Regulatory Surprise in Surprise Billing Law
“The law is the law.” That’s an old cliché that no longer applies in the nation’s capital, at least when it comes to the popular new statute that was designed to protect patients from surprise bills for medical services while keeping the medical system healthy.
The Washington, D.C., bureaucracy is staging a quiet, rearguard action to rewrite the law — called the No Surprises Act — in ways that will hurt the patients and the healthcare system it was supposed to help.
No patient should be blindsided by high out-of-pocket costs for medical bills they were not expecting because their insurance didn’t contract with the medical providers they saw. At the end of 2020, President Trump signed into law consumer protections for out-of-network billing of patients and a system to arbitrate payment disputes between health insurance companies and providers.
The basic protections against surprise billing remain. But the rules that are needed to implement the arbitration part of the law differ radically from what lawmakers and the president approved. That’s where patients will feel the pinch.
Unelected regulators at the Department of Health and Human Services have decided to ignore the careful compromise that Congress crafted over more than two years. The law as written creates an independent dispute resolution process that would decide an amount owed that is fair to all sides. The law says that an arbiter must weigh several factors, including the median in-network rate, the training and experience of the medical provider, the complexity of the services rendered, the contracted rates, and any other information submitted by the disputing parties. Such information is crucial to understanding the often-unique circumstances of each case.
But that’s not what the implementing rules call for. Instead, the regulators have decided on their own that the arbiter should use a single factor or benchmark — the median rate for services (as if those services had been in-network or, in other words, covered by insurance). This is the first time the government has instituted a price-setting scheme for healthcare services in the private market. The other factors are discarded even though Frank Pallone (D-NJ), who chairs the Energy and Commerce Committee which authored the law in the House, laid them out clearly in a press release about the final compromise which he, and the rest of Congress voted for.
This one-factor, price-setting method will set payments artificially low. Indeed, the median rate is determined by insurance companies, not by any market force. Worse, over time, it will become a ceiling for such payments. Why would insurance companies negotiate a higher rate in-network if they could just pay the government benchmark? The healthcare system will be forced to absorb that faulty rate. Congress rejected this method because it determined it was unfair.
The bureaucrats’ reinterpretation of the law will unfairly benefit health insurance companies and harm the patients who were supposed to be the law’s biggest winners. The uncertainty created by the new rules will not reduce costs to patients but will likely increase profits for insurance companies.
The result will be cutbacks in medical care. Many patients will be forced to stop seeing “their doctor” because the law will encourage insurers to kick doctors out of network. That goes directly against the spirit of the law, which was to take patients out of the middle and make it easier for them to get care. There is no obligation for health insurers to maintain adequate networks of physicians to provide appropriate access to care for patients, in either the bill as written or in the implementation scheme. This is especially true for emergency medical care, where patient access is ensured by the Emergency Medicine Transfer and Labor Act of 1986 (EMTALA), but no mechanism for appropriate reimbursement has ever been instituted.
Could there be a worse time for this than during a pandemic? Already strained emergency departments will have to shoulder the burden of undercut fees. The impact of those reductions will be felt most deeply in rural and underserved communities where the healthcare safety net is already tattered. A one-size-fits-all benchmark rate will prevent medical facilities that serve vulnerable populations from recruiting and keeping the providers and services they need.
Simply put, many emergency physician practices will be unable to continue to operate in the areas where patients need them most. Millions of people will have less access to the lifesaving emergency care they deserve. But time is short. The health care system will start feeling the negative effects of the benchmark as the year progresses. Insurance companies are already using the new rules to force cuts in physician payments.
Patients shouldn’t have to fear receiving surprise medical bills. They also deserve to have continued access to excellent emergency care. Congress carefully balanced the law and made sure it was friendly to patients and providers. It should be implemented that way.
Dr. Vidor E. Friedman is a former president of the American College of Emergency Physicians.
