A trio of draft bills that would get consumers off the hook for exorbitant surprise medical bills have much in common, but they differ slightly in terms of how insurers and doctors hash out their payments.
The relative similarity among proposals being considered in two House committees this week signals that lawmakers are serious about attempting to hammer out a deal this year. Congressional negotiators are pushing to come to agreement on surprise billing by late May, when funding for a variety of health-care programs, such as for community health centers, must be reauthorized.
“This bill reflects a genuine compromise,” House Education and Labor Committee Chairman Bobby Scott (D-Va.) said as his committee approved its own version of the legislation Tuesday. “By blending the policies put forth by both sides of the debate, it strikes a careful balance that achieves the goal of protecting patients without tipping the scales toward either providers or payers.”
The Education and Labor Committee approved its measure, H.R. 5800, Tuesday, and the Ways and Means Committee approved its version (H.R. 5826) Wednesday. The Education and Labor bill is similar to a third measure reflecting a December agreement between the chairman of the Senate Health, Education, Labor, and Pensions Committee, Sen. Lamar Alexander (R-Tenn.), and Democratic and Republican leaders of the House Energy and Commerce Committee.
Hospitals often are part of several insurance networks, but they employ practitioners—such as emergency room doctors, anesthesiologists, radiologists, and pathologists—who are often not in insurance networks and who send patients bills for thousands or sometimes tens of thousands of dollars. This typically occurs during visits to an emergency room or if non-network specialists are involved in pre-arranged surgeries or other services.
All three surprise billing measures would cap the amount patients have to pay for medical services given by out-of-network doctors at what they would owe for care from providers in their health plan network. Lawmakers are still debating over how insurers and hospitals would absorb the unpaid balance.
All three bills would allow billing disputes to be resolved through “independent dispute resolution,” or arbitration. Where they differ is in the details of how that arbitration is conducted.
On the whole, the Ways and Means bill is the most distinct of the three. Its provisions are more aligned with the preferences of the hospitals and doctors because it doesn’t set benchmarks for payments and allows more arbitration.
The other two proposals differ in minor ways and are closer to the requests of the insurers or employers, who want to ensure certainty about the price of services and preserve price negotiations with health providers.
The Congressional Budget Office estimated Tuesday that the Ways and Means bill would reduce insurance premiums between 0.5% and 1% annually and lower the federal deficit by $17.8 billion between 2021 and 2030.
The other two measures would save more money—$24 billion over 10 years, according to congressional staff.
Thresholds for Arbitration
All three bills would require “baseball-style” arbitration in which the arbitrator chooses one of the two offers between the insurer and the doctor. New York has a similar state system in place.
The Ways and Means bill would allow all billing disputes to be arbitrated, regardless of the price tag.
The other two measures would set minimum thresholds for arbitration. Medical bills would need to be higher than $750, or $25,000 for air ambulance bills, before they could be arbitrated.
The Ways and Means bill doesn’t include prohibitions on air ambulance bills, but it would require air ambulance providers to report cost data and insurers to submit claims data to the Department of Health and Human Services within a year of enactment. Air ambulance bills often run in the tens of thousands of dollars.
The Ways and Means measure and the Education and Labor bill would require that the dispute resolution process be regulated by the HHS.
The Energy and Commerce bill is silent on how the arbitration would be run.
The Ways and Means measure doesn’t specify any benchmark for out-of-network medical bills. This means that doctors or hospitals could, in theory, set any price they see fit for certain services like plasma analysis or anesthesiology. The rate they set would function as the opening bid for negotiation with the insurers.
The other two bills stipulate that out-of-network services under $750 would be paid at median in-network rates for similar services in the same geographic area. That means that insurers would have a natural starting point for negotiating any claim above $750, which doctors say would give insurers a leg up in arbitration.
In all three proposals, arbitrators would be instructed to “consider” median in-network rates.
“The real defining difference is the lack of a benchmark payment rate as the initial way to settle bills,” Shawn Gremminger, senior director of federal relations for consumer advocacy group Families USA, said in an interview.
Ways and Means is “kind of the odd man out on this one,” he said.
The Ways and Means version could result in more medical bills going to arbitration because it doesn’t include minimum thresholds or benchmarks for out-of-network services. Critics say that could drive up costs for insurers—and ultimately employers and consumers who pay for coverage—more than the other proposals.
Arbitration Still Under Debate
Even though some type of arbitration is all but assured in any final surprise billing measure, insurers and employers are still wary of the process.
They argue that arbitration could lead to higher payments to medical providers, especially if they set their rates at the start. They also say arbitration results in higher administrative costs, more complexity, and less transparency about health-care prices.
Doctors and hospitals say arbitration is needed to ensure they are dealt with fairly by insurers.
American Hospital Association President and CEO Rick Pollack said his group supports the Ways and Means proposal “because it protects patients while preserving the appropriate role of providers and insurers in negotiating payment rates.”
The entities that pay those bills aren’t so sure.
“Arbitration is not an improvement from the status quo,” said San Francisco-based Pacific Business Group on Health President Elizabeth Mitchell. “It basically takes a dispute between a hospital and an insurance company and puts it back into a secret negotiation between a hospital and an insurance company. It is an extension of the status quo.”
Her group represents about 40 companies that spend roughly $100 billion a year on coverage for 15 million people.