Millions of insured Americans receive surprise out-of-network bills each year, often from providers such as emergency room physicians that the patient has no choice in selecting for care. Surprise bills can be expensive and financially devastating for patients and their families. They also increase costs for everyone because the threat of surprise billing allows certain providers to extract higher payments for in-network services too. These higher prices show up in higher premiums for consumers and employers, increasing health care spending by about $40 billion each year.
Thanks to the No Surprises Act, patients are only weeks away from being protected from the abusive practice of surprise medical bills. In December 2020, Congress passed the law banning surprise medical billing in many situations starting on Jan. 1, 2022. It has the potential to protect patients from surprise bills and lower their health care costs. But whether it actually does depends on how the law is implemented, a process that is underway now. This fall, the Biden Administration released another regulation to implement the law — this time focusing on the independent dispute resolution (IDR) process to be used for determining payment for out-of-network services.
RELATED: Arnold Ventures submitted public comments to the Administration on the initial surprise billing regulations earlier this year.
The Biden Administration’s approach to designing the IDR process is strong and helps ensure the law fulfills its promise. We applaud the Administration for implementing the law in a manner that benefits patients, consumers, and employers, and urge the Administration to continue to implement the No Surprises Act without delay. The rule instructs arbitrators to use the qualifying payment amount (QPA) as the primary factor for determining payments for out-of-network bills in the IDR process, which is supported by both the statute itself as well as the Congressional Budget Office’s (CBO) analysis of the law. The QPA is generally the median rate negotiated between insurers and providers in the market and is usually well above Medicare rates — for some specialties, in-network rates are on average between 300 – 400% of Medicare.
The hospital, physician, and private equity-backed groups that oppose the Administration’s approach want the arbiter to consider other factors that would allow them to continue drive towards the excessive rates that they have extracted in the past — such as 800% of Medicare for out-of-network anesthesiology services — by squeezing the patient directly through surprise bills.
The Administration’s instruction to the arbiter to use the QPA as the primary factor is imperative for creating guardrails around the IDR process and helping ensure that the same providers engaging in the unfair practice of surprise billing are not able to abuse the IDR process to continue receiving inflated payments at the expense of consumers. It protects consumers, employers, and taxpayers by not only eliminating surprise bills, but by also ensuring that high health care prices aren’t passed along to consumers and employers in the form of higher premiums.
Addressing surprise billing is the first step in addressing egregious provider prices and increasing health care affordability for everyone. As implementation continues, the Administration should maintain the strong protections outlined in the IDR rule. Further, it is critical to defend against efforts by powerful hospital, physician, and private equity-backed groups to weaken the IDR process or the law more broadly. Changes to the Administration’s approach to the IDR process will lead to higher costs for consumers, employers, and taxpayers.
Read our full comments on the initial rule below or here.