Congress Ended Surprise Medical Bills — Doctors And Insurers Hate It

Lawmakers on both sides celebrated in 2020 when, after years of delicate negotiations, Congress passed the No Surprises Act to shield people from the unexpected bills they sometimes received from out-of-network doctors after emergency medical care.

“This must end,” President Donald Trump said when he signed the bill into law. “We’re going to hold insurance companies and hospitals totally accountable.”

Less than six years later, the system has gone haywire.

It is flooded with millions more claims from doctors seeking payment from insurers than anticipated. Doctors are sometimes receiving arbitration payouts for things like breast reductions and spinal surgeries that are mind-bogglingly larger than their services normally cost.

“Policy action is needed to put an end to this gold rush,” said Chris Bond, a spokesperson for AHIP, the insurance industry’s lobbying group.

But finding a fix is proving just as difficult as passing the original law. That’s because there’s no consensus around how to fix it and powerful interests, in doctors and insurance companies, with huge stakes in the fight. The impasse underscores not only how difficult it is for lawmakers to address something they agree is a problem but is also the sort of consequence of a well-intended law that can paralyze Congress even further in future legislating.

The stalemate is threatening patients Congress was trying to protect. Payouts are rising so fast that insurers say it’s putting pressure on them to raise premiums, and doctors say insurers are not paying them after they win in arbitration. Both are the opposite of what Congress intended.

“It’s not a partisan issue. We are going to fix this problem,” Rep. Greg Murphy, a North Carolina Republican, said in an interview.

Insurers are unlikely to embrace that fix. Murphy is a urological surgeon and one of doctors’ foremost advocates in Congress. His proposal would not seek to reduce the number of claims from providers going to arbitration, or ensure their payouts are rational, but rather boost penalties to insurers that don’t pay out the arbitration judgments.

It’s an idea the insurance industry and its allies on Capitol Hill have already dismissed.

Murphy’s just as opposed to bills that would slant the system toward insurers.

“If claims are adjudicated against somebody they need to be paid,” he said.

Patients win, insurers lose

The No Surprises Act has succeeded in its principle aim. Patients are no longer getting surprise bills.

But lawmakers figured the arbitration system they set up would receive 17,000 claims a year. It received 2.5 million last year, up from 1.5 million the year before, each one draining money out of the medical system.

Arbitrators are in some cases awarding physicians vastly more than their services normally cost, such as $440,000 for a breast reduction surgery that typically runs $15,000 to $25,000, the New York Times recently reported.

The Times also detailed how doctors are gaming the system. A husband-and-wife team in Manhattan, the surgeon husband in network, his assistant wife not, are a case in point. After performing surgeries, the assistant wife would file claims yielding in some cases payouts many multiples the size of her surgeon husband’s fees. In one case, arbitrators awarded her $210,000 for her work assisting with an operation reshaping bones around a transgender woman’s eyes to make them appear more feminine. Her husband earned $12,767.

Overall, arbitration judgments tripled last year from the year before, hitting $15 billion, according to an analysis of federal data by the Wall Street Journal.

Under the system Congress created, doctors and insurers have 30 days to settle disputes over out-of-network charges. If they can’t agree, the dispute goes to an arbitrator. The doctor and the insurer each put forth an offer on what they think a fair price for the treatment is and the arbitrator picks one. Similar to the arbitration system used to settle disputes over baseball salaries, the arbitrator must pick one number or the other and isn't permitted to compromise or choose a middle-of-the-road price.

Insurance companies are losing nearly 90 percent of the time. They often refuse to pay up.

The Centers for Medicare and Medicaid Services finalized a regulation in May to streamline the arbitration process, including a new requirement for arbitrators to determine if a claim is eligible within five days. But lawmakers say the rule itself isn’t enough and Congress must take action to address the law's bigger flaws.

Doctors and their allies

Murphy, the co-chair of the GOP Doctors Caucus, says no one should cry for the insurance companies: “They are sitting on a ton of money.”

His No Surprises Act Enforcement Act would strengthen penalties for insurers who don’t pay out arbitration judgments. The bill, introduced last year, has not advanced in the House.

Influential lobbying groups representing doctors, such as the American Medical Association, have thrown their support behind Murphy’s bill. The AMA pointed to a survey done this year by another lobbying group for doctors, the Emergency Department Practice Management Association, that showed a 39 percent reduction in out-of-network reimbursement for emergency services, which the group blamed on insurers failing to pay claims.

Some Democrats are on board with addressing the problem.

“The process is stacked against doctors: They get penalized for the smallest delay, while insurers can slow-walk or ignore a decision with no real consequences,” said Rep. Raul Ruiz (D-Calif.), who is sponsoring Murphy’s bill and, like Murphy, is a doctor. Ruiz practiced emergency medicine before getting into politics.

A Senate version of Murphy’s bill is led by another doctor, Roger Marshall (R-Kan.). And Bill Cassidy (R-La.), who chairs the Senate Health Committee, has staffers looking into how to resolve the persistent backlog of arbitration cases.

Cassidy, who is also a doctor and an original co-sponsor of the No Surprises Act, told POLITICO in July that doctors tell him insurers are gaming the system by "almost not participating" and failing to negotiate with doctors in good faith.

"They are putting up something so ridiculously low, the arbiter says 'I am not going to take that.'”

He's working on a plan to "prevent ineligible claims while also ensuring timely physician payment,” he told POLITICO in a statement.

Insurer pushback

Murphy’s bill is already getting massive pushback from insurers, underscoring his challenge in getting it enacted.

Insurers accuse doctors of gaming the arbitration process. They point to physician groups owned by private equity firms flooding the system with unreasonable and excessive claims.

The Coalition Against Surprise Medical Billing, which includes insurer and employer health plan advocacy groups, launched an ad campaign on July 13 charging that the bill would reward bad actors who abuse the arbitration process.

A group of major employers ranging from Microsoft to Dow also wrote to the Ways and Means Committee on July 10 decrying the Murphy legislation’s additional penalty to insurance plans.

In October, the insurer group AHIP co-published a survey of health plans with the Blue Cross Blue Shield Association, which represents more than two dozen Blue Cross Blue Shield insurance plans. While the insurance plans surveyed found 39 percent of all disputes ineligible, an arbiter deemed only 17 percent ineligible in the same survey.

A group of lawmakers is considering legislation to scrap the arbitration process altogether, according to a lobbyist granted anonymity to speak freely about the issue. Instead they want to rely on a benchmark rate that's tied to the in-network rate for a service.

But doctors balked at this approach during the 2020 debate over the No Surprises Act, worrying insurers could game in-network rates to underpay them.

So far, there has been no legislation introduced and more public support on Capitol Hill for provider-focused legislation than fixes to help insurers.

The surprise billing coalition is pushing for stricter guardrails to the arbitration process to combat outrageous awards.

“There is growing, bipartisan recognition that policy action is needed,” said Bond.