New vision, dental, and hearing benefits under Medicare must be included in Democrats’ social spending package if it’s going to win support from progressives, lawmakers said yesterday.

“This to me is not negotiable,” Bernie Sanders (I-Vt.) told reporters when asked if cutting the added benefits is a red line for progressives. Progressive Caucus Chair Pramila Jayapal (D-Wash.), said her coalition shares this sentiment.

Factions of the Democratic party are jockeying to maintain what they consider to be core elements of the evolving social spending bill, which contains the bulk of President Joe Biden’s economic agenda. Congressional leaders are aiming to cut or reduce areas of the once-$3.5 trillion spending package to win the support of key moderates. One of those moderates, Sen. Joe Manchin (D-W.Va.) has said he doesn’t support adding new benefits to Medicare without first addressing the program’s long-term solvency.

The policy also faces stiff opposition from the insurance industry. The proposed new benefits under Medicare come with a $358 billion price tag. 

• Jayapal also said that instead of cutting provisions, progressives would be open to making them effective for a shorter length of time. “What the progressive caucus, would like to have is not some false choice of just doing a couple of things and pitting communities against each other and leaving people behind, but actually reducing the number of years slightly if we need to,” Jayapal said.
  
• The progressives said that Manchin and Sen. Kyrsten Sinema (D-Ariz.) have yet to come forward with a formal counter-proposal, making it difficult to move forward in negotiations. Sanders said the time is “long overdue” for Manchin and Sinema to let Democrats know what they want to cut from the bill. 

“I would say the group was split pretty much in half,” Yarmuth, who announced his retirement on Tuesday, told reporters. “The half that wanted — and I’m in that half — who thinks it might be better to focus on a few things, couldn’t agree on what the few would be, and so it’s gonna be difficult either way. But my guess is that we’ll probably try to keep all the elements and pare them down.” 

Jayapal says that it’s still ultimately up to Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.). to make the next move on a compromise reconciliation package. 

“It all depends on the two senators who don’t agree with the 98 percent,” Jayapal stated. “We’re waiting on them to come back to us and tell us what’s their counterproposal. The sooner that they come back to us, the better.”

If progressives ultimately agree to slim reconciliation to roughly $2 trillion — a figure Biden has floated as a potential compromise — there remain major points of contention. 

During a conference call with reporters on Tuesday, Sen. Bernie Sanders (I-Vt.) said he wouldn’t budge on expanding Medicare benefits to include dental, vision and hearing, which Manchin has resisted.

“These provisions should have been included in the original Medicare bill — they were not,” said Sanders. “The time is now. This to me is nonnegotiable.” 

Forward progress: The House did accomplish one big thing on Tuesday night by raising the debt limit for seven weeks until Dec. 3, a measure President Biden is soon expected to sign. But that new deadline is also when the federal government is set to run out of money again, setting up a special holiday-edition fiscal cliff.

Jan. 6 panel prepares to act if ex-Trump advisers refuse to cooperate

Select committee tings: The House select committee investigating the Jan. 6 attack on the Capitol is prepared to move criminal contempt charges expeditiously in the case that top Trump White House officials do not comply with subpoenas.

Committee members said on Tuesday that the committee is united in moving aggressively to enforce the congressional subpoenas issued to Mark Meadows, Kash Patel, Stephen Bannon and Dan Scavino.

“We’ll see if they show up,” Chairwoman Liz Cheney (R-Wyo.) told reporters last night. “If they show up we’ll be prepared.”

Bannon said he is refusing to comply with a subpoena from the committee while Patel and Meadows have been “engaging” with investigators. But lawmakers did not say whether two of the former president’s advisers are confirmed to appear for their depositions scheduled for the end of the week.

“I think we are completely of one mind that if people refuse to respond to questions without justification that we will hold them in criminal contempt and refer them to the Justice Department and unlike the last four years, we expect the Justice Department to adhere to the principle that no one is above the law,” said Rep. Adam Schiff (D-Calif.), who is serving on the select committee.

