Huge Financial Stakes for Employers as Congress Looks for Deal on Surprise Medical Bills

As Congress races to wrap up the legislative year, Key House and Senate committee leaders announced a bipartisan agreement Sunday on draft legislation to ban surprise medical bills from out-of-network medical providers. 

Lawmakers haven’t yet released text of the agreement and haven’t detailed exactly how payments to providers would be determined. They said in a statement, however, that the new system includes a form of arbitration, which has been the primary flashpoint in the debate.

Employers strongly oppose arbitration because of the additional time, higher costs, and uncertainty associated with that approach. Instead, employers favor exclusive use of a median in-network benchmark to set reimbursements for out-of-network providers. That benchmark has also been embraced in earlier legislation authored by the House and Senate committee leaders who announced the weekend deal

Just how much additional cost? Former CBO staff at the Council for Affordable Health Coverage, did their own analysis of the cost of arbitration and report that binding arbitration costs an estimated $6.2 billion to taxpayers and $21 billion over 10 years to employers and private payers. The downstream impact would be increases to patients’ health insurance premiums, deductibles, copays, and coinsurance. 

Depending on where you live, you probably have seen the TV ads created to scare the public into believing that without arbitration, hospitals would close. The good news is that many consumers can see through the efforts of special interest groups. Arnold Ventures’ new poll found that two-thirds of voters prefer benchmark approach over the arbitration approach favored by providers, hospitals, and Wall Street hedge funds.

The announced legislative deal raises the odds of Congress clearing surprise billing legislation this year. In the meantime, employers should work with network managers to address charges from known categories of out of network medical providers to protect consumers from surprise medical bills and to manage the impact of higher reimbursements on overall plan costs. In addition, more can be done to help plan members know what they can, and should do, when they get these bills.   

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