Surprise billing happens when someone goes to a hospital covered by their insurance network only to be hit with unforeseeable bills because the doctor or specialist who treated them is out of network. Congress has for years talked about ending the practice, but even two weeks ago it seemed clear that a bill to end surprise medical billing was dead in the water yet again, as more than 115,000 people are currently in US hospitals with COVID-19, according to the COVID Tracking Project.
But in a turnaround that stunned observers, Congress finally acted to end the exploitive practice.
The coronavirus aid bill contained legislation to end surprise medical billing, almost exactly one year after the first major push to fix the issue collapsed at the last minute. Once the legislation is signed into law, doctors will no longer be able to charge emergency room patients unexpected, exorbitant fees that must be paid out of pocket.
Insurance companies will now be forced to cover those bills. If there is a disagreement on cost between the insurer and healthcare providers — the doctors, specialists, or hospitals issuing the bills — then the price will be decided by an independent arbiter.
The deal only came together after some last-minute changes were made to appease doctor and hospital groups. The final concession, demanded by Senate Majority Leader Mitch McConnell, is that arbitrators are not able to consider Medicare or Medicaid rates — which are much lower than private market rates — when ruling on the cost.
“Without question the big winners here are patients, who will be protected from surprise bills. Patients have effectively been held hostage to a fight between insurers and healthcare providers,” said Larry Levitt, executive vice president of health policy at the Kaiser Family Foundation.
Levitt said the pandemic shifted the balance of power away from insurance companies and toward providers, allowing them to push for the final bill to lean more in their favor. Still, patient advocates see the bill’s passage as a major win, if an imperfect one.
“It’s less than ideal to prohibit the arbiter from considering Medicare/Medicaid payment rates because they often better represent the true costs,” said Jen Taylor, director of government relations for Families USA. “Above all else, it protects consumers, which was always our number one goal.”
While all sides believed patients should not be hit with surprise medical bills, insurers did not want to pick up all the slack and providers did not want to lose their ability to charge higher prices than in-network rates. These industries battled publicly and privately to avoid having to absorb the cost of a fix.
What started as a gap in the system was turned into a profit driver for private equity firms. Two private equity giants, Blackstone Group and KKR & Co., bought up the largest physician staffing firms which led to more doctors going out of network and charging exorbitant surprise bills.
These private equity firms then created a dark money front group called Doctor Patient Unity and spent tens of millions of dollars successfully opposing legislation to end private billing, denouncing it as “government rate setting.”
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Two weeks ago, all signs pointed to a surprise billing fix being doomed. There had long been agreement on a fix between the Senate Health Committee and the House Energy and Commerce Committee. But Rep. Richard Neal, the Democratic chair of the Ways Committee, had asserted his jurisdiction and blocked the deal. Neal was the biggest barrier to a fix over the past year as he pushed for a more provider-friendly alternative.
According to multiple Hill sources, House Speaker Nancy Pelosi got involved the week before last, holding multiple talks with Neal on the issue. Pelosi’s involvement sparked a last-minute round of negotiations wherein Neal succeeded in tilting the bill slightly further in favor or providers, then ultimately agreed to support it.
The initial plan hatched between the House and the Senate was to force insurance companies to cover all emergency room bills and allow health providers to charge only the median in-network costs for fees. Providers fiercely opposed this “benchmarking” plan.
Negotiators agreed to adopt Neal’s preferred arbitration system over benchmarks, but Neal would still not drop his objections, according to Congressional sources. The tipping point, according to one House aide, was agreeing to remove even a peripheral reference to benchmarks involving preliminary payments made by insurers.
That got Neal on board but McConnell remained an obstacle. McConnell’s views on surprise billing had long been mercurial. He had not publicly come out for or against any plan. But there was speculation that McConnell wanted to grant a legacy item to his friend, Senate Health Committee Chair Lamar Alexander, who is retiring in January and coauthored the original bipartisan legislation to end surprise billing. McConnell ended up supporting the plan, but only after demanding one more change that banned consideration of Medicare and Medicaid prices in arbitration.
These late changes softened opposition from providers and raised concerns that doctors and hospitals will be able to continue to inflate prices. The Department of Health and Human Services will oversee the crafting of the arbitration system and a provider-friendly administration in the future could stack the deck in their favor.
But Loren Adler, a health policy analyst at the Brookings Institute, said those fears are overblown. The arbitration process also excludes consideration of the unnegotiated prices that providers were previously charging, and Adler said he thinks the ultimate result will be prices falling back to within in-network norms.
“I don’t think [arbiters] were going to consider Medicare rates to begin with,” said Adler. “It’s a win. Consumers no longer have to fear surprise bills. ... I would have written a somewhat different law if I was writing it myself, but politics exists, so.”