Next steps: “The criminal contempt statute outlines the process by which the House or Senate may refer the non-compliant witness to the Department of Justice (DOJ) for criminal prosecution,” according to a 2019 Congressional Research Service report.

Because these Medicare Advantage plans receive higher payments for beneficiaries with more ailments and higher expected medical costs, plan providers typically record all possible medical diagnoses, which often results in overpayments, according to the Medicare Payment Advisory Commission. In 2019, the commission estimates that MA plans received nearly $9 billion in excess payments due to this “coding intensity.”

As Democrats work to trim their $3.5 trillion reconciliation package to accommodate leery party moderates, recent research suggests that tweaking some of the Medicare Advantage payment formulas could save billions of dollars in overpayments that could help pay for the proposed benefit expansion. 

Billions in Savings

Excluding the cost of the new benefits from the “benchmarks” that Medicare uses to determine Medicare Advantage payment rates would save roughly $147 billion over 10 years, according to an analysis by Matthew Fiedler of the USC-Brookings Schaeffer Initiative for Health Policy. That’s 41% of the estimated $358 billion that the three benefits would cost over 10 years, according to a 2019 Congressional Budget Office estimate.

The Medicare Advantage benchmark is the highest amount Medicare will pay an MA plan to provide hospital and outpatient coverage. It’s a rate against which plans submit bids for coverage, benefits, and payments to the Centers for Medicare & Medicaid Services.

The benchmark rate reflects the equivalent cost of care in fee-for-service Medicare, which reimburses for all covered services provided to beneficiaries. Medicare Advantage plans receive a set monthly payment to cover each enrollee’s projected cost of care.

Most MA plans already offer some level of dental, hearing, and vision coverage as a supplemental benefit, although the level of coverage isn’t uniform and varies greatly from plan to plan.

In 2019, Medicare spent $321 more per MA plan enrollee than for those covered by traditional Medicare, according to a recent study by the Kaiser Family Foundation. The higher cost was due, in part, to extra supplemental benefits that are unavailable to beneficiaries in fee-for-service Medicare, the report said.

‘Coding Intensity’

This year, Medicare payments to MA plans average an estimated 104% of fee-for-service spending, up 1 to 2 percentage points from 2020, according to the Medicare Payment Advisory Commission. “The 2021 estimate incorporates about 3 percentage points of uncorrected coding intensity,” the commission noted in its March report to Congress.

But insurers say cutting MA plan payments to help finance a mandatory, program-wide expansion of benefits would cause plans to hike premiums and reduce other supplemental benefits, like transportation to appointments and in-home meals. That would hold true whether the cuts stemmed from inaction on the benchmark rate, as Fiedler has suggested, or from deeper reimbursement offsets to account for coding intensity.

Medicare already reduces payments to MA plans by 5.9% because of coding intensity by MA plan providers who submit a larger number and more severe diagnoses codes per patient than their counterparts in fee-for-service Medicare, said Tom Kornfield, a senior consultant at Avalere Health.

If Medicare increased the coding intensity payment reduction to 7% or 9% to help finance dental, hearing, and vision benefits, MA premiums would increase anywhere from about $9.30 per month to nearly $25 per month, on average, across all plans, according to an Avalere analysis commissioned by America’s Health Insurance Plans. Supplemental benefit offerings could decrease by $30 to $44 per month, the study found.

Lost Supplemental Benefits

If Congress adds the new Medicare benefits without an upward adjustment of the MA benchmark rate, those plans would receive 48% to 73% fewer rebate dollars, according to a Wakely Consulting Group analysis funded by AHIP. That represents nearly $700 to $1,056 a year in lost supplemental benefits, which rebate dollars help fund.

Those lost supplemental benefits help close disparity gaps for vulnerable beneficiaries and address social factors that adversely affect patient outcomes. Higher MA premiums could also slow Medicare’s push for greater health equity, since MA plans have a disproportionate share of lower-income and minority beneficiaries. About 57.5% of MA plan members are enrolled in coverage with no premiums.

Forty percent “of Medicare Advantage enrollees make less than $25,000 per year. Increasing premiums or lowering benefits could have a devastating impact on the affordability of this critical lifeline to helping America’s seniors get and stay healthy,” said a statement from Matt Eyles, AHIP’s president and CEO.

