Because patients are held harmless in surprise billing circumstances, payment for services is left to be resolved between the insurer and the provider. Four leading proposals are under consideration:
Setting a benchmark rate of payment that the insurer pays the out-of-network provider in surprise billing situations is a leading proposal. The Senate HELP bill, for example, uses an insurer’s median in-network, or contracted, rate for payment. The exact methodology for setting this rate is unclear and would be determined by Health and Human Services (HHS). The rate could consider things such as site of care, complexity of the patient and/or procedure, and more. Setting a benchmark rate —specifically the median in-network rate — is the preferred method for insurers, who have also proposed pegging rates to a percentage of Medicare (e.g., 125% of what providers are paid under the program).
Independent Dispute Resolution (IDR)
Otherwise known as arbitration, IDR is featured in other leading proposals. The Cassidy bill, for example, includes an independent IDR process that allows providers to seek a different payment rate than the default benchmark rate. The “baseball style” arbitration (named after the method used by Major League Baseball for some salary negotiations) empowers an independent arbiter to select between insurer and provider offers, determining which is the fairest. The Ruiz bill has a similar provision, but starts with the “commercially reasonable rate,” and an amendment to the Energy and Commerce (E&C) bill amended its benchmark-only proposal to include an arbitration backstop when the median in-network rate exceeds $1,250. Including an arbitration mechanism is favored by providers, who note concerns about network adequacy and inadequate payment for certain high-cost facilities and specialties in the benchmark proposals.
Also called an “in-network guarantee,” network matching would require facility-based emergency, ancillary and other providers to contract with all the same health plans as the facility or to secure payment from hospitals rather than insurers. Network matching was one of three initial ideas included in an early HELP committee discussion draft (and favored by the Committee’s Chairman, Senator Alexander); however, the committee decided in favor of a benchmark after learning it produced more savings. This approach is favored by some economists, who argue that benchmark and IDR approaches could result in inappropriate payments and encourage physicians to go out of network to achieve higher reimbursement.
Another approach that has been proposed by economists is to bundle the reimbursement of hospitals and hospital-based providers into one payment jointly negotiated with insurers. This would likely have a similar effect as network matching, but could create operational hurdles for providers currently billing separately for their services.