Employers, Hospitals Have Dueling Takes on Surprise Billing Rule


October 1, 2021 3:37 pm

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.”