CMS has released an interim rule, based on the No Surprises Act, that puts the kibosh on most so-called surprise billing. Bear in mind that this sneaky practice, greatly accelerated by private equity buying up outsourced hospital practices, like ER doctors, afflicts members of employer and individual plans.
Even though the proposed rule is subject to the usual 60 day comment period, public opinion is so opposed to balance billing that none of the commentary I have seen thus far expects the rule to change much prior to its planned effective date, in January 2022.
First, from Modern Healthcare:
The Biden administration on Thursday unveiled the first in a series of rules aimed at banning surprise billing.
The interim final rule bars surprise billing for emergency services and high out-of-network cost-sharing for emergency and non-emergency services. It also prohibits out-of-network charges for ancillary services like those provided by anesthesiologists or assistant surgeons, as well as other out-of-network charges without advance notice….
Under the new rule, health plans that cover emergency services cannot use prior authorization for those services and must pay for them regardless of whether the clinician is an in-network provider or emergency facility. Likewise, insurers can’t charge their enrollees higher out-of-pocket costs for emergency services delivered by an out-of-network provider. They also have to count beneficiaries’ cost-sharing for those emergency services toward their in-network deductible and out-of-pocket maximums.
Plans will have to calculate consumers’ out-of-pocket expenses based on a state’s all-payer model agreement or other applicable state law in most cases.
The rule seeks to implement key parts of the legislation protecting patients from being billed by out-of-network doctors who provide treatment at in-network hospitals, as well as protecting them from surprise bills for both emergency and nonemergency care…
Out-of-network charges have added to medical debt and rising out-of-pocket payments for consumers: An April 2021 study in the journal Health Affairs found that patients receiving a surprise out-of-network bill for emergency physician care paid more than 10 times as much as in-network emergency patients paid out-of-pocket.
The interim final rule is expansive. Emergency services, regardless of where they are provided, would have to be billed at lower, in-network rates without requirements for prior authorization.
The rule also bans higher out-of-network cost-sharing, such as copayments, from patients for treatment they receive either in an emergency or nonemergency situation. Under the rule, any coinsurance or deductible can’t be higher than if such services were provided by an in-network doctor…
Out-of-network charges from anesthesiologists, pathologists, radiologists and assistant surgeons increase spending by $40 billion annually, according to researchers at the Yale School of Public Health.
Yves here. The ER changes are a big deal because patients are now at risk of large bills if an ambulance brings them to a hospital not in their network. Current insurance rules assume that patients who are in a crisis situation are supposed to tell the EMTs to go only to a network hospital. And what if the EMTs don’t want to take the liability, say because they need to get the patient stabilized as quickly as possible, or the hospital they’ve chosen specializes in what is wrong with the patient (say a trauma center or known for having the diagnostic capacity to treat strokes quickly), or the EMTs are busy and can’t endanger other patients by driving further than they need to?
That isn’t to say that the medical industrial complex didn’t score some wins. Again from Modern Healthcare:
Likewise, if state laws don’t specify that an insurer must pay a specific price for a given service, providers and insurers will have to agree to an amount or go through an independent dispute resolution process.
The Biden administration is still working out the details about how the dispute resolution process will work. But Congress laid out the broad-brush strokes in December’s No Surprises Act, which passed as part of its end-of-year spending package. Providers and insurers will have 30 days to agree to a price for the medical services delivered. And if they don’t settle, they’re supposed to enter arbitration, during which each side will present a final offer and make their case for why their recommendation is best. The arbitrator must then pick one of the two offers. But they can’t split the difference.
Congress’ decision to go with baseball-style arbitration to settle payment disputes between providers and insurers was a victory for providers since insurers’ preferred benchmarking approach would have led to lower payments for doctors and hospitals.
This is a welcome change since 2019, when a bill in California intended to end surprise billing quickly and unceremoniously disappeared. As we wrote then:
This article demonstrates the power of health care industry incumbents. “Surprise billing” is pure and simple price gouging, particularly since hospitals routinely game the system, such as by scheduling doctors who are not in a patient’s network on his operation, even when the patient has gone to considerable lengths to try to prevent that.
All these hospitals did was the equivalent of yelling “Boo” at the legislature, and the legislation to combat surprise billing was yanked, even though there has been a great deal of deservedly critical press coverage of this abuse.
Keep in mind that powerful business interests are skilled at getting sympathetic actors to act as their human shields. For instance, TBTF banks regularly find community banks who will serve as the fronts for regulations that very much benefit big behemoths. Here, as economist Eileen Appelbaum demonstrated via considerable sleuthing, Blackstone and KKR, by buying up major outsourced hospital practices like hospitalists, had been the big drivers in recent years in a very impressive increase in both the frequency and cost of balanced billing episodes. So it’s a welcome departure to see private equity take a big loss on one of their destructive cons.