Groups like the Better Medicare Alliance have also urged Congress to “ensure additional benefits are structured in a way that fully reflect the cost of adding dental, vision, and hearing to Medicare in the benchmark calculation.”

While plans would get fewer rebate dollars if benchmarks weren’t adjusted, Fiedler disagreed with the magnitude of the estimated reductions in the AHIP study. “They would receive fewer rebate dollars, though much of the reduction in payments would be reductions in plans’ profit margins,” Fiedler said.

The most recent data from 2019 show MA plans had an average profit margin of 4.5%, the Medicare commission reported.

So the industry’s argument that a reduction in rebate dollars means fewer supplemental benefits isn’t “necessarily true because the rebate dollars currently being spent on dental, hearing and vision would be freed up for other uses,” Fiedler said.

Medicare Advantage has been a frequent target of lawsuits and government investigations focusing on improper payments related to questionable patient diagnoses.

Last month, the Department of Health and Human Services Office of Inspector General called for greater oversight of 20 MA plans that received a disproportionate share of $9.2 billion in enhanced payments in 2016 that were based on potentially suspect patient diagnoses. And in 2020, the OIG found $2.6 billion in payments to 438 MA plans in 2017 stemmed from patient diagnoses that were unrelated to any other clinical services.

Democrats are facing a daunting stretch as the party struggles to get beyond internal battles to win approval of President Biden’s agenda — and deal with other crises that have effectively been punted to the Christmas season.

Democrats are entering the home stretch of the year with four big priorities: funding the government, raising the debt ceiling and passing both the bipartisan infrastructure bill and a sweeping social spending measure.

It’s a stretch that could make or break Biden’s agenda and will surely set up battles for next year’s midterm elections.

“There’s a lot of stress being felt, or a lot of things at stake in terms of causes that many of us fought for, for a lifetime,” Sen. Dick Durbin (Ill.), the No. 2 Senate Democrat, said about the current dynamic within the caucus.

The tensions between Democrats — including moderates versus progressives, the Senate versus the House and moderates versus leadership — are increasingly boiling over. That includes a days-long shadowboxing match between Senate Budget Committee Chairman Bernie Sanders (I-Vt.) and centrist Sen. Joe Manchin (D-W.Va.) over Biden’s social spending measure.

Manchin and Sanders have spent days trading criticisms through the press, but Sanders brushed off a question about if they or Sen. Kyrsten Sinema (D-Ariz.), another moderate Sanders has urged to be more specific, should get in the room together to hash things out.

“This is not a movie,” Sanders said. “When you’ve got 48 people on one side … it is simply not fair, not right, that one or two people say my way or the highway.”

Sanders and progressives disagree with Manchin, Sinema and House centrists over the measure’s policy details and size.

Sanders is refusing to acknowledge a price tag below $3.5 trillion, while Congressional Progressive Caucus Chairwoman Pramila Jayapal (D-Wash.) is pushing for a bill around $3 trillion. That’s significantly higher than Manchin’s top line of $1.5 trillion or the roughly $2 trillion range floated by the White House.

The bipartisan infrastructure bill already passed by the Senate, progressives say, won’t move through the House without passage of the larger spending bill. But that’s left moderates fuming.

Moderate Rep. Jared Golden (D-Maine) said some of his constituents are “sick of the bickering” and want Congress to “stop fighting and sort it out.”

“I strongly support the bipartisan infrastructure bill and think the House should pass and send it to the president immediately. As for the separate $3.5 trillion draft reconciliation proposal in the House … I cannot support it in its current form, nor does it currently have the votes to pass in Congress,” Golden wrote in a Portland Press Herald op-ed.

Democrats face tough choices if they have to lower the size of the bill, as is likely.

Durbin, acknowledging that reality, urged Democrats to settle on a number, adding that “the sooner we get this done, the better. Everyone’s not going to win at the end of the day.”

They had hoped to fund everything from combating climate change to immigration reform as well as housing, child care, education assistance and a health care expansion.

