Surprise Billing - Not Allowed if Provider Receives CARES Act Funding | Citizens Against Government Waste

Surprise Billing - Not Allowed if Provider Receives CARES Act Funding

The WasteWatcher

One of the hot topics in Washington D.C. over the last six months was how to address surprise medical billing, sometimes called balanced billing.  A surprise bill occurs when a patient has a medical procedure at an in-network facility, like an emergency room visit or a planned procedure, and weeks later receives a bill from an out-of-network provider that can sometimes cost thousands of dollars.

Members of Congress had been pushing two so-called solutions to surprise billing before the pandemic came to fruition.  Both aim to relieve patients of getting a bill beyond what their insurer requires in their policy, like a co-pay or co-insurance.  The most prominent proposal would use rate-setting, which would be based on a government-set benchmark like the average rate for the service provided in the area.  Citizens Against Government Waste (CAGW) has been solidly against this government price control.  The other proposal being pushed is independent dispute resolution, or arbitration.  This is a process that would have the insurer and the out-of-network provider agree to an arbitrator to determine the payment, relieving the patient of a balanced bill.  But, CAGW is not in favor of this process either, as it is simply rate-setting delayed.  And there have been studies that show arbitration leads to higher healthcare costs.

Nevertheless, the COVID-19 pandemic has not stopped members of Congress from “never letting a crisis go to waste” so they are pushing for rate-setting and price controls to be added to the next coronavirus emergency spending bill.  On December 9, 2019, Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-Tenn.), and House Energy and Commerce Committee Chairman Frank Pallone (D-N.J.) and Ranking Member Greg Walden (R-Ore.) of the House Energy and Commerce Committee announced a “compromise” that would use a benchmark of $750 and then an outside arbitrator to solve the problem.  So far, thanks to strong opposition, including a March 18, 2020 letter signed by 24 organizations, they have been prevented from having their bill added to the first three emergency packages.  

But considering what has been already included COVID-19 emergency legislation and executive branch guidance, there is no need to enact any permanent solution to surprise medical billing. Price controls like rate-setting would have a devastating impact on emergency rooms and rural hospitals, and based on the action taken by the government to address coronavirus costs, they are currently completely unnecessary.

On Friday, April 3, 2020, Health and Human Services (HHS) Secretary Alex Azar announced that the administration planned to use $100 billion from the Coronavirus Aid, Relief, and Economic Security (CARES) Act for hospitals and other providers to support healthcare-related expenses and lost revenue to treat the uninsured due to COVID-19.  Hospitals and other providers would be reimbursed at Medicare rates and importantly, could not balance bill the uninsured.

A week later, the department released more information on how the $100 billion would be dispersed.  HHS would distribute $30 billion immediately, using a formula based on the provider’s share of fee-for-service Medicare, and directly deposited to providers that received Medicare fee-for-service reimbursements in 2019.  Again, as “a condition to receiving these funds, providers must agree not to seek collection of out-of-pocket payments from a COVID-19 patient that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.”

The remaining $70 billion will be targeted relief, with a focus on certain providers, including areas severely impacted by the coronavirus, rural providers, and those that serve large Medicaid and uninsured populations.  As a condition of receiving this money, “providers are obligated to abstain from ‘balance billing’ any patient for COVID-related treatment.”

CAGW has argued that any funds being dispersed to address the coronavirus pandemic must be temporary, targeted, and transparent.  On April 1, we established a list of 10 principles on that should be followed when writing legislation related to the coronavirus.  Any permanent solution to surprise billing would not be appropriate at this time and should be debated once the COVID-19 crisis is over.

When Congress does get back to work on this issue, surprise medical billing could be addressed by allowing the Federal Trade Commission to address false and misleading advertising regarding in-network facilities, which was laid out in a March 19, 2020 blog.  In the meantime, there must not be a permanent surprise billing “solution” in any forthcoming coronavirus spending bill.

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