Mar 27, 2024 - Health

Surprise medical bill law has been good for providers

Illustration of a person wearing scrubs using a blood pressure cuff made of money.

Illustration: Gabriella Turrisi/Axios

The federal process for resolving billing disputes for out-of-network care has to date yielded payouts well above what Medicare and most in-network private insurers would pay providers, according to a new Brookings Institution analysis provided first to Axios.

Why it matters: That could lead to downstream effects like higher premiums — quite the opposite of what Congress intended when it passed a law banning surprise medical bills in 2020.

What they found: Brookings analyzed Centers for Medicare and Medicaid Services data on arbitration decisions to settle disputed claims during the first half of 2023.

  • Researchers specifically focused on emergency care, imaging and neonatal and pediatric critical care.
  • Across the three categories, median payouts were at least 3.7 times what Medicare would pay, Brookings found.
  • For emergency care and imaging, the median decision was at least 50% higher than the most generous payments commercial plans historically made, on average, for in-network care.
  • Similar estimates weren't available for neonatal and pediatric critical care.
  • The analysis concludes that there is a "realistic possibility" that the law will wind up raising in-network prices and, in turn, premiums.
  • That's the opposite of what the Congressional Budget Office predicted would happen.

Between the lines: Arbitrators faced with competing offers from insurers and providers have been far more likely so far to side with providers, who won more than three-quarters of cases in the first half of 2023, per CMS.

  • It's still unclear what direction future rulings take, and the effect they could have on negotiations between insurers and providers.
  • The prevailing assumption before the law took effect was that removing financial incentives to be out of network would encourage in-network care and ultimately lower prices.
  • The Brookings analysis "suggests that the amount of money providers can collect when out of network might not change dramatically," and being out of network may even be more attractive now because patients are no longer the ones being hit with big bills.
  • That could potentially give providers a stronger — not weaker — hand in price negotiations with insurers, placing "upward pressure" on prices.

Where it stands: The arbitration process has gone through a rough start.

  • It's been swamped by 13 times more disputed claims in the first six months of 2023 than the government initially estimated it would see over an entire calendar year, per CMS.
  • Biden administration rules for settling disputes have also been struck down in court, leaving arbitrators with "little substantive guidance on how to reach payment decisions," per the analysis.
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