Provider-friendly surprise billing fix, more funds for hospitals in year-end spending bill

Dive Brief:

  • Year-end legislation bipartisan leaders finalized late Sunday includes a long-awaited ban on surprise medical bills, along with $900 billion in new COVID-19 relief, according to top Democrats House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer.
  • The sweeping package comes less than a week after leaders of major House and Senate committees announced they had finalized a surprise billing fix that would resolve any disputes between payers and providers on out-of-network bills via third-party arbitration, a method preferred by providers. The news was a blow to insurers, which lobbied for tying payments to in-network rates.
  • Congress is expected to pass the package on Monday alongside a $1.4 trillion government funding deal. It’s the second-largest piece of emergency relief ever, after the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act passed in March.

Dive Insight:

If passed, the massive package includes another round of direct payments to individuals, loans for small businesses and enhanced unemployment benefits. It doesn’t include liability protections for businesses, an initial sticking point for the deal and something the hospital industry and Republicans wanted. 

On the healthcare side, the legislation includes $22 billion for the health-related expenses of state and local governments, additional funding to boost the $175 billion provider relief fund, help distribute vaccines and establish a national COVID-19 testing and contact tracing system, according to Pelosi and Schumer.

It also includes a bipartisan fix banning surprise billing, something Washington has deliberated for the past two years but failed to take concrete action on amid fierce industry lobbying for their preferred fixes.

Patients receive surprise bills when they unknowingly receive care at an out-of-network facility, or from an out-of-network provider at an in-network facility. Tackling the exorbitant bills, which can be tens of thousands of dollars, was a key priority for Congress coming into 2020, before the coronavirus took over nearly all health policy debates.

The final fix included in the legislation is almost exactly the same as the initial proposal agreed upon last week by key Congressional leaders, Politico reported on Sunday. The measure, which rejuvenated the surprise billing debate after a long stall, would hold patients harmless for any surprise bills received for out-of-network emergency services and air ambulances, along with much out-of-network care provided at in-network facilities. Patients are only responsible for any in-network cost sharing.

Any disputed bills between payers and providers will go to third-party arbitration, an approach preferred by hospitals and other providers. Insurers had lobbied to instead tie the bill amount to in-network rates, a fix doctors and physician staffing companies, many backed by deep-pocketed private equity groups, spent millions to oppose.

“There will never be a broader bipartisan, bicameral solution to ending surprise medical billing and we should deal with it now,” Senate health committee Chairman Lamar Alexander, R-Tenn. said in a statement.

And the final text of the surprise billing fix includes additional concessions to providers, according to Politico.

It prohibits the arbiter from taking Medicare and Medicaid rates into consideration when deliberating an out-of-network charge. The American Hospital Association asked Congress to make that change last week, as Medicare typically pays significantly less than commercial insurers. The change should result in more favorable arbitration outcomes for providers, so is a loss for payers and employers, along with patient advocates who saw that provision as a guardrail against providers hiking prices.

However, arbiters are told to take the median in-network rate for an item or service into account, and they’re banned from considering providers’ billed charges, which are often significantly higher than what a patient ends up paying.

And in a win for payers, the final text waters down a provision that would have forced them to disclose to employers information on drug pricing and rebates through their contracts with pharmacy benefit managers, Politico reported. Instead, the legislation requires payers to submit information on prescription drug spending and medical costs to relevant federal agencies, which the government will use to track drug pricing trends.

The surprise billing measure will save an estimated $18 billion, which will be reinvested in community health centers and other health programs, lawmakers said.

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