On Dec. 28, 2020, President Donald J. Trump signed the No Surprises Act into law. This legislation will for the first time remove patients from the middle of out-of-network (OoN) billing disputes between healthcare professionals and insurers and create an independent dispute resolution (IDR) process to settle payment amounts. This result comes after more than two years of advocacy engagement from AAOS members in conjunction with the wider physician community, which prevented enactment of a federal benchmark standard unfairly influenced by insurers and with little opportunity for physician objection.
Increasingly, health insurance plans are offering narrow, often inadequate networks of healthcare providers, leaving even the most diligent patients with OoN healthcare bills. Aggressive insurance industry consolidation has worsened the problem in recent years. Although many states have enacted surprise medical billing protections, federal legislation was widely viewed as necessary. As of 2019, 61 percent of covered workers are in self-funded plans and therefore regulated under federal law and exempt from state regulation.
The issue came to national prominence at the end of 2018, as high-profile cases of patients receiving surprise medical bills, including a teacher who was charged $109,000 for care after a heart attack, intensified pressure on Congress to act. President Trump held two public events calling for legislation on surprise medical billing in early 2019 as well, allying with a group of bipartisan committee chairs in the House of Representatives and Senate in favor of an insurer-favored benchmark solution and creating the potential for swift action.
The No Surprises Act is not a perfect law, and federal rulemaking still to come will settle critical unanswered questions about the process. However, AAOS achieved vital changes in the law that will protect patients while allowing for negotiation to resolve medical billing disputes.
AAOS entered this debate with the following clear goals for eventual legislation:
- Hold patients harmless. A patient receiving emergency services from an OoN healthcare professional should be liable only for the amount they would have been charged had the healthcare professional been in network.
- Create a quick and fair process for settling billing disputes. AAOS supported a “baseball-style” IDR (also known as arbitration) process, similar to New York law. In New York, the healthcare professional and insurer provide a best offer, and the IDR entity chooses between them, using 80 percent of an independent database of charges as a key reference tool. The process saved consumers $400 million in the first three years of enactment.
- Include no benchmark or rate-setting. Insurers and their allies in Congress preferred legislation that would have incentivized further narrowing of networks and reduced in-network reimbursement by 15 percent to 20 percent.
- Retain a balance-billing option. In nonemergent situations, balance billing should be permitted if the patient is adequately informed about the likelihood of OoN care in order to preserve choice and competition.
Several key pieces of legislation provided a frame for Congressional debate. AAOS and a coalition of physician groups helped create and build support for the Protecting People from Surprise Medical Bills Act. That legislation—introduced by two physician members of Congress, Reps. Raul Ruiz, MD (D-Calif.), and Phil Roe, MD (R-Tenn.), in June 2019—most closely modeled the New York law to reduce balance billing. The legislation would have prevented balance billing in emergency situations and would have created a baseball-style arbitration process to settle disputes. The arbiter would have considered 80 percent of an independent database of charges when making a decision between the two numbers. The loser would have paid the arbitration costs, and the whole process from services to decision would take no longer than 60 days. Under this legislation, the physician and the insurer would have been able to negotiate and settle on a mutually agreeable number at any time.
Despite opposition from insurers and their allies, the physician community helped grow support for this legislation to 110 cosponsors. The legislation was incredibly important as a marker of widespread support for the Academy’s position and a legitimate proposal for committee action. However, guidance from the Congressional Budget Office indicated that the Ruiz-Roe bill would have added billions of dollars to the deficit due to its reliance on physician charges as a factor for IDR. Because of this, as well as committee action on other proposals, AAOS pivoted to pushing for many of the principles in this legislation to be incorporated in other legislation, as opposed to seeking passage.
The second major piece of legislation was the dominant proposal, favored by powerful House Energy and Commerce and Senate Health, Education, Labor, and Pensions committee chairs and key negotiators such as Senator Bill Cassidy, MD (R-La.), as well as insurers, large employers, and others. The Lower Health Care Costs Act would have established federal rates for OoN payments set at the median contracted (in-network) rates for services in the geographic areas they were delivered. Insurers would be largely responsible for calculating the rates.