But as the top line slips, they’ll need to think about investing heavily in a smaller number of programs or keeping their expansive wish list but taking more incremental approaches across the board.

While Democratic leadership is aiming to have the bill to Biden by the end of October, senators acknowledge they aren’t married to a timeline.

“Obviously we want to get it done as quickly as possible. But obviously this is an enormously complicated and consequential bill. … This is not a baseball game,” Sanders said, asked if the deal to put the debt ceiling put pressure on Democrats to get the social spending bill done quickly.

But they also can’t risk it dragging too far into fall. If they can’t pass the bipartisan infrastructure bill by the end of October, they’ll need to pass another short-term highways extension, and the scheduling of other must-pass bills, including an annual defense policy bill, have also been in limbo as Democrats try to figure out when they’ll bring their two-part spending package to the floor.

They also risk running directly into round two of their fight over the debt ceiling and funding the government.

Government funding is set to run out on Dec. 3, setting a hard deadline for lawmakers to prevent a shutdown heading into the holidays. And the Treasury estimates that the $480 billion debt hike — which is expected to pass the House on Tuesday — will extend the nation’s borrowing limit until roughly the same time.

When exactly the debt ceiling will hit is unclear. The Bipartisan Policy Center’s Shai Akabas noted that analysts are trying to estimate how much money is going into and out of the government and that the “uncertainty comes on the back end” of the Dec. 3 timeline.

Both sides are already digging in.

Senate Majority Leader Charles Schumer (D-N.Y.) is doubling down on his pledge that Democrats won’t use reconciliation — a budget process that lets them bypass the 60-vote legislative filibuster — to pass a long-term debt hike later this year. The votes are tough politically for Democrats because they have to raise the debt ceiling to a number instead of suspending it to a date.

“The solution is for Republicans to either join us in raising the debt limit or stay out of the way and let Democrats address the debt limit ourselves,” Schumer said. “Senate Democrats want a long-term solution. … I hope my Republican colleagues relent from trying to make it one when we revisit this issue soon.”

While 11 Republicans helped Senate Democrats overcome a key procedural hurdle on the debt ceiling last week, they are vowing they won’t do so again.

The move, GOP senators argue, was designed to take pressure off changes to the filibuster and prove Democrats had time to raise the debt ceiling on their own under the budget rules. Schumer also rankled the GOP senators he’ll need in December with a fiery speech he gave just before the Senate passed the short-term debt hike.

Senate Minority Leader Mitch McConnell (R-Ky.) — who has faced criticism from his own members for proposing the short-term debt hike — vowed in a phone call and letter to Biden that Republicans will not help raise the debt ceiling in December. He also railed against Schumer’s speech, saying the Democratic senator’s “tantrum” had “poisoned the well” with GOP senators.

“Your lieutenants on Capitol Hill now have the time they claimed they lacked to address the debt ceiling through standalone reconciliation. … They cannot invent another crisis and ask for my help,” McConnell wrote.

If Republicans don’t blink, congressional Democrats will have limited options, and it could lead to pressure on Manchin and Sinema to create a carveout from the legislative filibuster.

But asked about the looming end-of-year showdown, Manchin said that creating a carveout from the filibuster is already off the table for him.

“The filibuster is the only thread that we have to keep democracy alive and well in America. It keeps us the body that we are,” Manchin said. “If we didn’t have the filibuster to where it would keep us keeping back to civility from time to time, then you would see total chaos.”

Whether a provider can practice telehealth across state lines depends on both federal and state policies, according to the Health Resources and Services Administration, part of the U.S. Department of Health and Human Services. 

Some states have agreements that allow for an expedited process for physicians to practice using a single license. Other states require providers to get a new license, which can be a time-consuming and expensive process, Mei Kwong, executive director of the Center for Connected Health Policy, said in an interview.

“Licensing is really a barrier,” and makes it harder for people in rural areas to see specialists like dermatologists, Larson said. Some states require physicians to be fingerprinted on site, which can be difficult for a busy physician.

