Surprise Billing Background and Comparison – Updated February 25, 2020 - McDermott+Consulting

Surprise Billing Background and Comparison – Updated February 25, 2020


Congress spent much of 2019 working on surprise billing with a goal of passing legislation by the end of the year. While that did not happen, the momentum around passing surprise billing legislation has continued into 2020 with the introduction of two new surprise billing proposals in early 2020. In total, there are now three primary pieces of legislation being considered:

1.  A compromise between HELP Chairman Lamar Alexander (R-TN) and leadership from the House Energy and Commerce Committee was announced in December 2019. While no bill text has been formally introduced, a summary of the bill is available. This is based on two other bills that the respective committees had put forward: (1) The No Surprises Act (HR 3630) was introduced by the leaders of the House Energy and Commerce Committee, and then incorporated in the Reauthorizing and Extending America’s Community Health Act (HR 2328) in July 2019. HR 2328 has passed out of the Energy and Commerce Committee; and (2) The Lower Health Care Costs Act (S 1895) was introduced by the leaders of the Senate Health, Education, Labor and Pensions (HELP) Committee in July 2019. S 1895 has passed out of the HELP Committee.

2. The Consumer Protections Against Surprise Medical Bills Act of 2020 (HR 5826) was introduced by the leaders of the House Ways and Means Committee in February 2020. HR 5826 has passed out of the Ways and Means Committee and awaits floor action in the House.

3. The Ban Surprise Billing Act (HR 5800) was introduced by the leaders of the House Education and Labor Committee in February 2020. HR 5800 has passed out of the Education and Labor Committee and awaits floor action in the House.

We compare the three leading proposals in the below chart. There is considerable alignment among the different proposals, with the most notable distinction around setting a specific payment rate for services that fall under the ban on balance billing and the process by which providers and health plans can challenge that rate. Specifically, the compromise HELP/Energy and Commerce legislation includes a minimum benchmark rate for insurers to pay providers and also includes an arbitration process for insurers and providers to settle payment disputes for claims over $750. The Education and Labor bill would create a similar system, while the Ways and Means package does not include a benchmark payment rate, nor does it set a minimum dollar limit for providers and insures to enter into an arbitration process.

Background on Congressional Action

In the House, Energy and Commerce Committee Chairman Frank Pallone (D-NJ) and Ranking Member Greg Walden (R-OR) originally sought feedback on the No Surprises Act discussion draft (stakeholder comments were due May 28, 2019) and held a hearing on the topic on June 12, 2019, entitled “No More Surprises: Protecting Patients from Surprise Medical Bills.” On July 9, 2019, Pallone and Walden formally introduced a new version of the bill. Following that, on July 11, 2019, the Energy and Commerce Health Subcommittee held a markup of a number of bills, including the No Surprises Act. During the markup, there was unanimous support to address surprise billing and protect patients. However, some members raised concerns about the benchmark rate approach. On July 17, 2019, the Energy and Commerce Committee held a markup of 26 bills, which included the No Surprises Act. A last-minute agreement was reached to amend the benchmark rate by adding an arbitration process to address payment disputes for certain surprise billing situations. The arbitration amendment was pushed by Representatives Raul Ruiz (D-CA) and Larry Bucshon (R-IN), and reflected a delicately crafted compromise with the bill sponsors, Pallone and Walden. The addition of an arbitration process accommodated some of the concerns that physicians and hospitals have regarding the benchmark rate approach. This amendment was added with no opposition. The House Energy and Commerce Committee also voted to combine its surprise billing legislation within a larger health extender bill (HR 2328), which included funding for the Medicare and Medicaid programs including the community health centers, special diabetes program, the teaching health centers and the Medicaid DSH allotments. As noted, the Senate HELP bill was marked up on June 26, 2019. Additional amendments were added to the bill, one of which was related to surprise billing. That amendment requires plans to include a list of categories of providers of ancillary services for which the plan or coverage has no in-network providers. Although Alexander originally expressed hope that the Senate would vote on the bill before the end of July 2019, no vote has occurred. On December 8, 2019, Alexander, along with Pallone and Walden, announced a compromise. The compromise attempts to reconcile differences between the House and Senate bills, specifically how much insurers will pay providers that are not covered in their network. The compromise requires that all bills under $750 would be paid according to the median in-network price for the service in the geographic region. Meanwhile, bills over $750 would be eligible for baseball-style arbitration. Although this compromise has received bipartisan support, it is worth noting that Senate HELP Committee Ranking Member Patty Murray (D-WA) has not expressed support for this approach.

