By Jack Hoadley, Kevin Lucia, Katie Keith

Surprise medical bills continue to threaten consumers’ financial stability at a time when the COVID-19 pandemic has increased the potential for out-of-network billing by health care providers. While the Trump administration has taken some emergency measures to try to reduce the risk of surprise medical bills for COVID-19 patients, these protections are both incomplete and temporary.

In the meantime, action in Congress appears to have stalled despite strong prior momentum and bipartisan, bicameral support for comprehensive protections. Congress has not yet included surprise medical bill protections in any COVID-19 relief packages as Democratic leadership continues to debate the most appropriate mechanism for doing so, and Sen. Majority Leader Mitch McConnell (R-KY) reportedly has little interest in including these protections in the next legislative package.

It is in this context that the Department of Health and Human Services released a new report and statement on the need for protections against surprise medical bills, calling for Congress to take action. The report was required by an executive order issued by President Donald Trump in June 2019.

The report itself, written by the Office of the Assistant Secretary for Planning and Evaluation (ASPE), summarizes the latest data on surprise medical bills. It outlines how and why out-of-network bills occur, notes that most surprise bills are from ancillary providers such as anesthesiologists and emergency department physicians, highlights the role of private equity firms in increasing the prevalence of surprise medical bills, and summarizes the latest federal and state action to address surprise bills (including in the COVID-19 context).

The report emphasizes that price transparency, another focus of the Trump administration, is foundational but that more action is needed to fully address surprise medical bills. Simply put, the ASPE writes that surprise billing “represents a market failure that will not correct itself” and that federal legislation is necessary to correct this market failure.

Principles Alone Are Not Enough

The ASPE’s report generally embraces four principles outlined by the White House last year. Those four principles are that patients should not face surprise bills for emergency care; patients receiving “scheduled” care should have information about whether or not their provider is in network and the cost of their care; patients should not receive surprise bills from out-of-network providers they did not choose; and federal health care expenditures should not rise.

(It is not clear that the principles extend to banning surprise medical bills from out-of-network providers when care is provided in an in-network facility by, say, an anesthesiologist. Rather, the White House seems to endorse additional transparency for patients when scheduling a procedure—so a patient could select an in-network provider or at least understand their costs—rather than a ban on these types of bills or other more explicit consumer protections.)

While the White House’s principles highlight the need to protect patients from surprise medical bills, they prioritize transparency, especially in non-emergency care provided at in-network settings, and do not endorse a comprehensive approach.

Transparency can be valuable. For example, consumers benefit when they have access to accurate and complete information on insurer networks. However, as the ASPE report acknowledges, transparency alone is not sufficient to protect consumers. A notice about the consequences of using an out-of-network provider is not helpful to the consumer if it comes on the same day that services are to be delivered or if it lacks actionable steps for the patient to select an in-network provider.

Furthermore, the administration’s principles take no position on the means of determining the payment to be made by an insurer to the out-of-network provider. A payment provision, which we classify as one of the elements of comprehensive protection, reduces the risk that the out-of-network provider tries to recoup fees from the consumer. It also helps ensure that providers receive timely, fair, and appropriate payments for their services.

Consistent with its principles, the White House reportedly floated a proposal that would simply outlaw providers from sending out-of-network bills. That approach would have protected consumers from out-of-network bills but did not include a mechanism for resolving payment disputes between payers and providers. This approach did not appear to gain momentum among lawmakers, and unlike other approaches it is untested for its impact on consumers and health care markets.

Finally, the White House has previously linked support for surprise billing protections to other initiatives such as expanded availability of “far cheaper” short-term plans. Notably, however, protections in state laws and federal proposals typically do not extend to short-term plans whose design often includes low-dollar value limits that guarantee that enrollees will owe balance bills to their providers.

A Path To A Federal Solution

The White House’s repeated calls for federal protections and the ASPE’s new report are important to protecting patients and sustaining political momentum. However, failing to call for a mechanism to establish a fair payment may be insufficient both politically and substantively. The lack of a payment mechanism or standard is also inconsistent with state and federal approaches to combating surprise billing to date.

States that have adopted comprehensive protections typically use either a payment standard, an independent dispute resolution (IDR) process, or a hybrid of the two. Three of the four federal bills with comprehensive protections include a similar hybrid approach. (The only bill that does not emerged from the House Committee on Ways and Means; this bill avoids use of a payment standard and relies on voluntary negotiation backed up by IDR.) Each of the federal bills includes substantial guardrails on the use of IDR.

Starting from consensus among three of the bills, negotiations on a federal solution have continued. Sen. Lamar Alexander (R-TN), among others, has continued to push his colleagues to capitalize on the potential consensus between parties and between House and Senate committees.

In the meantime, states have adopted protections on a broadly bipartisan basis. Three states—Georgia, Maine, and Virginia—adopted comprehensive protections in 2020; this followed similar efforts in six states in 2019. This recent experience is instructive, with one red state and two blue states adopting comprehensive solutions that worked for those states. All three have hybrid approaches with some version of a payment standard, followed by an opportunity for providers to initiate IDR. Each state placed some limits on the use of IDR to prevent providers from requesting IDR in every case. We have noted elsewhere that Georgia, in particular, could be a model for Congress.

State leadership is promising, but federal action is needed to ensure that everyone is protected. To date, only 16 states have adopted comprehensive protections against surprise medical bills. Furthermore, states generally lack the means to guarantee that people insured through employer-sponsored self-funded plans are protected, since state regulation of these plans is preempted by the federal Employee Retirement Income Security Act (ERISA) of 1974 statute. In addition, federal law blocks most efforts to protect users of air ambulance services. A federal law is also needed to guarantee protections when a resident of one state is treated by health care providers in a different state.

Despite an intense (and, so far, successful) lobbying blitz by private equity-backed interests, there is broad-based support in the Senate, the House, and the White House for a solution to surprise billing. In an era when consensus on so many issues is blocked by partisan rancor, action to address surprise medical bills should transcend, and congressional leaders should resolve the modest disputes that remain. Failure to do so will be a true loss for consumers in the midst of a global pandemic.