Bipartisan legislation to address surprise medical billing was introduced June 19 in the Senate Health, Education, Labor and Pensions (HELP) Committee.  Most notable for health insurers and providers is the way the bill tackles the biggest sticking point in the issue—mandating a benchmark rate to avoid pay disputes between health insurers and non-network providers.

Surprise medical billing is commonly the result of care received in an in-network facility, such as a hospital, but that included the services of a non-network provider, such as an anesthesiologist who is based at the in-network facility.

The newly introduced proposal is part of a broad legislative package to mitigate rising health care costs called the Lower Health Care Costs Act of 2019.  The primary sponsors of the bipartisan proposal are the HELP Committee Chair, Sen. Lamar Alexander (R – TN), and the ranking member, Sen. Patty Murray (D – WA).

To address surprise billing, the Alexander-Murray legislation would:

  • Hold patients harmless from surprise medical bills and require patients to pay only the in-network cost-sharing amount for out-of-network emergency care and for services provided by ancillary out-of-network providers and out-of-network diagnostic services at in-network facilities.
  • Bar facilities and individual providers from sending patients “balance” bills totaling more than the in-network cost-sharing amount. Out-of-network providers will bill patients to recover the balance left after the patient cost sharing and insurer payment obligations have been met.
  • In situations that could otherwise result in surprising billing, require health insurers to pay out-of-network providers a benchmark rate—specifically, the local median contracted commercial amount that insurers have negotiated with other providers and agreed upon in that geographic area. The Department of Health and Human Services would establish a consistent methodology for insurers to calculate their own median contracted rates.  A state’s all-payer claims database or a similar data source could be used in the calculation if an insurer otherwise lacks sufficient data.
  • Require that, when a patient enters a facility through the emergency room and is stabilized, the facility provide the patient an advance notice of any post-stabilization out-of-network care, an estimate of the patient’s costs for out-of-network care, and referrals for alternative options for in-network care. If a patient is not given adequate notice, the patient would be protected from surprise bills or out-of-network cost-sharing.

The HELP Committee is expecting to mark up the legislation the week of June 24, and the prospects for passage out of the Senate are good. President Donald Trump said he wants to sign the legislation.  In May 2019, the President called for bipartisan legislation to eliminate surprise medical bills for people covered by group or individual health insurance.

In the House, two bipartisan proposals have received attention.  The No Surprises Act, sponsored by Rep. Frank Pallone, Jr., (D – NJ) and Rep. Greg Walden (R – OR), would also use a local median contracted rate to avoid insurer-provider disputes.  A competing House proposal, the Protecting People from Surprise Medical Bills Act, would use an independent arbitration system instead of a benchmark rate.  The primary sponsors behind this approach are physicians, Rep. Raul Ruiz, MD (D – CA) and Rep. Phil Roe, MD (R – TN).

Just before the Alexander-Murray bill was introduced, Senator Alexander said the sponsors were considering an arbitration process instead of the benchmark approach.  He also described a third option under consideration, treating all providers at an in-network facility as in-network providers.  Apparently, a leaked preliminary cost assessment by the Congressional Budget Office (CBO) tipped the scale in favor of the benchmark rate.

According to reports, the CBO determined that, of the three proposals considered, the benchmark solution offers greater cost savings—saving $25 billion in health costs to the federal government over 10 years.  The arbitration process was projected to save $20 billion over 10 years, according to the leaked CBO information.

Generally, provider groups have favored private negotiation or dispute resolution over the benchmark solution to surprise billing.  The American Hospital Association, for example, said there may be a role for “baseball-style arbitration,” in which each party submits a best and final offer.  An arbitrator would choose one of the two offers, and the decision would be binding.

Surprise medical billing is not a new issue but has gained prominence in recent years.  According to a study using claims data from large employer health plans, roughly one in six people receiving care in an emergency room or an in-network hospital in 2017 received at least one out-of-network charge.  The study was reported June 20 by the Peterson Center on Healthcare and the Kaiser Family Foundation.  Other recent studies produced similar findings:  receiving an unexpected, large medical bill is a top concern for consumers.

State legislatures are also acting to address surprise billing.  Texas, for example, recently adopted an arbitration process to relieve consumers caught in the payment fights between health insurers and providers.  Such state approaches will help patients with fully insured individual and small group coverage.  But large-employer groups are likely to be in self-funded health plans, which are not subject to state regulation, which offers an additional rationale for the proposed federal legislation.

For more information on surprise medical billing and the impact of legislative proposals to address the issue, contact a member of the Husch Blackwell Healthcare Law team.