Physicians could be likely to get multiple licenses if they live close to a border, Kwong said. But, for “one patient who lives in Florida,” it’s less likely a provider would “go through that entire process,” Kwong said.

While many states eased restrictions during the pandemic, those accommodations are beginning to peel back, Zebley said. Practicing across state lines is a polarizing issue, and raises questions about how physicians should enforce “contentious practice of medicine issues like abortion, birth control, euthanasia, or prescription of marijuana,” Zebley said.

‘Telehealth Cliff’

Being able to access health-care remotely “is a matter of life and death,” Sen. Brian Schatz (D-Hawaii), said at the hearing. 

Schatz is part of a group of 50 senators advocating for the CONNECT for Health Act (S. 1512), which would make permanent several of the telehealth flexibilities granted during the public health emergency, including removing geographic restrictions. The bill has bipartisan support.

The passage of the CARES Act last year enabled doctors and other medical providers to initiate telehealth care with a patient in their home. The Social Security Act generally keeps Medicare from reimbursing those visits unless they’re for patients in rural areas, or if they originate at a qualifying site like a hospital or nursing home. 

Those exceptions will end when the public health emergency ends unless Congress takes action, leading to an approaching “telehealth cliff,” Schatz said. 

If a patient still has to “get a ride and schlep some place, it defeats the purpose, at least partially, of telehealth in the first place,” Schatz said.

Telehealth also helps keep patients’ illnesses from escalating, Larson said. 

“If we can’t immediately see an individual when they start to feel ill or have a situation going on, if we’re waiting, now that individual is probably going to be seen in an emergency department,” Larson said. “We can prevent much of that.”

The $24 billion, according to data released Wednesday from health-care improvement company Premier Inc., represents an 8% increase in clinical labor costs per patient day compared with 2019.

Hospitals have had to pay nurses and other staff members inflated wages to keep their doors open amid nationwide staffing shortages, driven by burnout from an unrelenting virus, firings and resignations over vaccine mandates, and sickness and quarantine. Some states have even called in the National Guard to help meet patient demand during the delta variant’s surge.

Health-care providers are “just really at their wits end in terms of dealing with the pandemic,” said Doug Miller, vice president of workforce management operations at Premier.

The government issued funding to hospitals coping with lost revenues and pandemic-related expenses, but the health-care industry has said the more than $120 billion distributed isn’t enough to meet its needs. 

Beyond increased staffing prices, hospitals are facing higher costs for drugs, supplies, preparation for more Covid-19 patients and their treatment, and the lost revenue from elective surgeries, American Hospital Association Executive Vice President Stacey Hughes wrote in a Wednesday letter to congressional leadership asking for legislative provisions that would provide financial relief.

The industry is also facing various regulatory burdens, from the reporting required of those that received pandemic assistance funds to demands that they list their prices for common services online.

“The COVID-19 pandemic has resulted in historic challenges for hospitals and health systems and the communities they serve, placing unprecedented stress on the entire health care system and its financing,” the letter said. The AHA is advocating against reducing Medicare payments so that providers can stay afloat.

The financial stress has led to a breaking point for some hospitals less able to weather the storm, with more than 40% of rural hospitals in the U.S. at immediate or high risk of closing in July 2021, according to a Center for Healthcare Quality and Payment Reform report.

High Demand

The nursing industry was already facing labor shortages before the pandemic, said Beth Cloyd, principal consultant at Premier. The pandemic has tested nurses, who have worked longer hours in harder conditions, “but that resiliency and effort over time takes a toll on the workforce,” Cloyd said.

Hospitals may not be able to fill their vacancies any time soon, and the recent vaccine mandates could keep costs for labor high. So hospitals should look at bringing in international workers or consider how technology can help providers meet patient demand, Cloyd said. The Biden administration will speed up the visa process for health-care workers coming to the U.S. to aid in pandemic response.

Most of the evidence about how vaccine mandates will affect the workforce is anecdotal, Miller said, since many hospitals have not completed their vaccine mandate timelines. “I don’t know that anybody has a crystal ball to fully know how the data plays out,” Miller said, but Premier is working on another study to capture some of that evidence.

