Surprise Medical Billing Regulation Under White House Review


June 9, 2021 2:58 pm

The first rule implementing a 2020 law limiting medical bills in emergencies and in other situations beyond patients’ control is under review by the the White House’s Office of Management and Budget. 

How the Biden administration interprets the No Surprises Act, passed as part of appropriations legislation (H.R. 133) late in 2020, will likely be crucial to controlling costs of medical bills that can reach into the tens of thousands of dollars for both health insurers and employers who pay health-care bills for employees. The law takes effect in 2022.

The OMB must review the interim final rule before it can be issued by the Department of Health and Human Services, which sent it to OMB Tuesday. The regulations are due to be issued by July 1.

The No Surprises Act limits bills to patients for emergency treatment and for treatment by out-of-network doctors at facilities covered by health insurance networks, such as by anesthesiologists used during surgery. Bills in those situations can’t exceed what patients would be billed for in-network care. 

The law allows for billing disputes to be handled through arbitration, which under state surprise billing laws has led to high charges being passed on to insurers and employers.

Arbiters are prohibited from considering rates for government programs such as Medicare or Medicaid, which providers say are often below their costs. Nor can arbiters consider so-called “billed charges” by providers, which are typically well above what insurers pay for in-network treatment.

Allowing billed charges to be used by arbitrators under state laws, such as a surprise billing law enacted by New York state, has resulted in “very high out-of-network reimbursement,” according to a 2019 report by the USC-Brookings Schaeffer Initiative for Health Policy. That in turn leads to higher premiums and costs borne by employers.

Arbiters can consider factors such as the median contracted rate, the provider’s market share, provider training and qualifications, and the severity of the patient’s condition in deciding between the competing offers submitted by the provider and insurance plan.

Payment Rate Calculations

The interim final rule is likely to define how to calculate the qualified payment rate that will be used to help determine what providers should be paid, James Gelfand, senior vice president of the ERISA Industry Committee, said in an interview. The ERISA Industry Committee represents large employers that provide health and retirement benefits to employees.

The qualified payment amount generally is the median in-network rate, Gelfand said. The median in-network rate is one of the factors used to determine how much insurers and employers pay, and it also affects coinsurance payments that patients will have to pay. Coinsurance payments are a percentage of fees.

“How exactly is this going to be calculated? What is the methodology that is to be used?” are questions that need to addressed to determine the qualified payment amount, Gelfand said.

It will likely take longer to issue rules on how the independent dispute resolution, or arbitration process, will work and what entities can run that process, Gelfand said.

Various groups representing hospitals, doctors, insurers, employers, and consumers are lobbying the HHS to influence how billing disputes will be resolved.

The ERISA Industry Committee is part of a coalition of 49 organizations that sent the HHS a letter Tuesday calling for the agency to draft regulations “that make the qualifying payment amount (QPA), on which patient cost-sharing is based, the primary factor in resolving payment disputes.”

The American Medical Association, in a May 21 letter to the department, said contracted rates used to calculate median rates should be limited by factors such as what is paid to providers in the same specialty. It also said the contracted rates “should be as specific as possible as to the type of item or service.”

Twenty-two patient and consumer organizations representing millions of people with chronic conditions sent the HHS a letter Wednesday saying “the law must be implemented in a way that ensures the independent dispute resolution (IDR) process does not lead to higher costs for patients.”

Balancing the Arbitration Process

At a House Ways and Means Committee hearing Tuesday, the panel’s ranking Republican, Rep. Kevin Brady (R-Texas), told HHS Secretary Xavier Becerra that the department should carefully balance the arbitration process to avoid favoring health-care providers or insurers.

“The integrity of that arbitration process should be protected in as many ways as possible, including through robust transparency,” Brady said.

Ways and Means Committee Chairman Richard Neal (D-Mass.) said lawmakers will be examining the coming regulations to ensure providers can’t sidestep the rules. “Lawmakers did not design any intentional loopholes,” he said.