Congress Agrees to Preliminary Compromise on Surprise Billing

Several congressional committees recently announced a new compromise plan that may finally end the long deadlock over surprise billing reform. Pre-Covid-19, surprise billing made a lot of noise in Washington DC as multiple members of Congress pushed for a resolution to this long-standing problem. Reformers landed in two camps, with one favoring a provider backed arbitration method for settling out-of-network (OON) claims, and the other pushing for the insurance industry’s preferred method of using “benchmarked” rates calculated by analyzing regional in-network claims.

Various committees in both the House and Senate had created their own plans that tried to balance the two competing factions, often by allowing for arbitration only on claims above a certain amount, such as $750. However, none of these found majority backing, and the effort appeared to die in early 2020 as the Covid-19 pandemic took center stage.

Congress did continue to work on the solution, albeit more quietly. Their new compromise seeks to remove benchmarking all together, a big win for providers. In its place, the plan calls for insurance payers and providers to negotiate rates directly. If no solution is reached, arbitration can be used regardless of the claim amount. Presumably, the plan seems to rely on natural pressure to keep OON rates down. When providers and payers submit their proposed rates to arbitrators, the party with the more conservative number should, in theory, be picked. Hopefully, this will keep the parties from proposing unreasonably high or low amounts.

The new compromise also includes two important patient protections. OON providers must notify patients in advance of their network status, and give patients an estimate of their charges 72 hours prior to care. This policy targets “hidden” providers such as radiologists, laboratories, and anesthesiologists who provide care, often during or after patients are seen in a hospital or surgery center, without meeting the patient prior.

The committee members who announced the compromise stated they hope to finalize a bill quickly and attach it to an end-of-year funding package. While it promises to help the surprise billing issue, no plan is without its potential negatives. Benchmarking promised a more streamlined method of processing OON claims, decreasing administrative burdens. However, it also can also inadvertently encourage insurance companies to keep their networks small since they know OON charges will be controlled by in-network averages. Arbitration prevents this, but may lead to higher charges and make the process of settling OON claims even more time-consuming than it already is. Regardless, in this case, an imperfect solution is better than no solution.