Other Findings

Premier used artificial intelligence to examine a workforce database and compare trends from October 2019 to August 2021. The study examines clinical employees who work in the emergency department, intensive care units, or nursing.

Among the survey’s other findings:

• Larger hospitals with 500 or more beds have been paying $17 million extra for labor each year since the beginning of the pandemic.
• Overtime hours as of September 2021 have risen 52% compared with before the pandemic.
• Almost a third of emergency, ICU, and nursing employees turn over each year, up from 18 percent pre-pandemic.

Long-term care facilities must fully explain predispute arbitration agreements to their residents if they want to continue getting paid by Medicare and Medicaid, as the requirement doesn’t conflict with federal arbitration laws, the Eighth Circuit said.

A U.S. Health and Human Services Department rule placing conditions on payments when nursing homes use such agreements isn’t preempted by the Federal Arbitration Act, is a valid exercise of the agency’s authority, and was adopted in compliance with federal administrative rules, the U.S. Court of Appeals for the Eighth Circuit said.

The rule doesn’t prohibit nursing homes from including predispute arbitration clauses in their residents’ contracts, the court said. This distinguishes it from a 2016 rule—blocked by a federal district court in Mississippi—that expressly banned facilities from requiring patients or their representatives to agree to arbitrate any disputes that arose while the patient was being treated there.

The district court in the Mississippi case found the 2016 rule inconsistent with the FAA. 

Under the newer rule, nursing homes can continue to insist on such clauses, the court said. But they must fully explain what the arbitration clause means in the patient’s or representative’s language and make clear that admission and ongoing care aren’t dependent on their agreement in order to participate in the Medicare and Medicaid programs, it said.

HHS reasonably interpreted the Medicare and Medicaid laws to allow conditioning payments on the arbitration rule, the court said. The agency could reasonably conclude that predispute arbitration clauses could frustrate residents’ access to care “or jeopardize their health and well-being,” it said. 

The rule is “a reasonable exercise” of the Centers for Medicare and Medicaid Services’ authority to protect residents’ rights, the court said.

The agency relied on sufficient evidence when adopting the rule, including “academic literature and court opinions” suggesting that predispute arbitration clauses are detrimental to residents’ health and safety, it said Oct. 1 in an opinion by Judge Jane Kelly.

The court affirmed summary judgment for HHS and CMS.

Chief Judge Lavenski R. Smith and Judge Ralph R. Erickson joined.

Kirkland & Ellis LLP and Hardin, Jesson and Terry PLC represent the nursing homes. The U.S. Department of Justice represents the government.

The case is Northport Health Servs. of Ark. v. U.S. Dep’t of Health & Human Servs., 2021 BL 375572, 8th Cir., No. 20-1799, 10/1/21.

The Biden administration released a rule Thursday that addresses one of the most fought-over provisions of a coming ban on surprise medical bills.

The rule details how a new class of medical billing arbiters will decide the fair price for emergency medical care, one of the largest sources of surprise bills. The rule received a positive reaction from consumer advocates and some legislators who drafted the law, but it “disappointed” emergency physicians, who fear it will lead to unreasonably low rates.

The ban on surprise medical bills was passed by Congress and signed into law by President Donald J. Trump last winter, but it is the Biden administration that has been fine-tuning the policy — amid intense lobbying from insurers, medical providers and advocates.

In a dispute between an insurer and a provider over an out-of-network bill, the rule directs the arbiters to focus first on the median price that other doctors and hospitals in the area have negotiated for that service.

This was the second major rule the Biden administration released on surprise billing this year, before the law takes effect in 2022. Taken together, the two regulations detail how the federal government will end what patients, academics and legislators often describe as one of the most exasperating practices in American medicine.

“We’re taking patients out of the middle of the food fight, and we’re also providing a clear road map on how you can resolve that food fight between the provider and the insurer,” said Xavier Becerra, secretary of Health and Human Services, in an interview.

