Analysis: No surprise, legislators split on surprise-bill draft legislation

On June 12, the House Energy and Commerce Health Subcommittee held a hearing on its draft legislation addressing surprise bills. Not surprisingly, the committee was split on whether or not to limit payment for out-of-network providers to the median contracted rate in the geographic area, which is what is currently in the draft legislation, or some form of baseball-style arbitration if the payment amount is contested.

Rich Daily’s June 12 HFMA article does a nice job of summarizing the hearing and describing the issues related to each approach. 

The CBO has the geographic-median-payment-only-approach saving $25B over 10 years. An arbitration option for any bill over $750 is scored as saving $20B over the same period.

My guess is the geographic-median approach, which is favored by health plans and consumers, will be successful, but I wouldn’t bet a paycheck on it. If the geographic-median approach does win out in the final legislation, it will be crucial to watch how the geographic median is calculated. Also, none of the drafts currently include language preventing balance billing from air ambulance services, which is a consumer pain point. 

Takeaway

The U.S. Senate HELP Committee draft proposes allowing each plan to calculate its own geographic median. 

However, if the final legislation includes payment based on a geographic median, a better approach would be to calculate the geographic medians based on the prevailing commercial rates across all health plans because:

• It would negate the market clout many plans have that could inappropriately compress physician payment rates.
• It would also prevent issues like in New York where “usual and customary rate” calculated by Ingenix was consistently lower than the actual average, which led to the creation of Fair Health, Inc. as part of a settlement with the New York state attorney general.

The Senate HELP draft includes funding for the creation of an All Payer Claims database (APCD), compels ERISA plans to contribute data to the APCD and requires state APCDs to contribute data if they want access to the ERISA plan claims data. This might be, depending on the details, a better alternative than allowing each plan to calculate its own geographic median. 

Here is what to keep an eye on: For next week’s Senate hearing, discussion of how to determine payment in instances where a patient receives services from an out-of-network provider. The three options include:

1. Basing payment on the geographic median.
2. Basing payment on the geographic median for bills less than $750 and allowing for baseball-style arbitration for claims greater than $750, where the payment amount is disputed by the provider.
3. “Network matching,” which would require physicians who have privileges at a hospital to either contract with all of the health plans for which the hospital is in network or for the hospital to submit a global bill for all services rendered during the admission or service and then pay the physicians who delivered the care. 

Also, you’ll want to stay to see if there’s any testimony from the witnesses (see list of invitees) on the prohibitions of various, common clauses (gag, disclosure of price/quality data, all or nothing, anti-tiering and most-favored-nation) found in managed care contracts. 

These prohibitions are generally opposed by plans and providers alike. Expect to see a revised draft of the Senate HELP bill (Lower Health Care Costs Act) shortly after the hearing. It will likely indicate a preferred-payment approach. I would not expect to see it include air ambulances on the list of providers/circumstances that are covered under the surprise bill prohibition.