In early February, two federal bills targeting surprise billing in healthcare advanced out of committee.  On February 11, the House Education and Labor Committee passed the Ban Surprise Billing Act (H.R. 5800), which was introduced by Chairman Rep. Bobby Scott (D. – Virginia) and Ranking Member Rep. Virginia Foxx (R. – North Carolina).  One day later, the House Ways and Means Committee unanimously advanced the Consumer Protections Against Surprise Medical Bills Act (H.R. 5826), led by Chairman Rep. Richard Neal (D. – Massachusetts) and Ranking Member Rep. Kevin Brady (R. – Texas).  Both bills would prohibit providers from balance billing patients for surprise medical bills and would limit patients’ cost-sharing to in-network amounts.  The two competing bills must be reconciled before the full House can vote on the issue.  Leaders hope to include the final product in a spending bill that must pass Congress by May 22.

Similar scopes of coverage

The competing bills are substantively similar in several ways.  Each bill applies to out-of-network emergency claims, to post-stabilization inpatient services provided to patients who are admitted to the hospital through the emergency room, and to non-emergency services provided at in-network facilities by out-of-network providers.  The Ban Surprise Billing Act also covers air ambulance services.  Additionally, both bills apply to all individual and group health plans (both fully- and self-insured) in the group and individual markets, but do not apply to federal programs such as Medicaid or the Federal Employees Health Benefits Program.  The Ban Surprise Billing Act also extends to grandfathered health plans.

Notice requirements

The House Education and Labor Committee’s Ban Surprise Billing Act permits providers to balance bill patients who knowingly consent to receive an out-of-network procedure in certain circumstances.  When patients schedule such services, the provider must give an oral and written notice that the provider is out-of-network, explain the patient’s cost-sharing responsibilities and, in the case of out-of-network providers at in-network facilities, provide a list of in-network provides at the facility that are able to furnish the service.  If the patient signs and dates the notice not less than 72 hours prior to the services being received, then the provider may balance bill the patient.  This does not apply to services furnished by an out-of-network provider if there is no in-network provider who can furnish the same services at the in-network facility, or to ancillary services provided by out-of-network providers at an in-network facility—in such instances, the out-of-network provider is prohibited from balance billing the patient.  Ancillary services include items and services that are: (i) related to emergency medicine, anesthesiology, pathology, radiology, and neonatology – whether or not provided by a physician or non-physician practitioner; (ii) provided by assistant surgeons, hospitalists, intensivists, and other specialty practitioners that Department of Health and Human Services (HHS) may specify; and (iii) diagnostic services, including radiology and laboratory services.

When patients schedule non-emergency services with out-of-network providers, the House Ways and Means Committee’s Consumer Protections Against Surprise Medical Bills Act requires providers to prepare a “good faith estimate” of the expected charges for the service.  The provider must provide that estimate to the patient’s insurer, or directly to the patient if uninsured.  Health plans also are required to submit an “advanced explanation of benefits” to members who schedule non-emergency services, describing whether the provider is in-network or out-of-network.  For in-network providers, the health plan must notify the member of the contracted rate for the service.  For out-of-network providers, the health plan must pass along an estimate of the cost of the service as received from the provider, as well as an estimate of the member’s cost-sharing responsibilities given current status of the member’s deductible and out-of-pocket maximums.  In the case of uninsured patients, the bill directs HHS to establish an arbitration process for the resolution of claims when the charge for the service is “substantially in excess” of the estimate provided.

Different approaches to payment dispute resolution

The central issue in the surprise billing debate is at what rate health plans would be required to reimburse non-participating providers.  The two House bills provide different solutions for how to resolve payment disputes.  The Ban Surprise Billing Act sets health plans’ default payment obligation at the 2019 median in-network rate inflated for subsequent years based on the Consumer Price Index for All Urban Consumers (CPI-U).  When that rate is $750 or more (or $25,000 or more for air ambulances), providers can request a review of the payment rate by initiating binding arbitration.  When determining the payment, the arbitrator must consider several factors: (i) the median in-network rate; (ii) the providers’ level of training, education, experience, and quality of outcomes; (iii) the providers’ market share; and (iv) extenuating circumstances such as complexity of the service provided.  The arbitrator is prohibited from considering the providers’ billed charges.  The bill is to be enforced primarily through state-run audit processes developed in collaboration with HHS.  HHS is also directed to establish a process by which patients can submit complaints to the Department of Labor, which is charged with investigating and resolving complaints within 60 days.  HHS may also impose a civil penalty upon providers of up to $10,000 per violation.

