Analysis: New HELP draft surprise-bill legislation bases payments on geographic median rate

On June 19, the Senate HELP Committee released a revised draft of its legislation to address surprise bills — Lowering Health Care Costs. There were several changes to the legislation, which are described below.

During the hearing, Senator Lamar Alexander (R- Tenn.) expressed strong support for the “network matching” — approach that requires all providers to be in the hospital’s network or for the hospital to submit a global bill to determine payment when a patient receives out-of-network care that is covered under the legislation.

Despite that indication of support for network matching, the updated draft bases payment to out-of-network providers on the geographic median for the service as calculated by the health plan as originally anticipated.

In his comments about the change, Alexander cited the CBO score as the driving factor. Basing payment on the geographic rate leads to greater 10-year cost savings. Below is a summary of both key changes and items that remain in the bill.

Key Changes:

• Payment Calculation: In applicable instances where the patient is out of network, the bill would pay the providers/hospitals who delivered the care based on the plan’s geographic median rate. This is the approach favored by plans and employers. The U.S. Department of Health and Human Services (HHS) is instructed to use the rulemaking process to define geographic areas and establish a consistent methodology for health plans to use in calculating their own median- contracted rates.
• Effective Date: The law would be effective for the second plan year after the bill is passed. For example, if the bill passes on July 1, 2019, it would be effective for plan years after July 1, 2020.
• Air Ambulances: Air ambulances are now covered by the bill. Like terrestrial out-of-network bills, payment is based on the geographic median.
• Patient Billing: The requirement to bill patients is changed in the new draft from “within 30 days” to “within 45 days.” Language also was added indicating that the 45-day period starts after the claim has been adjudicated. However, the draft legislation does not include a definition of adjudicated.

Key Items Retained:

• Prohibition on Common Contracting Provisions: Bans gag, anti-tiering/steering, all or nothing and most-favored nations clauses.
• Health Plan Directory Updates: If a patient provides documentation that they received incorrect information from an insurer about a provider’s network status prior to a visit, the patient will be only responsible for the in-network cost-sharing amount.
• Price Estimates: Requires providers and health plans to give patients good faith estimates of their expected out of-pocket costs for specific healthcare services and any other services that could reasonably be provided, within two business days of a request.
• All Payer Claims Database (APCD): Creates a non-profit, non-governmental APCD base. Five of the 11 appointments, excluding the chair, to the advisory committee come from CMS and HHS.

Takeaway

Moving to a geographic median now aligns the HELP bill with the House Energy and Commerce’s draft surprise-bill legislation and the Administration’s preferred approach. It may feel like Congress is starting to coalesce around a mechanism for calculating payments to providers for out-of-network services in instances covered by the legislation. However, as Lee Corso, an ESPN’s college football analyst, would say, “Not so fast my friend.” 

During the hearing, Senator Patty Murray (D-Wash.), the HELP Committee’s top democrat, indicated support for “baseball-style” arbitration, which is the approach taken in New York to address surprise bills. And she’s not alone as there are other surprise-bill proposals based on arbitration.

Additionally, former U.S. Solicitor General Paul Clement, most famous for arguing the initial challenge to the Affordable Care Act at the Supreme Court, has posted a whitepaper calling into question the constitutionality of a geographic-median payment mechanism. The paper outlines why a mandated- payment calculation applied to commercial-payment violates the Takings Clause of the Fifth Amendment.

The whitepaper represents an escalation of lobbying efforts as it might cause some Congressmen and Senators to rethink their support for a geographic-median approach. And, it signals that if a geographic- median approach is passed into law, it will undoubtedly be challenged in the courts as soon as providers have standing to file suit.

The next date to watch is June 26 when the HELP Committee is scheduled to mark up the draft.