washington and Texas each acted this week, for instance. But lawmakers say federal legislation is needed because state-by-state measures—where they exist—fail to protect certain patients, like ones covered by self-funded employer plans.

Despite agreement about the need to end surprise billing, witnesses from the American Medical Association, American Hospital Association, America's Health Insurance Plans, and ERISA Industry Committee disagreed on proposed solutions, such as fixed rates and arbitration.

Here's a quick rundown of their testimonies:

Bobby Mukkamala, MD, board of trustees, American Medical Association: The AMA called on Congress to avoid solutions that set minimum payment standards for out-of-network care at noncompetitive rates and instead urged them to consider structured binding arbitration to help determine a fair payment. Mukkamala pointed to successes in states like New York and Connecticut that have been using this model.

The AMA calls for

  • Not charging patients more than the in-network amount when they don't have a chance to select an in-network provider and ensuring that payments count toward patient deductibles and out-of-pocket maximums
  • Active network evaluations and network adequacy standards that require, "at a minimum, an adequate ratio of physicians, including hospital-based physicians and on-call specialists and subspecialists, to patients, as well as geographic and driving distance standards and maximum wait times"
  • Ensuring fair provider payments
  • Informing patients before care about their anticipated out-of-pocket costs, scope of their coverage, and breadth of their provider network, as well as requiring provider transparency about anticipated charges for scheduled care

Jeanette Thornton, senior vice president of product, employer, and commercial policy, America's Health Insurance Plans: AHIP argues that using arbitration to determine payments to out-of-network providers would increase costs and slow down the claims process. It also says arbitration doesn't address the "root cause": cause of surprise bills, which it says is "exorbitant bills from certain specialty doctors and EMS providers."

Instead of arbitration, AHIP favors a "market-based approach" and points to California, where the reimbursement is "based on market rates defined as what similar providers routinely accept as payment in-full for their services."

AHIP calls for:

  • Banning balance billing when patients are involuntarily treated by an out-of-network provider and limiting patient cost-sharing to the amount for "which the patient would be responsible for a participating network provider"
  • Requiring health plans to reimburse non-participating providers an appropriate and reasonable amount when this happens
  • Requiring states to establish an "independent dispute resolution process that works in tandem with the established payment benchmark"
  • Requiring hospitals or other healthcare providers to "furnish advanced notice to patients of the network status of treating providers"

Tom Nickels, executive vice president of the American Hospital Association: The AHA opposes solutions that include "bundling" of hospital and clinician services; specifying a national reimbursement rate for out-of-network services; and narrowing of networks. However, it says a well-designed arbitration process could work. Nickels' testimony also noted the limits of providing patients with notices and disclosures as a solution, especially during emergencies.

The AHA calls for:

  • Protecting patients from balance billing and from serving as the negotiator between payers and providers
  • Ensuring access to emergency care, requiring health plans use the "prudent layperson standard" and not deny payment for emergency care that the plan doesn't consider an emergency
  • Ensuring providers and health plans can continue to negotiate appropriate payment rates
  • Educating patients about their healthcare coverage and accessing their benefits
  • Greater oversight of health plan provider networks and providing patients with accurate and easily-understandable provider network information
  • Supporting effective state laws

James Patrick Gelfand, senior vice president of health policy, ERISA Industry Committee: ERIC is a national association that advocates for large employers on health, retirement, and compensation public policies. Gelfand testified in opposition to arbitration, calling it a "snipe hunt" (wild goose chase) and argued it would increase patient costs. "[I]f providers find that they can make more by taking insurers and plan sponsors into arbitration, rather than getting in-network, patients will pay a heavy price," his testimony said.

ERIC calls for:

  • A guarantee that if a patient goes to an in-network facility, every provider they see should be required to accept in-network rates as payment in full
  • Setting a benchmark to determine an appropriate payment when an insurer or plan sponsor cannot come to an agreement on the cost of emergency out-of-network care, such as ERIC's suggestion of "125 percent of what Medicare would pay that provider, in that market, for that service."
  • A requirement that providers tell patients if the care will be out-of-network, including when transferring a patient to another provider or facility, and offering an in-network alternative whenever possible.

Alexandra Wilson Pecci is an editor for HealthLeaders.


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