Health insurers and medical providers are sharply split over a Biden administration rule that lays out how they should resolve disputes over surprise bills.
Hospitals and doctors say they will be hurt by the rule implementing legislation to crack down on surprise billing, but health insurers and employers say it will prevent health-care price inflation.
“It’s really put a finger on the scale in favor of plans,” Amanda Hayes-Kibreab, a partner with law firm King & Spalding who represents major hospitals and providers, said of the interim final rule published Oct. 7 by four agencies.
The rule implements a major provision of the No Surprises Act, which was enacted as part of budget legislation in 2020 (H.R. 133) to end most surprise out-of-network billing. It will give health plans “undue leverage in managed care contracting negotiations,” she said.
On the other side of the divide over the law, Erica Socker, vice president of health care for payer reform for philanthropy Arnold Ventures, said the rule makes sure “that the law does put downward pressure on health-care costs, in addition to protecting patients from surprise bills themselves, but still allows for some flexibility where needed.”
Those two views have been argued between medical providers and the health plans and employers that pay for employee care throughout the debate over how to resolve billing disputes for out-of-network bills. Comments on the interim final rule were filed Dec. 6.
Texas doctors and air ambulance providers are challenging the rule in separate lawsuits. In addition, about 150 members of the House wrote Biden administration officials calling for the rule to be revised. The American Medical Association, American Hospital Association, and other parties filed suit against the rule Thursday.
The No Surprises Act, which takes effect Jan. 1, 2022, prohibits hospitals and providers from billing patients more than the amount owed for in-network care in cases of emergencies or when patients receive care from out-of-network providers, such as anesthesiologists, at facilities that are in their insurance networks.
The interim final rule, the second major rule issued to implement the law, requires arbitrators to primarily use the “qualifying payment amount” (QPA), which is based on median contract rates, in deciding billing disputes over out-of-network charges.
Rule ‘Strays’ From Statute
“The elevating of the QPA to the rebuttably presumptive out-of-network rate really strays from the statute,” Hayes-Kibreab said.
Hospitals and doctors, who have billed patients thousands or even tens of thousands of dollars in out-of-network charges, argue they will be treated unfairly by health plans unless other factors the law allows to be considered are weighed equally in the independent dispute resolution (IDR) process. Those other factors can include the experience and education of the provider and the complexity of the case.
Requiring billing disputes to be based on network contract rates “is not going to be helpful for providers, whether we’re talking about facility providers or physician providers,” Hayes-Kibreab said.
But Socker said “the administration’s position is very strong.” Using the qualifying payment amount as the starting point for determining payments for out-of-network services is the right way to go, she said.
“There really is a fairly small subset of providers that are engaging in surprise billing, really exploiting the market failure and the ability to surprise bill to be able to extract higher payment rates,” Socker said. “That is raising health-care costs for everyone.”
Arnold Ventures, which works on lowering health-care costs, filed a comment letter applauding the administration’s approach to the independent dispute resolution process.
‘Underlying Market Failure’
Among the other groups that filed comment letters, the ERISA Industry Committee, which represents large employers in their role as sponsors of employee benefit plans, said “the cost savings intended by the No Surprises Act is possible only by maintaining the qualified payment amount (QPA) as the primary and overriding consideration for final payment determinations during the IDR process.”
America’s Health Insurance Plans (AHIP) said the “underlying market failure” that has led to surprise billing in emergencies and with out-of-network providers where patients have no choice “can be corrected when more health care providers, particularly hospital-based physicians, participate in commercial health plan networks that serve more than 200 million individuals.”
“More in-network care means the requirements of the No Surprises Act need not be triggered, including the need to resolve payment disputes through IDR,” the trade group said.
But the American Medical Association said the rule “could jeopardize patient access to care (including rural and underserved communities) by putting unnecessary strain and burden on physician practices, undercutting efforts by physicians to negotiate fair contracts with insurance companies, and reducing the breadth of provider networks across the country.”
The American Hospital Association, too, requested that the agencies “restore the independence of the IDR entities by not distorting the process in a manner that negatively impacts patient access to care, undercompensates providers and has other consequences far beyond surprise medical bills.”