On February 7, 2020, leadership from both the House Ways and Means and House Education and Labor committees released bipartisan legislation addressing surprise medical billing. The House Ways and Means proposal does not set a benchmark rate, nor does it set a minimum dollar threshold to initiate the arbitration process. The House Education and Labor proposal largely aligns with the HELP/Energy and Commerce compromise. Both pieces of legislation add new transparency requirements for both health plans and providers, including requiring that additional information be included on insurance cards, and that provider directories be regularly maintained and available for patients.

On February 11, 2020, the Education and Labor Committee held a markup of its bill. Fifteen amendments were offered and nine were accepted. Notably, provisions were added that would require a Government Accountability Office report evaluating the relationship between private equity backed providers and facilities and the utilization of the indirect dispute resolution process. Private equity firms have come under fire recently by some members of Congress who express concern that private equity-owned provider groups are more likely to be out-of-network, and patients are more likely to receive higher surprise medical bills from these types of providers. While this amendment only includes a report on such groups, it is the only mention of private equity in any proposed surprise billing legislation. HR 5800, the “Ban Surprise Billing Act” as amended was reported favorably to the full House by a vote of 32-13.

On February 12, 2020, the Ways and Means Committee held a markup of its bill. Rep. Doggett offered but then withdrew three amendments and an amendment in the nature of the substitute was offered and adopted to make technical changes. HR 5826, the “Consumer Protections Against Surprise Medical Bills Act,” as amended, was reported favorably to the full House by a voice vote.

After the Ways and Means Committee markup on February 12, 2020, President Trump, on Twitter, urged Congress to reach a bipartisan compromise ending surprise billing. However, the administration has previously signaled opposition to the Ways and Means approach, saying that overuse of arbitration could drive up healthcare costs.

The savings generated by the varying approaches is a significant factor in the ongoing negotiations, as many lawmakers are hoping to use a surprise billing deal to offset the cost of other funding priorities. The Congressional Budget Office (CBO) found that the Lower Healthcare Costs Act (S 1895) surprise billing provisions would save the most money at $25 billion over 10 years, while the No Surprises Act (HR 2328) would save $20 billion over 10 years. CBO estimates that the Ways and Means (HR 5826) and Education and Labor (HR 5800) proposals would save $18 billion and $24 billion, respectively, over 10 years. Overall, bills that include a benchmark rate save more than those that do not. These scores could affect policy decisions and negotiating tactics on issues such as payment methodology, appeals processes and whether this surprise billing legislation will be packaged with other bills to take advantage of the savings.

Next Steps

As there was no compromise in 2019, lawmakers now face the next deadline of May 22, 2020, to extend funding for a number of expiring healthcare programs. There is an opportunity to use the surprise billing policies along with potential drug pricing reform legislation to pay for a long-term extension of the expiring healthcare programs. However, it remains unclear if, and how, the committees will resolve their differences. With so many different proposals on the table, Congress has their work cut out for them to find a compromise. After the deadline to pass the healthcare extenders package this spring, there remains little opportunity to pass any major legislation during the remainder of this election year.

Details of the Major Surprise Billing Proposals

 Please click here to review the Details of the Major Surprise Billing Proposals Chart


For more information contact Rachel Stauffer or Katie Waldo.