Surprise Billing: Benchmarking vs. Arbitration
Providers Lose Out in Latest Bipartisan Surprise Billing Draft
What’s New: Bipartisan leaders in Congress in both the House and Senate drafted a bill to combat surprise billing.
Details of the Surprise Billing Bill: Benchmarking vs. Arbitration Differences
The new bill is an altered version of older proposals. For bills under $750, insurers would pay providers at least the median in-network rates for that region.
- You might have seen reporters call this the “benchmark rate” method.
For bills over $750, insurers and providers will negotiate through a third party – called the “arbitration” method.
Who Wants What: Benchmarking vs. Arbitration
Providers oppose the benchmarking part of the deal. They think the bill will lower reimbursement by giving them less room for negotiation (it will).
Insurers oppose arbitration because their negotiating leverage for larger costs goes out of their hands. So, since nobody’s happy, the bill is probably closing in on the right solution.
- You should know: New York tried 3rd party arbitration to combat surprise billing in 2015. The catch? The bill guided arbitrators to use use the 80th percentile of billed charges as the starting point.
Here’s the problem with that: charges are generally made up numbers and do not correlate to actual reimbursement. Providers charge a certain amount for healthcare services but receive lower reimbursement from insurance/patients. As a result, providers ended up receiving higher payments in New York.
- If Congress pegs the arbitration to a high level of charges like New York did, insurers could lose out big time. But it’s important to note that the national bill is different because it includes benchmarked rates.
Conclusion.
- Who loses: Providers
- Who’s in the middle: Insurers
- Who wins: Patients
Keep in mind that this bill, while bipartisan, still has a long way to go – especially since a House panel just introduced a rival proposal. But these same solutions have been floating around Congress for a while now.
- Go Deeper From Bloomberg: Patients and insurers are the big winners in the latest surprise medical bill deal.