Surprise medical bills happen when a doctor or other provider who isn’t in a patient’s insurance network is unexpectedly involved in a patient’s care. Patients may go to a hospital that accepts their insurance, for example, but get treatment from emergency room physicians or anesthesiologists who don’t — and who then send patients big bills directly.

Millions of Americans receive these type of bills each year. As many as one in five emergency room visits result in such a charge, and the rate of surprise billing is similar for women giving birth. Some coronavirus patients have received exceptionally high surprise bills. That includes a Pennsylvania woman who was unconscious and intubated when an out-of-network air ambulance transported her between hospitals. She was billed over $50,000 for the service.

Patients like that are essentially caught in the middle of a dispute between a doctor and an insurer, who disagree on the fair price for a given medical service. The new rule released Thursday lays out how newly hired billing arbiters will decide who, in those fights, is right.

Under the federal law, both the insurer and the doctor will tell an arbiter what they believe the appropriate price for the service should be. The arbiter will then look at a variety of factors to decide which of the two rates to pick.

The law that Congress passed has six factors the arbiters can consider. The rule released Thursday, however, directs the arbiters to focus on one of those factors as their starting point: the median prices that have been negotiated in the area for the same medical service.

The arbiter “must begin with the presumption” that this is “the appropriate out-of-network rate,” the rule states. They may consider other factors listed in the law, such as how sick the patient was or whether the hospital or doctor had made good faith efforts to join insurance networks, if they receive “credible information” from either party involved in the dispute on those subjects.

The administration on Thursday also opened applications for organizations to become arbiters. Applicants must have experience in “billing and coding” and “arbitration and claims management.”

The rules on how arbiters settle billing disputes are seen as especially important because they will determine whether the ban on surprise billing ultimately saves money for consumers, insurers and the federal government. The Congressional Budget Office estimated last year that the surprise billing ban would save the federal government $17 billion and reduce private insurance premiums 0.5 percent to 1 percent.

Most experts expect that starting from the in-network prices will ultimately lead to lower reimbursement rates. The Biden administration stated in the rule that the decision “will aid in reducing prices that may have been inflated due to the practice of surprise billing prior to the No Surprises Act.”

Trade groups representing health care providers, including emergency room physicians and hospitals, had generally urged the Biden administration to do something different: ensure that arbiters use all six of the factors listed in the law when they make up their minds. They argue that Congress intended for arbiters to have that broader deliberation, and that focusing on median in-network rates will lead to lower prices that are untenable.

“We’re pretty disappointed because this is entirely against congressional intent,” said Laura Wooster, senior vice president for advocacy at the American College of Emergency Physicians. “I’m not seeing how small physician groups will be able to work with this, and keep their doors open. Now is not the time to take away resources from emergency physicians.”

Congressional Democrats quickly applauded the new rule.

“Today’s rule implements the No Surprises Act just as we intended,” Senator Patty Murray of Washington and Representative Frank Pallone of New Jersey, who lead health committees in each of their chambers, said in a joint statement. “It establishes a fair payment resolution process between providers and insurers while finally taking patients out of the middle.”

Secretary Becerra said he expected the rule to generate “a lot of animated discussion on the part of the stakeholders in the industries” but felt the Biden administration had created a way to settle billing disputes that was straightforward and fair. “It will give patients some peace of mind that they don’t have to stand the chance of going bankrupt just because they had to go out of network,” he said.

Republican reaction to the rule wasn’t immediately available. Stakeholders are still reviewing the 521-page rule, and the administration will accept comments on it for the next 60 days. Given the relatively short timeline — the surprise billing ban is set to start in three months — major changes are not expected.

Hospitals reacted sharply toward a Biden administration regulation implementing legislation barring “surprise billing” of patients while health insurers and employers’ groups praised it for guarding against health-care price inflation.

The rule is a “windfall for insurers,” Stacey Hughes, executive vice president of the American Hospital Association, said. “The rule unfairly favors insurers to the detriment of hospitals and physicians who actually care for patients.”

Hughes made her remarks in a statement after four agencies on Thursday released an interim final rule (RIN 0938-AU62) that details the process for settling billing disputes between health-care providers and entities that pay the bills—health insurers and employers that sponsor employee health plans.

