Biden Administration Issues Interim Rule Barring Surprise Billing

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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.

As the Wall Street Journal put it:

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.

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  1. Aumua

    It’s hard to say anything bad about that, I guess. The Biden Administration has surprised me more than once I must say, on some fronts. I’m always waiting for the other shoe to drop of course.

    1. timbers

      Have the same reaction. In a way, Biden on rare occasion does what I half expected Trump to do – delivers a common sense near home run at the margins for the little guy out of the blue – on top of and despite their over all awful policies as a whole. It’s something Obama never did that I can recall, and when he seemed to, it was mostly all repackaged marketing. And complicated. Good example being of course the ACA itself.

      Maybe that’s true “incremental change” some can believe in?

        1. Aumua

          Yes I can’t help but think that the events of Jan. 6 shook those people up a little, maybe made them realize they have to throw a few more crumbs to stave off revolt. It’s ironic that such a positive outcome might have come from an action originating from the Trump supporting vector, since Trump himself did very little to advance working class interests. I mean it’s all backwards. The leftists should really be the ones knocking on their door with a guillotine.

  2. Howard Beale IV

    Remeber several weeks back when I posted about a hospitalist bill for $18,000+? After a few weeks, I actually got two bills from the hospitalist’s group (lucklilly in-network), and that $18,000 bill was actually for the hospital stay (also in network) – so when it’s all said and done, the total out-of-pocket was well within range.

  3. Felix_47

    I urge everyone to read Hospital by Brian Alexander. It is a very accurate picture of the state of American health care today. This balance billing law is like putting lipstick on a pig or is it whitewalls on a dump truck. This won’t hurt the insurance companies who are the real power in medical care and who are funding our Congress. It may hurt group practices that hire doctors who are out of network. I don’t see it making any difference for doctors in practice in a particular location. I am a trauma surgeon and where I work the hospital now pays us to take call because otherwise no one would take call because the mix is mostly Medicaid or no insurance no money or Medicaid managed care or Medicare. Years ago when this balance billing BS started I remember being surprised to see what a General Practitioner was billing and getting paid on a case I operated on and this was because of balance billing. Often hospitals require a physician assistant on certain complex cases even if the assistant is essentially useless. I guess the theory was that if the surgeon drops dead the assistant can close the wound. Now some private hospital chains have purposely stopped taking any insurance and they do all of it with balance billing. When a case comes to their ER they do every test known to man to milk it and then transfer the care to another hospital where definitive care can be done. I am hoping this new Alzheimer’s drug which was pushed through by the democrats over the doctor’s objections at the FDA is so expensive it breaks the system. Them maybe we can have a national health care system a lot like England’s with doctors on salary rather than the current eat what you kill system now which encourages bad care and overtreatment. Again, read Hospital and vote based on what you learn.

    1. allen

      couldn’t agree more … its pretty much obvious to anyone who isn’t a multi millionaire that the us healthcare system (if you can even call it that) is fundamentally broken. M4ALL is the only solution that makes sense unless of course you are an insurance company CEO or a congress critter being paid to kill the idea.

  4. antidlc

    From the Modern Healthcare article:

    This first round of regulation applies to providers, air ambulance providers, group health plans, health insurance issuers and Federal Employees Health Benefits Program carriers.

    Looks like the new rule does not include ground ambulance providers.

    It applies to air ambulance services from out-of-network providers, but ground ambulance services are not covered.

    Ground ambulance rides, which were excluded from the No Surprises Act, continue to contribute to surprise billing in the US, a Peterson-Kaiser Family Foundation brief found.

    Experts analyzed 2018 large employer health plan claims data in order to assess the rate of surprise billing for ground ambulance rides. They also included data from National Hospital Ambulatory Medical Care Survey from the same year which encompassed data on ambulance rides that had an emergency department as their destination.

    Slightly more than half of the emergency ground ambulance rides (51 percent) and four out of ten non-emergency ground ambulance rides resulted in an out-of-network charge. Such charges often lead to surprise bills for patients.

  5. fresno dan

    I am very cynical and despondent about what this country can accomplish for the common good – but once in a great while, there is an actual real reform.

    1. tongorad

      Not sure if it is cynical to note that the insurance companies hold all the cards and cannot be reformed. Hope I’m wrong in this case. In the meantime my employer informed me that insurance premiums are going up for the nth year in a row and my $4000 deductible says hello.

