In the Know

U.S. House of Representatives Committee Proposes Ban of Surprise Medical Bills
May 29, 2019
Alerts
Arnall Golden Gregory LLP

On May 13, 2019, the U.S. House of Representatives Energy and Commerce Committee proposed draft legislation banning surprise medical bills, also known as balance bills, through a cap on any out-of-network charges. The draft legislation follows recent pressure from President Donald Trump for a bipartisan measure ending surprise billing.

As of now, the provisions of the draft legislation include:

  • Removing arbitration to resolve pay disputes between hospitals, physicians, and insurers; instead, opting for a set price for services provided by out-of-network clinicians based on similar physicians in the network;
  • Requiring both written and oral permission from patients prior to treatment by an out-of-network physician;
  • Informing patients on cost for an out-of-network charge;
  • Proposing grants to states to fund all-payer claims databases; and
  • Mandating only one hospital bill following treatment.

The goal of the legislation is to protect consumers from hidden costs following hospital visits where they are treated by out-of-network physicians. The draft legislation is not the only surprise medical bills legislation, as California and New York have enacted similar laws. President Trump’s support and the draft’s bipartisan nature may demonstrate widespread support for such a law.

America’s Health Insurance Plans CEO, Matt Eyles, has praised the proposal for ensuring patients are protected and doctors are fairly paid. Critics argue the draft legislation gives little power to the consumer. Instead, it transfers power to the insurer, leaving the consumer with an arbitrary rate set by law. The American Hospital Association has expressed concern over the proposed legislation because it takes away incentives for insurers to contract with providers, which in turn may decrease patients’ network sizes and impact provider income.

Moreover, requiring only one hospital bill may provide more transparency to patients; however, it forces hospitals and specialty physicians to change their contracting. Lobby groups representing America’s doctors and hospitals have written a letter to lawmakers arguing bundle payments would be administratively complex and fundamentally change relationships between hospitals and physician partners. Such change could increase administrative costs for providers.

The biggest critique of the draft legislation is its lack of an arbitration clause. Under the current regime, insurers and providers must negotiate and utilize a neutral arbitrator to select the fairest price. New York’s surprise medical bill law contains an alternative dispute resolution provision, or “baseball style arbitration,” where the insurer and provider both submit one payment offer and the arbiter selects which will be used. This likely explains why, in New York, consumer complaints concerning surprise bills have decreased greatly since the law was enacted. Bucking the trend, the draft legislation seems to eliminate arbitration altogether, opting instead for a set price model. Notwithstanding the House’s insistence on capping cost rather than arbitrating, the Senate Health Committee is currently working to draft competing surprise medical bill legislation that would include arbitration.

In summary, although the draft legislation has apparent flaws, we anticipate that a similar law is likely to pass through Congress given President Trump’s vehement support and consideration of comparable proposals by both chambers of Congress, with members of both political parties in action.

Lawmakers expect stakeholder feedback by May 28th. In light of this quick turnaround, providers should continue to monitor the proposals closely and consider petitioning representatives.