The Biden administration released a rule Thursday that addresses one of the most fought-over provisions of a coming ban on surprise medical bills.
The rule details how a new class of medical billing arbiters will decide the fair price for emergency medical care, one of the largest sources of surprise bills. The rule received a positive reaction from consumer advocates and some legislators who drafted the law, but it “disappointed” emergency physicians, who fear it will lead to unreasonably low rates.
The ban on surprise medical bills was passed by Congress and signed into law by President Donald J. Trump last winter, but it is the Biden administration that has been fine-tuning the policy — amid intense lobbying from insurers, medical providers and advocates.
In a dispute between an insurer and a provider over an out-of-network bill, the rule directs the arbiters to focus first on the median price that other doctors and hospitals in the area have negotiated for that service.
This was the second major rule the Biden administration released on surprise billing this year, before the law takes effect in 2022. Taken together, the two regulations detail how the federal government will end what patients, academics and legislators often describe as one of the most exasperating practices in American medicine.
“We’re taking patients out of the middle of the food fight, and we’re also providing a clear road map on how you can resolve that food fight between the provider and the insurer,” said Xavier Becerra, secretary of Health and Human Services, in an interview.
Surprise medical bills happen when a doctor or other provider who isn’t in a patient’s insurance network is unexpectedly involved in a patient’s care. Patients may go to a hospital that accepts their insurance, for example, but get treatment from emergency room physicians or anesthesiologists who don’t — and who then send patients big bills directly.
Millions of Americans receive these type of bills each year. As many as one in five emergency room visits result in such a charge, and the rate of surprise billing is similar for women giving birth. Some coronavirus patients have received exceptionally high surprise bills. That includes a Pennsylvania woman who was unconscious and intubated when an out-of-network air ambulance transported her between hospitals. She was billed over $50,000 for the service.
Patients like that are essentially caught in the middle of a dispute between a doctor and an insurer, who disagree on the fair price for a given medical service. The new rule released Thursday lays out how newly hired billing arbiters will decide who, in those fights, is right.
Under the federal law, both the insurer and the doctor will tell an arbiter what they believe the appropriate price for the service should be. The arbiter will then look at a variety of factors to decide which of the two rates to pick.
The law that Congress passed has six factors the arbiters can consider. The rule released Thursday, however, directs the arbiters to focus on one of those factors as their starting point: the median prices that have been negotiated in the area for the same medical service.
The arbiter “must begin with the presumption” that this is “the appropriate out-of-network rate,” the rule states. They may consider other factors listed in the law, such as how sick the patient was or whether the hospital or doctor had made good faith efforts to join insurance networks, if they receive “credible information” from either party involved in the dispute on those subjects.
The administration on Thursday also opened applications for organizations to become arbiters. Applicants must have experience in “billing and coding” and “arbitration and claims management.”
The rules on how arbiters settle billing disputes are seen as especially important because they will determine whether the ban on surprise billing ultimately saves money for consumers, insurers and the federal government. The Congressional Budget Office estimated last year that the surprise billing ban would save the federal government $17 billion and reduce private insurance premiums 0.5 percent to 1 percent.
Most experts expect that starting from the in-network prices will ultimately lead to lower reimbursement rates. The Biden administration stated in the rule that the decision “will aid in reducing prices that may have been inflated due to the practice of surprise billing prior to the No Surprises Act.”
Trade groups representing health care providers, including emergency room physicians and hospitals, had generally urged the Biden administration to do something different: ensure that arbiters use all six of the factors listed in the law when they make up their minds. They argue that Congress intended for arbiters to have that broader deliberation, and that focusing on median in-network rates will lead to lower prices that are untenable.
“We’re pretty disappointed because this is entirely against congressional intent,” said Laura Wooster, senior vice president for advocacy at the American College of Emergency Physicians. “I’m not seeing how small physician groups will be able to work with this, and keep their doors open. Now is not the time to take away resources from emergency physicians.”
Congressional Democrats quickly applauded the new rule.
“Today’s rule implements the No Surprises Act just as we intended,” Senator Patty Murray of Washington and Representative Frank Pallone of New Jersey, who lead health committees in their chambers, said in a joint statement. “It establishes a fair payment resolution process between providers and insurers while finally taking patients out of the middle.”
Secretary Becerra said he expected the rule to generate “a lot of animated discussion on the part of the stakeholders in the industries” but felt the Biden administration had created a way to settle billing disputes that was straightforward and fair. “It will give patients some peace of mind that they don’t have to stand the chance of going bankrupt just because they had to go out of network,” he said.
Republican reaction to the rule wasn’t immediately available. Stakeholders are still reviewing the 521-page rule, and the administration will accept comments on it for the next 60 days. Given the relatively short timeline — the surprise billing ban is set to start in three months — major changes are not expected.