AAOS believes that the true sources of surprise medical bills are narrow, inadequate networks of healthcare professionals. Setting payments to median rates would disincentivize plans from negotiating with healthcare professionals to keep them in network at fair rates. Thanks to AAOS advocacy and a key amendment from Rep. Ruiz, this legislation was improved to include a limited IDR process in July 2019. However, the IDR was weakened significantly by a $1,250 per-claim threshold for access and the use of the median in-network rate as the primary factor for consideration by the IDR entity. AAOS pushed the sponsors of the legislation to make further improvements throughout the rest of 2019 and 2020.
In February 2020, following AAOS advocacy with committee members and staff, the House Ways and Means Committee produced the Consumer Protections Against Surprise Medical Bills Act, a competing proposal that came much closer to meeting AAOS priorities. This legislation also contained an IDR process with the median in-network rate as a factor for consideration, although other key factors, including previous contracting history, were to be considered. AAOS thanked the committee for the progress made in the legislation but worked for improvements to further clarify that the median in-network rate should not be the primary factor to be considered in IDR; otherwise, it could be used as a de facto benchmark.
Threat of executive action
Progress on action in the spring of 2020 was stalled by the COVID-19 pandemic as well as disagreement between the committees of jurisdiction on key elements of the legislation. In fall 2020, President Trump signed an executive order giving Congress a deadline of Jan. 1 to pass a legislative solution. AAOS worked behind the scenes with congressional allies to persuade the president not to attempt a surprise medical billing fix by executive order alone. Although the White House had expressed opposition to an IDR solution, the president was widely expected to sign any surprise medical billing legislation presented to him.
No Surprises Act
Following months of negotiations between the House Doctors Caucus, Sen. Cassidy, all the key committees, as well as sustained advocacy from AAOS and the physician community, a final compromise piece of legislation was circulated on Dec. 11, 2020, for inclusion in an end-of-year package. The No Surprises Act represented further progress, with an IDR process with evenly weighted factors, no threshold for access, and the ability for physicians to batch claims in order to reduce administrative burden. A full summary of the draft as introduced is available at https://bit.ly/2LPfWGW.
AAOS worked immediately to request further changes to the text, including the removal of a 90-day waiting period between IDR processes. Several of the requested changes were championed by allies in Congress and included in the final bill, including provisions ensuring prompt payment or notice of denial of payment from insurers, a prohibition against insurers bringing public payer rates to IDR, more time for physicians to file for IDR, and an interim report regarding the effects of the included 90-day waiting period to help ensure that the waiting period isn’t preventing IDR from working as it should. These changes were made before the bill was incorporated in the COVID-19 relief package that passed Congress on Dec. 22, 2020, and the bill was signed into law by the president on Dec. 28, 2020.
Congress left many specifics of the legislation up to interpretation by the Department of Health and Human Services, which will now enter a rulemaking process to determine those specifics in advance of the bill’s effective date of Jan. 1, 2022. AAOS will work closely with regulators and continue to advocate for all possible improvements throughout the process.
AAOS is grateful for the work of allies in Congress; coalition partners; and the many AAOS members who sent thousands of messages to Congress through the Advocacy Action Center, met with legislators during the August 2020 In-District Advocacy Event, and supported the AAOS Orthopaedic Political Action Committee. Although the No Surprises Act is not a perfect solution, AAOS thanks Congress for rejecting a benchmark approach and choosing an IDR process to remove patients from the middle of medical billing disputes.
Jordan Vivian is director of government relations in the AAOS Office of Government Relations.
- New York State Department of Financial Services: Report on the Independent Dispute Resolution Process. Available at: https://www.dfs.ny.gov/system/files/documents/2019/09/dfs_oon_idr.pdf. Accessed January 8, 2021.
- Congressional Budget Office: Cost Estimate. Available at: https://www.cbo.gov/system/files/2019-09/hr2328.pdf. Accessed January 8, 2021.
- NPR: Life-Threatening Heart Attack Leaves Teacher with $108,951 Bill. Available at: https://www.npr.org/sections/health-shots/2018/08/27/640891882/life-threatening-heart-attack-leaves-teacher-with-108-951-bill. Accessed January 8, 2021.
- Kaiser Family Foundation: 2019 Employer Health Benefits Survey. Accessed January 8, 2021.