Stopping surprise medical billing: Prevention is better than cure.

Come January 1, 2022, patients will be protected from certain types of unexpected medical bills.  America’s hospitals and health systems strongly support these new patient protections that are included in the No Surprises Act. However, the law and associated regulations offer only a partial cure: they do not account for all instances in which a patient may experience a gap in coverage, and the new policy could create incentives for plans and issuers to drop more providers from their networks. 

Restricted provider networks create negative consequences for patients beyond the potential for unexpected medical bills. Indeed, provider networks are critical to patient choice of provider, coordination of care, ease of navigation of the system, and value-based care efforts. Hospitals and health systems, therefore, are urging policymakers to ensure that implementation of the No Surprises Act protects and maintains proper incentives for comprehensive provider networks. 

The primary objective of the No Surprises Act is to reduce instances where patients face unexpected medical bills because they received care from an out-of-network provider either as a result of an emergency or because they could not have been expected to reasonably know the network status of the provider. In order to achieve this, the law established protections against balance billing in these specific scenarios. These include disallowing balance billing by providers in most instances and only permitting patients to consent to be billed in very limited circumstances. Plans and providers are responsible for negotiating appropriate reimbursement. To account for any disputes that may arise, the law established an independent dispute resolution process.

As policymakers and stakeholders debated solutions to unexpected medical bills, there was broad stakeholder agreement on the value of network participation. Health plans, providers and patient advocates all recognized the value of access to in-network care for patients. Congress worked carefully to craft a solution that would not inadvertently disrupt network participation. Specifically, Congress tried to avoid a situation where plans and issuers could rely on the law’s provisions to pay less for out-of-network care than they would by contracting at commercially reasonable rates with in-network providers and facilities. Setting a benchmark payment rate, for example, could financially reward plans for not contracting with certain types of providers. Congress wisely declined to pursue that approach. But despite their efforts, the threat to networks remains a real one. The biggest risk: an independent dispute resolution process that tilts towards reimbursement below commercially reasonable rates.

While there are some safeguards in existing laws and regulations related to network adequacy, these protections are far from comprehensive. Indeed, no network adequacy requirements apply to the many plans regulated under the Employee Retirement Income Security Act (ERISA). In addition, the requirements on fully insured health plans often are not specific enough to address a number of critical provider types, including anesthesiologists, radiologists, and pathologists. Indeed, these gaps in network adequacy standards directly contributed to where we are today. This is because they allow plans and issuers to exclude many ancillary providers from their networks and instead push the responsibility of coverage and coordination directly onto their enrollees. In some instances, plans and issuers knowingly enter into contracts with facilities while excluding from their networks the independent physician groups who staff the facilities. 

Patients have paid the price for these coverage gaps, and not just through unexpected medical bills. The resulting patchwork provider networks make it harder for patients to find in-network providers and challenge in-network providers’ ability to find referral partners for their patients. Hence, coordination of care is disrupted and any efforts towards developing integrated, high value care delivery models are simply not possible.

Hospitals and health systems continue to believe that the best way to protect patients from surprise medical bills is to ensure that every form of comprehensive coverage – including plans regulated under ERISA – are subject to strict network adequacy rules. 

As the Administration continues implementation of the No Surprises Act, we strongly encourage it to focus on addressing inadequate provider networks as the root cause of unexpected medical bills. Specifically, we urge the departments to:

• Not design the independent dispute resolution process in a way that will enable plans and issuers to use it to obtain below commercially reasonable reimbursement rates, including by not overly weighting the qualifying payment amount as a factor for consideration;
• Strengthen existing network adequacy rules through regulation where possible; and 
• Work with Congress to establish network adequacy requirements where they do not currently exist (i.e., ERISA). 

You can read our full sent of comments to the Departments here.

Ashley Thompson is senior vice president for public policy analysis and development at the American Hospital Association