Surprise billing: Not all fixes are created equal

Congress is still fighting about surprise medical bills. The House Ways and Means Committee and Energy and Commerce Committee are both trying to line up bipartisan support for their competing approaches.

Neither committee’s approach is right. Congress must go back to the drawing board and come up with a fix that relies on market principles, transparency, and common sense to stop surprise medical bills.

Surprise bills arise when patients unknowingly receive care from out-of-network providers and are then billed for the difference between what those providers charge and what their insurance will pay for out-of-network care.

Surprise bills are a particular problem in emergencies, when patients are understandably incapable of making sure they visit an in-network hospital or doctor. In other cases, patients may select an in-network hospital but later discover that someone who assisted in their care was out-of-network.

The Ways and Means Committee proposes settling surprise bills with arbitration. Providers and insurers would each suggest a payment amount to a third-party arbiter who would decide what the patient owes.

But arbitration is expensive, as it requires a huge new administrative infrastructure and wraps the payment process in more red tape. The Congressional Budget Office estimates arbitration would add $1 billion in administrative costs to our healthcare tab.

The Energy and Commerce Committee has proposed “benchmarking.” To settle a surprise bill, insurers would pay the median in-network rate for the procedure in a given geographic area.

These de facto price controls would allow insurers to low-ball providers as they build their networks, knowing the most they’ll have to pay if providers refuse to join is the median in-network rate. Patients could end up with fewer in-network providers and reduced access to care.

Fortunately, there’s a third way. Congress can require insurers and providers to be honest and transparent about their pricing and network status. Insurers that falsely represent facilities as in-network and facilities that represent themselves as in-network should be penalized if those facilities permit physicians to balance bill patients. In addition, Congress should simply ban balance billing for emergency services provided at nonnetwork facilities.

Too many families have suffered at the hands of surprise medical bills through no fault of their own. Congress must end the practice in a way that puts patients first.

Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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