The Consumer Protections Against Surprise Medical Bills Act, on the other hand, does not set a default payment rate for health plans.  Rather, the bill empowers arbitrators to decide what health plans must pay if the parties do not reach a voluntary agreement during a 30-day negotiation period.  The parties submit their proposed payment rates and supporting information to the arbitrator, who must then choose one of the proposed rates after considering the median in-network rate and the information submitted by the parties.  Arbitrators are prohibited from considering usual and customary charges or billed charges.  Parties may continue negotiating with each other throughout the arbitration process, and any agreement reached before the arbitrator’s final decision will be implemented.  The bill would be enforced by HHS which can impose a penalty upon providers of up to $10,000 for each violation.

Both bills’ payment resolution processes share some similarities.  First, both bills defer to state payment standards and dispute resolution processes for state regulated individual and group health plans; they contain no preemption language and, instead, expressly defer to applicable existing state law.  Second, both bills permit parties to select an arbitrator by mutual agreement from a pool of individuals certified for the job by a process yet to be established by HHS.  Absent agreement, HHS will choose the arbitrator.  Third, both bills allow parties to aggregate claims related to the same condition.  The Ban Surprise Billing Act limits this type of bundling to claims furnished within 30 days of each other.  Finally, both bills require that the losing party pay the arbitrator’s cost (but not attorney fees).  The Consumer Protections Against Surprise Medical Bills Act also requires both parties to split an administrative fee to cover the cost of running the arbitration process.  Notably, the Ban Surprise Billing Act states that the arbitrator’s decision is final and binding, but the Consumer Protections Against Surprise Medical Bills Act lacks such language.  It is unclear, what, if any, appeal rights an aggrieved party may have after an arbitrator’s decision.

Industry reaction

The Consumer Protections Against Surprise Medical Bills Act is supported by major provider industry groups including the American Hospital Association, the American Medical Association, the Federation of American Hospitals, America’s Essential Hospitals, and the Association of American Medical Colleges.  Meanwhile, insurance industry groups have expressed their opposition to the Consumer Protections Against Surprise Medical Bills Act, but have not officially endorsed the Ban Surprise Billing Act.  America’s Health Insurance Plans (AHIP) has announced that it will not support legislation that does not establish benchmark payment rates, and the Coalition Against Surprise Medical Billing has described the Consumer Protections Against Surprise Medical Bills Act as a “major step backwards.”

States test different solutions

While Congress debates a federal solution, over 25 states have already passed laws protecting patients from surprise billing.  The state solutions vary widely.  For example, Colorado sets health plans’ reimbursement obligation at the median in-network rate and allows for arbitration to resolve disputes.  Oregon provides two different payment formulas anesthesia and non-anesthesia claims.  Texas entrusts arbitrators to determine payment rates.  New Mexico mandates that health plans pay the 60th percentile of FAIR Health’s allowed amount benchmark for the particular service in the specific geographic area, but requires that no payment be less than 150% of the Medicare reimbursement rate.  Connecticut requires payment at the highest of three values: (1) the allowed amount under the member’s plan, (2) the FAIR Health 80th percentile charge benchmark, or (3) the Medicare reimbursement rate.

The momentum at the state level is growing.  Recently, six governors addressed surprise billing in their “2020 State of the State” speeches.  Indiana Governor Eric Holcomb announced that ending surprise billing will be one of his top legislative priorities.  New York Governor Andrew Cuomo proposed expanding New York’s existing surprise billing law to require hospitals and emergency room doctors to participate in the arbitration process to set payment rates.  State reforms like these protect consumers with commercial health plans, but do not extend to self-insured employer-sponsored plans which are regulated by the federal government.

We previously reported on the 2019 effort to enact federal legislation to end surprise billing.  See Trump Administration and Congress Are Moving Quickly on Health Care Price Transparency and Lowering Costs.