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It all seemed so simple earlier this year. Members of Congress on both sides of the partisan divide could unite as the “white hat” saviors of health care consumers hit by large, surprise medical bills — either from out-of-network (OON) emergency care or from undisclosed OON medical providers operating at hospitals. Ideally, officeholders could heap rotating rounds of blame on the greed of billers and payers in the private sector and then strike a compromise that claimed to solve the problem while still keeping incumbent providers and payers in business.
Well, it’s turned out to be a little more complicated to strike that balance. The proposed policy solutions have largely been narrowed down to two:
Other once-competing policy approaches, such as bundling payments for a broader basket of related medical services and products or implicitly assigning OON providers to the insurance networks most similar to where they operate (“network matching”), seem to have lost favor recently among lawmakers. One reason is that actually setting a reimbursement formula can generate modest budget “savings” — at least on CBO’s Fantasy (scoring) Island.
In the usual Capitol Hill pickup games involving “shirts vs. skins” interest groups, the median in-network charges side tends to favor insurers and employer-payers while the “how high can we go” arbitration route is friendlier to physicians. Hospital interests tend to lean toward modest forms of arbitration, fearing any further policy drift toward more restrictive reimbursement benchmarks.
And each side has its respective champions. The Senate HELP committee bill increasingly tilted toward using comparable in-network charges as a payment proxy to limit excessive OON bills; meanwhile, the House Energy & Commerce committee’s newly marked-up bill has resurrected a limited version of arbitration options for providers looking for better payment deals just behind the curtain.
The powerful voices of most health economists and budget deficit hawks have argued against the arbitration approach as biased toward inflating health care prices, based on recent field experience in several states. (Of course, those voices also have called for retention of the Affordable Care Act’s Cadillac tax, and we know how much fear that stance has struck in the hearts of Washington lawmakers lately.)
With some momentum building to include at least a gesture toward an arbitration option (and the pursuit of happiness in the form of higher physician payments) in whatever compromise legislation can stagger out of Congress later this year, the fallback defensive strategies in the Senate need to become more creative in re-stacking the deck of cards, so that the lower House doesn’t win too often at the expense of consumers, private payers, and taxpayers.
A variety of tweaks to the OON payment processes and formulas should be considered. If the goal is to make the pursuit of an arbitration override less desirable, some modest provisions could structure the process to be more time consuming, while payment remains delayed. Or legislation could impose an escalating price of admission to the arbitration casino for each time that a disgruntled provider seeks that alternative to accepting a benchmark median in-network rate instead. A more substantial disincentive would impose a percentage penalty on the losing side of a payer-provider dispute in arbitration, pegged to the degree the loser deviated from the initial benchmark rate proposed. A different type of policy calibration could set a lower ceiling on how much could be gained through arbitration, relative to the lower floor on what could be lost in declining to accept a benchmark rate.
The analogy is to how more successful gambling establishments operate. Bookmakers would call it “vigorish.” Monetary authorities used to call it “seigniorage.”
Another way to round up stray cattle is to adopt a percentage limit on physicians’ balance billing, combined with early-payment incentives for participating providers, as Medicare policymakers adopted several decades ago.
Or, if it’s baseball-style arbitration that providers and their allies seek, perhaps it’s best to dial it up to full strength, with a transcript made available to the public of all the allegations and counters that are made during that process about the quality and value of the care and payment that is being challenged.
Left off the table, of course, are more straightforward reforms that would empower consumers and hold providers accountable (no prior disclosure and no contractual agreement equals no payment at all), and make officeholders vote to pay for their unfunded emergency care mandates under Emergency Medical Treatment and Active Labor Act.
Instead, the usual way to get balky health care providers to say “Moo” is to pretend to threaten them with leaner rations and then deliver dollars to them later in less transparent ways. As usual, we might hope for better, but we should prepare for further misdirection.
The usual way to get balky health care providers to say “Moo” is to pretend to threaten them with leaner rations and then deliver dollars to them later in less transparent ways. As usual, we might hope for better, but we should prepare for further misdirection.
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