  6. Code Name D

    When I venture into Clinton Land, it might surprise you to learn that the Neo Liberals are; and have been concerned for the trend in surprise billing for some time – but not in the way you might think. In their minds, the problem is seen as a lack of transparency for the system “preventing” consumers from making informed choses about the make-up of their support networks.

    The solution? Social media. Think, Facebook for doctors & nurses. Just like how you can manage your “friends” on face book, you can recruit and manage healthcare providers in your network. Consumer choice is restored, and healthcare outcomes will get better and cheaper because of markets. And I am told that Covid proves a desperate need for these networks because there are no market forces to manage pandemics. So, you can get the latest information on pandemics, local “real-time” statistics and have a means of reporting your own condition to the network.

    My suspicion is that Silicon Valley wants a larger slice of the healthcare pie by taking over network management systems in the name of “efficiency” and “consumer choice.” The only thing in its way is surprise billing, which gives “bad networking” an easy out for mistakes and prevents any incentive for addressing networking issues. Biden’s decision is likely just laying the groundwork for big-tech’s networking solution.

  7. XXYY

    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.

    While the Biden rule will provide some welcome relief, it adds yet another layer of useless waste to the US healthcare system. Now apparently every billable event is a candidate for arbitration between insurer and provider, which will no doubt be welcomed by lawyers on both sides and by privately-paid arbitration judges. None of these people provide any healthcare of course, they are just paid huge hourly fees to argue over money.

    A Medicare For All system is projected to save $300 to $600 billion annually while covering everyone. It’s easy to see why.

    1. juno mas

      Yes, if recovery from illness requires rest and sleep, don’t expect ANY as you prepare for the arbitration hearing. It is my understanding that these hearings do not allow lawyers to be present (or at least present your case). So the hospital (or medical biller) will have a better understanding and much more experience than you before the hearing officer.

      Arbitration hearings are not necessarily fair hearings. That is why hospital in-patient contracts ask you to waive your right to the judicial system.

  8. redleg

    I’m still dumbfounded that these people think that someone can navigate the intricacies of insurance while they’re in shock or otherwise incapacitated during a medical emergency, even if the emergency is not life threatening.
    They are clueless and lack any vestige of compassion or empathy.

    1. Eye 65

      Always seemed to me as a voidable ‘contract’ due to lack of legal capacity, but I was never on a jury.

    2. Procopius

      I don’t think they really believe that. The very basis of Sophistry, as it was taught in ancient times, was to train the students to present arguments that were persuasive, not what they thought was “true.” It’s like your neighbor suing you for breaking his lawnmower. Your lawyer is expected to offer all the following defenses, which your neighbor must then disprove. (1) I never borrowed the lawnmower, (2) It was in perfect condition when I returned it, (3) It was broken when I borrowed it.

  9. Susan the other

    Balance billing makes a mockery of “medical insurance” – because nobody’s responsible except the patient. A national health insurance program would not necessarily put private insurance out of business, but certainly trim them down to size. Medicare requires supplemental insurance which resolves the balances which Medicare currently refuses to pay. So that would probably be the case if we had M4A. In addition to the abuses by billing departments trying to balance the hospital budget at the expense of the patient – there are all sorts of spin off schemes. Like “clinic manager” bumpkins who make an administrative mistake and try to bill the patient. Example: my former doc got in a huff and dropped his subscription to my insurer without notifying me or any one else. We patients got billed for the full difference on our next visits and said, Hey what is this? It turned out that the twit doctor had failed to notify anyone of his change of heart. When it fell to the manager to fix it, he claimed he had sent out letters to everyone. But I, for one, never received this “letter”. So back and forth on the phone and getting nowhere, I was actually told that according to my “contract” with the doc I was responsible for the balance. I can’t remember ever signing a legit contract with that clown; I complained; lost my temper, etc. The surprise bill kept coming. So naturally I called and threatened to sue. Which surprised me even further because the manager actually tried then to cover his tracks (or missing tracks) by saying once again, “well, OK Susan, I’m going to send you a letter and if you sign it we can resolve this whole thing. ” I kid you not. And of course the “letter” never came. So I called the little twit and asked where’s the letter. And he said, “What letter, I didn’t send you a letter.” And other absurdities. But the bill disappeared. So far. What blatant idiots.