This is the most important regulation implementing the No Surprises Act that was enacted in 2020 as part of budget legislation (H.R. 133). It stipulates that arbitration awards in disputes must primarily be based on median in-network rates rather than giving providers more ammunition to argue that exceptional circumstances demand higher payments.

Under the law, patients can’t be billed by hospitals or medical providers for more than they would owe for in-network treatment in emergencies or in situations where an out-of-network clinician treats them during procedures performed at facilities that are in their networks. Such out-of-network treatment has often resulted in patients being billed for large amounts, sometimes in the tens of thousands of dollars.

‘Good for Consumers’

“It’ll definitely be good for consumers,” Katie Keith, an associate research professor at Georgetown University, said in an interview. Keith co-authored an analysis of earlier surprise billing regulations.

“The Biden administration really made a strong statement about how it wants the federal IDR process to be used,” Keith said, referring to the independent dispute resolution process. “It does not want this to be a way for providers and facilities and air ambulances to stay out-of-network and think they’re going to be able to leverage this process for higher rates.”

The rule could result in more providers entering into network contracts with insurers, Keith said. “You could have consumers having increased access to in-network providers,” she said.

In addition, the rule will help prevent out-of-network care from inflating health-care costs, which could have an impact on premiums, Keith said.

In January, the Congressional Budget Office estimated that in most affected markets in most years, “smaller payments to some providers would reduce premiums by between 0.5 percent and 1 percent.”

‘A Fair Payment’

“The biggest thing by far, when they talked about how the arbitration itself is going to work, the presumption is going to be the market-based qualified payment amount is a fair payment,” James Gelfand, executive vice president, public affairs, at the ERISA Industry Committee, said in an interview. ERIC represents large employers that provide health benefits.

The qualifying payment amount is the primary measure that will be used to determine rates in disputes under the rule. It’s based on a health plan’s historic median contract rate for similar services in a geographic area.

“There’s nothing more important than that that they could possibly have done,” Gelfand said. “It puts market dynamics at the center of this arbitration.”

In addition to setting the basis for deciding disputes rates, the rule also sets limits on the cost of arbitration, which has been worrisome, Gelfand said. Arbitration entities that must be certified by the federal government have to agree to reasonable fees, he said.

Hospital Objections

Hospitals and providers had wanted arbitration regulations not to be as dependent on the qualifying payment amount, which limits their payments.

They pointed to other factors that the No Surprises Act allows arbitrators to consider in billing disputes, such as the severity of a patient’s case and the experience of the provider.

“These consumer protections need to be implemented in the right way, and this misses the mark,” Hughes said.

The American Medical Association also objected strongly to the regulation. 

“The interim final regulation issued late yesterday to implement the No Surprises Act ignores congressional intent and flies in the face of the Biden Administration’s stated concerns about consolidation in the health care marketplace,” AMA President Gerald Harmon said in a statement.

The AMA cited its study that found 73% of the nation’s insurer markets are “highly concentrated.” The result is higher premiums and narrower provider networks, which are a root cause of the surprise medical billing problem. it said.

The AMA urged the Biden administration to delay implementation of the rule.

America’s Health Insurance Plans President and CEO Matt Eyles said in a statement that “The Administration’s approach signals a strong commitment to consumer affordability and lower health care spending through an independent dispute resolution process that should encourage more providers to join health plan networks.”

“The parties then may jointly select a certified independent dispute resolution entity to resolve the disputes,” according to a fact sheet on the rule.

After an arbiter is selected, both the payer and provider will submit the amount they believe the service should cost. The arbiter will then select one of the amounts as the out-of-network charge. The arbiter must begin with the presumption that the qualified payment amount, which is the insurance plan’s median contracted rate for the same or similar service in an area, is the appropriate out-of-network charge. 

Other consumer protections in the rule include a payment dispute resolution process for uninsured or self-pay individuals. It also adds protections in the external review process so that individuals with job-based or individual health plans can dispute denied payment for certain claims.

We are currently analyzing the rule and will follow up with a full breakdown of the provisions.