Lawmakers clash over surprise billing law’s implementation

At issue are parameters an arbiter should consider when determining payment a health plan and provider can’t determine on their own

House Energy and Commerce Chairman Frank Pallone Jr. is working on a letter responding to the interim final rule, after praising the rule upon its release. (Tom Williams/CQ Roll Call file photo)
House Energy and Commerce Chairman Frank Pallone Jr. is working on a letter responding to the interim final rule, after praising the rule upon its release. (Tom Williams/CQ Roll Call file photo)
Posted October 20, 2021 at 5:31am

Lawmakers who crafted last year’s law addressing surprise billing are once again at odds over policy particulars after the Biden administration issued a rule to implement the law in a manner that some say revives a congressional dispute.

Certain members on Capitol Hill and influential voices in the health care industry that spent millions trying to influence the law are pushing the Biden administration to amend its surprise billing policies before the law takes effect on Jan. 1. But policy experts say the rule is unlikely to change significantly.

Congress spent two years creating and debating legislation to shield patients from so-called surprise medical bills. Lawmakers agreed that patients shouldn’t receive such bills, but the primary hurdle was how to resolve payment disputes between health plans and providers. Now some lawmakers, doctors and hospital groups say an interim final rule outlining how those disputes will be decided doesn’t adhere to the legislation, which was enacted as part of a 2020 year-end spending law.

“There is bipartisan concern about the rules that have been released because they clearly do not match not just the intent but the letter of the law on surprise medical bills,” Texas Rep. Kevin Brady, the Ways and Means Committee’s top Republican, said on an Oct. 13 press call.

Other lawmakers, including two top committee leaders who were closely involved in the negotiations, say the rule by the Health and Human Services, Labor and Treasury departments and the Office of Personnel Management does meet Congress’ intent and should take effect in January.

“This rule implements the No Surprises Act just as we intended and will save countless patients from being left with an exorbitant bill for care they thought was covered by their insurance,” Washington Democrat Patty Murray, who chairs the Senate Health, Education, Labor and Pensions Committee, said in a statement.

While industry groups rallied behind the effort to end surprise medical bills, lawsuits are expected.

The surprise billing regulations “will be aggressively litigated, and such litigation likely will not be resolved until the highest court willing to hear appeals renders its verdict on the permissibility of the rulemakings,” Spencer Perlman, a managing partner at investment and consulting firm Veda Partners, wrote to investors.

Reactions

At issue are the parameters an arbiter should consider when determining payment for a surprise bill that a health plan and provider cannot determine on their own.

The law directs the arbiter to look at a range of factors when determining the ultimate outcome. But the recent interim final rule dictates the in-network median payment rate should be the default payment amount — an outcome closer to the policy that Murray and Energy and Commerce Chairman Frank Pallone Jr., D-N.J., preferred.

Pallone is working on a letter responding to the interim final rule, after praising the rule upon its release.

“I’m sure they’re glad about it,” Sen. Bill Cassidy, R-La., said of Murray and Pallone in an interview. “This circumvents the compromise we’re all forced to agree to and goes closer to where they wanted it to end up.”

Brady and Ways and Means Chairman Richard E. Neal, D-Mass., both advocated last year for an arbitration process for surprise medical bills that did not rely on the median in-network rate. The lawmakers said such a policy would favor insurance companies. Now that the Biden administration’s final rule relies on a median in-network rate for surprise billing disputes, Neal and Brady are asking HHS to revisit and adjust the regulation.

Brady said he and Neal want to meet with HHS Secretary Xavier Becerra to discuss their concerns.

“I feel confident HHS can get it right, but we are going to have to sit down and talk with them to make sure that they are following intent in the timetable we set,” Brady told reporters.

Reps. Brad Wenstrup, R-Ohio, and Tom Suozzi, D-N.Y., who both sit on the Ways and Means Committee, are circulating a letter, which has not been publicly released, to HHS, Labor and Treasury that will urge them to revise the rule to say the arbiter should consider all the factors outlined in the law, rather than focusing on the median in-network rate.

These concerns echo the complaints of hospitals and physician groups that are concerned the surprise billing regulation could hurt their business model. Soon after the rule came out, the Federation of American Hospitals called the rule a “total miscue,” and the American Hospital Association called it a “windfall for insurers.”

“The process put forth by the agencies fails to create an impartial and fair dispute resolution system — this will likely lead to consolidation in the health care marketplace, threatening patients’ access to care,” Carole Allen, president of the Massachusetts Medical Society, said in an email.

The American Medical Association went a step further and asked the Biden administration to delay the rule’s implementation.

Sen. Maggie Hassan, D-N.H., who partnered with Cassidy on surprise billing legislation and advocated for an approach that did not put median in-network rates at the center of the arbitration process, is unconcerned by the Sept. 30 rule. Unlike Cassidy, Hassan says the law aligns with congressional intent. Hassan says the most important thing is ensuring Americans are protected from surprise medical bills.

“Patients can’t afford a delay, and this law must go into effect in January,” Hassan said.

In contrast, the insurance industry says the interim final rule encourages health care providers to join insurance plans and would not result in premium increases for consumers.

“This is the right approach to encourage hospitals, health care providers and health insurance providers to work together and negotiate in good faith,” said Matt Eyles, president and CEO of America’s Health Insurance Plans.

Potential roadblocks

Cassidy accused the administration of putting its thumb on the scale in favor of insurance companies and said that such favoritism could cause providers to file a lawsuit and delay the surprise billing ban’s implementation — an approach he does not support.

Perlman told investors that he anticipates litigation on surprise billing rule-making could take a long time.

“Depending on the outcome of legal disputes a new round of regulations may be promulgated, meaning the final resolution of these debates could potentially be years away,” Perlman’s investor note states.

If an outside group wanted to halt the rule-making process, it could try to make an Administrative Procedures Act claim against the agencies, arguing that using an interim final rule rather than the usual rule-making process was hasty and illegal, said Loren Adler, associate director of the University of Southern California-Brookings Schaeffer Institute for Health Policy.

But Adler said if such a lawsuit were to happen, the case in favor of an interim final rule would likely win because the law gave the administration only one year to implement the surprise billing law.

“I would be absolutely shocked if [courts] delayed implementation of the law. That seems just like not what any administration or lawmaker would want,” Adler said.

The interim final rule asks for comment on several policy details, so the agencies eventually will have to issue a final rule and could make changes. A final rule could be issued before the end of the year.

The agencies “indicated their clear intention to do the rule, the way that they wrote it, and I suspect there’s not a lot of interest in trying to take a different approach,” said Jack Hoadley, a research professor emeritus at the Georgetown University Center on Health Insurance Reforms.