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Congress moved to protect Americans from surprise medical bills, but some lawmakers worry the coming rule favors insurers

Secretary of Health and Human Services Xavier Becerra testifies at a congressional hearing on Sept. 30. His agency helped draft rules implementing legislation protecting Americans from surprise medical bills.SHAWN THEW/Associated Press

In a rare show of bipartisanship, Congress last year enacted protections for Americans hit by surprisingly large medical bills. But now, some lawmakers said they’re the ones being surprised — by a Biden administration rule implementing the measure that they complain doesn’t fairly solve the problem.

The concerns, which cross party lines, revolve around the arbitration process, set to go into effect Jan. 1, to settle billing disputes. The proposal, issued in an interim rule on Sept. 30 by the Health and Human Services Department and other agencies, “subverts congressional intent” by favoring insurers over physicians and patients, said Representative Larry Bucshon, a Republican from Indiana.


“It’s not even close to being what Congress passed into law,” he said of the rule. Bucshon, who is a doctor, helped organize a bipartisan letter earlier in November signed by more than 100 House members to administration officials urging them to revise the rule.

The law is designed to prevent unexpectedly large medical bills from being passed along to patients who had expected their insurance would cover most of the cost. When a health care provider and insurer disagree with the reimbursement for a procedure or service, the interim rule requires them to settle the dispute through arbitration, protecting patients from time-consuming negotiations and expensive fees. Nearly two-thirds of the public worry about affording surprise medical bills, according to a February 2020 Kaiser Family Foundation poll.

But as soon as the Biden administration released the interim rule, which is open to public comment until the end of November, two sides took shape— health care providers worried insurers would have a leg up during negotiations, and insurers who praised the administration for taking the right approach. Lawmakers who supported the legislation also split along the same lines.

The arbitration process “strikes the right balance among competing stakeholder requests for consideration of higher and lower payment rates,” said Senator Patty Murray, a Democrat from Washington who chairs the Senate Health Education, Labor and Pensions Committee.


She and Representative Frank Pallone, a New Jersey Democrat and chair of the House Energy and Commerce Committee, were key players in getting the No Surprises Act included in a COVID relief bill last December that was signed by President Trump. Murray and Pallone sent a letter last month to Biden administration officials backing the arbitration process.

According to the rule, whenever there is a dispute over the cost of a medical procedure, health care providers and insurers have 30 days to agree to a new amount. If they can’t, a federal independent dispute resolution process begins and the matter goes to an arbitrator.

Both sides submit a payment amount with supporting documentation. Then an arbitrator chooses one in a decision that’s binding.

The problem comes from the proposed starting point in the arbitration process. The interim rule says the correct fee for a disputed medical bill is the median in-network rate paid by an insurer for the medical procedure. Bucshon said this implies the median rate is always correct, when other factors, such as the severity of a patient’s illness and the amount of attention they need from medical professionals, should equally be taken into consideration during negotiations.

The proposed arbitration process could lead insurers to lower their median in-network rate, which would pressure health care providers into accepting lower payments for their services. That could prompt more physicians to move out of insurer networks, decreasing access to care for patients, Bucshon said.


But a set rate for doctors and other health care providers could be beneficial in the long run, said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University. It would prevent providers from charging exorbitant fees for medical procedures, and could even lead to lower private insurance premiums.

If physicians end up getting higher reimbursement rates for their services under the surprise billing arbitration process, then insurers will pay the difference. But to get additional money to pay these rates, insurers would likely start charging higher premiums, leading to increased costs for consumers.

“Most observers think that these disputes will sort of settle out somewhere around the average in-network range. It means that policyholders, people, consumers are winning, not the plans,” said Corlette, who hasn’t taken a stance on the regulations. “That’s simply because the plans are middlemen— they just pass on their costs to the rest of us in the form of premiums.”

But large organizations that represent medical providers, such as the American Medical Association, the Federation of American Hospitals, and the American Hospital Association, are calling on the federal government to change the rule, fearing hospitals and physicians will lose all power in negotiations.

The groups also expressed concern that the proposed arbitration process could harm doctors with small practices who have already been hard-hit by the coronavirus pandemic.


“The hope was that the legislation would even the playing field between small practices with little to no market leverage and insurers who continue to consolidate and dominate the market,” the AMA said in a statement. “Unfortunately, the Administration’s interpretation of the statute puts the insurers’ thumb on the scale and actually increases insurer dominance in contract negotiations.”

Despite the concerns raised by medical providers, Corlette said the long-term impact of the arbitration process is difficult to predict.

Nicola Truppin, who helps patients resolve surprise bills, said they are struggling with the burden of advocating for themselves while trying to understand the complex health insurance system.

“The rules are just so convoluted and labyrinthine,” Truppin said. “It’s very hard for the general person on the street to kind of get it.”

Taking patients out of the picture during billing conflicts between health care providers and insurers is an admirable goal, Truppin said. But Corlette warned that reworking the rule might delay implementation of the law, causing patients to suffer the negative effects of surprise billing for longer.

“Congress said these protections must go into place on January 1, 2022,” Corlette said. “And so I think any delay in consumers getting this protection would really be a travesty.”

Neya Thanikachalam can be reached at neya.thanikachalam@globe.com.