    1. juno mas

      Welcome to healthcare in America!

      As an aside: Medicare doesn’t *require* supplemental insurance to cover the other 20% that Medicare payments do not. You can go bare; and many do because the supplemental plan premiums (for good coverage) are too expensive for the degree of insurance provided. (When it comes to medical insurance/medical bills having enough insurance is a crap-shoot.)

  10. Dave in Austin

    Three Austin stories on this.

    A friend- a doctor who runs a very large practice- got a surprise, “out of network” $1,000+ bill for a pathologist looking at his blood draw. It was routine so he sicked his billing boss on the case. Yes; the pathologist was “out of network” because “no in-network pathologists were available”. He asked for the list of in-network pathologists in Austin. There were none- and the insurer was a huge company. Needless to say they forgave the bill… for him. And the Austin pathologists he knew? Why they were the “out of network” pathologists for the same company’s program fifty miles away.

    Medicare requires hospital emergency rooms to take all comers, even those like illegals who never pay (name another industry which the government requires to provide a free service?). The city hospital in Austin gets them all because the ambulances must send them to a hospital within, I think, 12 miles. So the other emergency rooms nearby closed and now there are a bunch of new hospital emergency rooms- 14-15 miles from Austin.

    My buddy, a doctor, said I should get a camera up my butt at the age of fifty. At the time I had a Unicare 5,000 (?) plan so I had to pay the first $5,000 so I resisted. He offered to do it for free at the outpatient facility nearby. I said “Yes”. I called up, gave my insurance info and made the appointment (I would pay for the facility charge) I asked “How much?”. The girl said roughly $3,000. I said “let me think about it” and hung up. Then I called back the next day at lunch when she would be out, pretended to be in the Unicare 100 program (Unicare would pick up everything over $100), made the appointment and casually asked what the facility fee was. “$900”. So Unicare made a contract- actually two seperate contracts- with the facility; when they were paying the bill would be $900; when the poor schmuck trying to save money by going for the high deductable plan paid, the fee was $3,000. The “real” customary cost was about $1,600, so Unicare made a little deal to get the high deductable people to subsidize the Unicare bills. When I asked the girl “What about uninsured people?” she said $3,000 minus 25% reduction for being uninsured and 25% for “prompt payment” (before the operation). When I called back the first girl and explained what I’d done and pointed out if I’d never mentioned I was insured I would be paying $1,500 instead of the $3,000 I’d have to pay as an insured person, she said with a resigned tone in her voice “Yes, that’s about the size of it”.

    Needless to say, I dropped Unicare and went uninsured. I had no big expenses in the following years til’ I hit Medicare. I was lucky.

    1. Eye 65

      That phone call thing… I paid $250 cash money instead of $2500 for an MRI for one of my kids that way.

    2. Procopius

      I don’t think it’s Medicare that requires Emergency Rooms to “take all comers,” it’s other laws that have been around a lot longer than Medicare, but they don’t really require ERs to provide care. They require ERs to “stabilize the situation.” If you’re in an insulin coma the ER has to provide insulin to bring you out of the coma, but then they send you on your way, which a bill which obviously you’re never going to be able to pay and you’re going to be back in a day or two in a coma. If you have cancer and are hemorrhaging from it, they’ll stop the bleeding, but they won’t provide chemotherapy. Lots of people go to ERs because they have no other hope, but they don’t really get helpful treatment.

    3. Kurtusmayfield

      The hospitals get non profit tax status because they are in the business of saving people’s lives. The whole argument about “making the hospital take all comers” is a non starter. They can reclassify themselves as a business and not get the specialized tax status.

  11. Jeff

    As sole proprietors, my wife and I use an HSM. We wind up paying cash and negotiate on the provider side and submit receipts to the HSM. It’s messy, inconsistent, unpredictable and costly, but it’s the least bad of all other options we’ve explored.

  12. Sound of the Suburbs

    What is Left?

    Inequality exists on two axes:
    Y-axis – top to bottom
    X-axis – Across genders, races, etc …..
    The traditional Left work on the Y-axis and would be a problem when you want to increase Y-axis inequality.
    The Liberal Left work on the X-axis.
    You can increase Y-axis inequality while the liberal Left are busy on the X-axis.

    How can I vote for someone that will do something about Y-axis inequality?
    You can’t.
    Those billionaires know what they are doing.

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