Surprise billing rule has providers fuming over insurer-friendly policies
Providers are crying foul about a regulation from the Biden administration that lays out the process they can use to settle out-of-network billing disputes with payers.
The rule, released Thursday by the Centers for Medicare and Medicaid Services, is the next step in its implementation of the surprise billing ban passed last year by Congress.
Payers praised the regulation as the “right approach,” while providers swiftly denounced it as a “miscue” arbitrarily favoring insurers. At issue is the part of the regulation that lays out the independent dispute resolution process used when there is a disagreement between providers and payers over the fair price for an out-of-network service.
In the IDR process, both the insurer and provider tell an arbiter what they think the appropriate rate for an out-of-network service is. CMS directs the arbiter to presume the “qualifying payment amount,” which is usually an insurer’s median contracted rate for the same service in a geographic area, is the “appropriate” rate and pick the offer closest to that.
In the providers’ minds, that gives insurers too much leverage.
“It goes way beyond protecting patients. It protects insurance companies and gives primary credence to their point of view and data,” said Chip Kahn, CEO of Federation of American Hospitals. FHA is a trade group that represents for-profit hospitals.
For the arbiter to deviate from the offer closest to the QPA, a provider must “clearly demonstrate” why the value is “materially different.” Arbiters are also allowed to consider some information submitted by providers, including patient acuity and a provider’s level of experience.
But Kahn said he interprets the law to say all those factors should be considered equally and there should be no “presumption” that the QPA is the appropriate amount, especially since it relies on insurer data.
The median rate is merely a starting point to begin deliberations, said Kevin Lucia, a research professor with Georgetown University’s Center on Health Insurance Reforms. He emphasized that both the provider and insurer can submit more information to the arbiter to try to change what’s ultimately paid.
“There is an opportunity to be swayed away from the qualified payment amount—above and below—if the information presented is convincing,” Lucia said.
The rule disincentivizes insurers and providers from contracting with one another, because providers would ultimately get paid contracted rates even if they stayed out of network, said Amanda Hayes-Kibreab, partner in King & Spalding’s healthcare and life sciences group. The benefits of contracts go beyond rates, she said. Providers get assured and timely payments and an agreed-upon dispute resolution process.
The regulation burdens providers because the presumption is the QPA is the fair rate and providers have to prove otherwise, according to Claire Ernst, director of government affairs for the Medical Group Management Association.
“We worry that it does place practices at a disadvantage in the process and create hardships,” she said, arguing that the QPA is not reflective of costs because all contracts are different.
The rule forbids the use of billed charges, or providers’ out-of-network charges, in arbitration, which decreases the likelihood that the No Surprises Act will inflate the cost of services, Lucia said. States like Texas, Florida and New York have surprise billing laws that rely on billed charges or usual and customary rates, which ultimately drives up costs and—if insurers pay closer to billed charges—premiums, he said.
“What we saw in this regulation was what Congress envisioned,” Lucia said. “They didn’t want the downstream impact of higher prices and higher premiums. The way they did this was consistent with that vision.”
Some health policy researchers resisted framing the news as good for insurers and bad for providers. Loren Adler, associate director of USC-Brookings Schaeffer Initiative for Health Policy, said insurers would have passed any cost increases onto members anyway, so they’re only marginally affected by the outcome.
The real winners are consumers, patients and employers, who will be protected from surprise bills now that 100% of emergency care is treated as in-network, Adler said.
“There’s a very nice peace of mind that all consumers can take here that is a big win regardless of where the costs in the system end up,” he said.
Meanwhile, insurers cheered the interim final rule as the right interpretation of the law that will protect patients.
“We commend the administration for protecting patients and using an independent resolution process that focuses on affordability,” Justine Handelman, senior vice president of the office of policy and representation for the Blue Cross Blue Shield Association, said in a statement.
It’s the next chapter in the saga over surprise medical bills, which prompted a lengthy fight across on both sides of the aisle on Capitol Hill for two years.
As Congress tried to find a solution to balance billing that held patients harmless in situations beyond their control, providers and insurers argued over how much insurers should pay for out-of-network charges.
Providers fought hard against a “benchmark” approach favored by insurers that would essentially allow the federal government to determine prices for certain out-of-network services.
The legislation that passed in December allowed for an independent arbiter to settle disputes between payers and providers, a solution that appeared to appease all sides of the debate.
Under the law, providers can’t bill patients for out-of-network emergency services or for nonemergency services performed by an out-of-network physician at an in-network facility. HHS issued rules implementing that part of the law earlier this summer with a January 1 start date.
If an insurer and provider can’t come to an agreement on how much the insurer should pay for that service within 30 days, they can enter into the independent dispute resolution process as laid out in the regulation by CMS on Thursday.
While provider groups said the rule “misreads” congressional intent, it was praised by two Democratic leaders who helped draft the legislation.
“Today’s rule implements the No Surprises Act just as we intended and is a significant new protection for families across the country that will save countless patients from being forced to foot the bill for care they thought was covered by their insurance,” said Sen. Patty Murray (D-Wash.), chair of the Senate health committee and Rep. Frank Pallone (D-N.J.), chair of the House Energy and Commerce Committee.
Meanwhile, some doctors in Congress, who are all too familiar with the impacts of regulation on physician payment, are unhappy.
“The HHS second rule on surprise billing is a disaster for patient access,” Rep. Brad Wenstrup (R-Ohio), chairman of the GOP Doctors Caucus, said in a statement Friday. “Congress was very clear that we did not intend to create a de facto benchmark for negotiations when creating the arbitration process in the historic, bipartisan No Surprises Act…Unfortunately, this rule does not meet our intent.”
He argued the rule will disincentivize insurance companies from keeping providers in their networks.