Bgov: HHS to Mull Surprise Billing Rules with Premiums in the Balance


February 21, 2021 11:25 pm

  • Much is left open to regulation under No Surprises Act
  • Extensive rulemaking likely on factors in arbitration

By Sara Hansard | January 22, 2021 5:31AM ET

Health-care costs could escalate depending on how the Biden administration writes regulations implementing a new law that bans hospitals and doctors from issuing surprise medical bills.

The bar on such bills is included in the omnibus spending and virus legislation signed at the end of 2020 by former President Donald Trump (H.R. 133). Starting in 2022, it will prohibit health-care providers from billing patients in emergencies or for services from out-of-network caregivers at facilities that are in patients’ insurance networks.

Bills from out-of-network emergency room doctors, anesthesiologists, radiologists, pathologists, and air ambulances can run in the thousands of dollars or more.

The crucial issue that must be resolved through regulations is whether arbitrators are allowed to favor providers or insurers in settling billing disputes. Arbitration cases in Texas,New York, and New Jersey have resulted in high payment rates to providers based on high charges originally billed. That in turn results in higher premiums.

“There are a lot of pieces that are left open to regulation” under the No Surprises Act, which was folded into H.R. 133, Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, said in an interview.

The Department of Health and Human Services will determine what arbitrators can be used to resolve billing disputes and what the rules for arbitration will be, James Gelfand, senior vice president of health policy for the ERISA Industry Committee (ERIC), said. ERIC represents large employers on benefit policies.

Employer groups and health insurers lobbied lawmakers against giving arbitration a large role in determining payments, while hospitals and doctors pushed for heavier reliance on arbitration.

Factors in Arbitration

There will be extensive rulemaking on factors arbitrators must consider in making a decision, Gelfand said. Arbitrators must choose between the two offers made by the competing parties and can’t award any other amount.

The median network rate for the area in which the service takes place is among the factors arbitrators are required to consider under the law. But additional questions need clarifying through regulation. “What is the median in-network rate for a given procedure in a given area? How is that determined?” Gelfand said.

“You have to have a reference” to determine network rates, he said. For example, “there’s plenty of places where there virtually are no in-network air ambulances.”

Even if there is a reference price, it isn’t clear if rates should be calculated “item by agonizing item,” comparing small hospital charges for things like Band-Aids, or whether the prices should be based on episodes of care, such as normal charges for births.

The geography defined for network prices could also be difficult to define. Medical markets “do not neatly align necessarily with state lines,” and it may not be based on the area covered by the insurer, he said.

Factors such as the training and experience of the provider, and the complexity of the services provided also must be considered under the law. Arbitrators are expressly prohibited from considering the high “billed charges” set by providers or rates set through government programs such as Medicare, which hospitals say are below the cost of providing care.

“All that needs to be sort of built out,” Gelfand said. “The language in the legislation isn’t enough to inform the arbitrator what to do.”

Fierce Lobbying Ahead

Lobbying on the regulations will likely be fierce, and the American Hospital Association will be one of the foremost organizations involved. The AHA declined a request for comment, saying it is too early to comment on regulations.

The AHA sent a letter to congressional health leaders in December, after broad agreement had been reached on surprise billing provisions but before the final legislation was passed.

Among the list of concerns listed by the AHA were requirements that providers give patients good faith estimates of costs when procedures are planned. Requiring hospitals to provide the estimates regardless of whether a patient requests it or has access to other cost estimator tools would add “significant burden and cost to the health care system without clear additional benefit to patients,” it said.

America’s Health Insurance Plans also raised concerns about the measure. “We remain deeply concerned that hardworking American families and businesses will face increased costs and higher premiums as private-equity firms exploit arbitration processes,” AHIP President and CEO Matt Eyles said in a statement.

Market Share Language

An example of the ambiguities of the law is the inclusion of the market share of providers or insurers as another factor for arbitrators to consider.

However, “It doesn’t say which direction” arbitrators should view market share, Jack Hoadley, research professor emeritus in Georgetown University’s Health Policy Institute, said in an interview.

“It could be thought of as either way,” with a high market share seen as justification for receiving higher payments, or it could go against the party if arbitrators don’t want to reward them for dominating the market, Hoadley said.

The administration could let arbitrators decide how to interpret the law, “or they could try to provide more guidance, perhaps for the purpose of getting to lower settlements,” he said.

Combining Cases

The law allows for multiple cases to be combined into a single arbitration case as long as they involve the same provider or facility, involve the same insurers, involve treatment of similar medical conditions, and occur within 30 days.

Whether the arbitration fee charged for combined cases is based on each underlying case, or whether the fee is set as one fee for the combined cases, may affect the extent that parties are willing to go to arbitration, Hoadley said.

The loser in cases must pay the fee, which may also discourage parties from going to arbitration, he said.

“The presumption is that it’s the providers who are going to push to arbitrate to get a higher amount,” Hoadley said.

If insurers perceive that providers are receiving higher rates in arbitration, they could offer higher rates than network rates, Hoadley said.

That could increase health-care costs and premiums.

Federal Enforcement

A new feature of the law will be enforcement on providers who run afoul of the law, such as by billing patients who are supposed to be protected, said Katie Keith, a research professor with Georgetown University.

Like the Affordable Care Act, states are responsible for enforcing the law, but if they don’t the federal government steps in, Keith said.

“That’s been normal on the insurance side” but will be new for health-care providers, which include air ambulances, she said.

A federal complaint process will have to be created for individuals who get surprise medical bills.

“If the feds are the ones enforcing this—not the states—they can impose pretty significant penalties on the providers that are still doing that kind of thing,” Keith said.