Press Release Coronavirus Health and Social Programs Private Equity

Surprise Medical Billing Legislation is Good News for Patients, CEPR Co-Director Says


December 21, 2020

Contact: Karen Conner, 202-281-4159Mail_Outline

Washington DC — In response to Surprise Medical Billing legislation inserted into the omnibus spending and COVID relief bill introduced December 21st (passing on December 22nd), CEPR Co-Director Eileen Appelbaum issued the following statement:

“We commend Congressional leaders for passing a spending and relief package that includes legislation to end surprise medical billing. That is very good news for patients.

“With this legislation, patients will not receive surprise medical bills from providers or air ambulance services (but ground ambulance services are not covered). Patients will only be required to pay the co-pays that they would be responsible for if cared for by an in-network doctor. 

“The legislation that just passed is weaker than the bill that was defeated last December — it has fewer restrictions on when a surprise medical bill can go to arbitration. Still, it has an arbitration mechanism for resolving disputes over payments to providers. The arbitrator must begin from the median fee paid to in-network doctors for the same procedure in their area, and not the fee charged by the out-of-network doctor. 

“This is really bad news for companies like Envision, who have profited from and made extensive use of surprise medical bills. It is less of an immediate problem for companies like TeamHealth. Most of TeamHealth’s doctors are in-network, but the company is able to negotiate higher reimbursements for their doctors. This will continue for now. Over time, these premium payments from insurance companies will dissipate. TeamHealth has been able to command higher reimbursement rates than other doctor practices because they could threaten to go out-of-network if they didn’t get what they wanted. That would make patients covered by those insurance companies very unhappy. In future contracts with insurance companies, that will be a much weaker threat, and their reimbursement rates will be much closer to what other doctors get. 

“The legislation appears to have taken the private equity companies and the American Hospital Association by surprise. They previously opposed any limits on their ability to negotiate settlements with insurance companies. The legislation was introduced on the evening of December 18, and passed on December 21 as part of the larger spending and relief bill. This did not leave time for opponents to mount a full court press against it.

“In general, the legislation to rein in surprise medical bills is weaker than we would have liked, since arbitration generally results in out-of-network doctors getting higher reimbursements. But having to start the negotiation from the median in-network price paid for the procedure really limits this.”

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