Senate committee adopts 'federal benchmark' strategy to address surprise bills
The benchmark would limit charges for out-of-network care by pegging reimbursements to the median in-network rate.
The Senate Committee on Health, Education, Labor and Pensions has unveiled its effort at legislation to rein in health care costs, as well as a federal benchmark to resolve the issue of “surprise” medical bills.
As reported by Politico, the benchmark drafted to tackle surprise bills is a different solution from the remedy that HELP Chairman Lamar Alexander, R-TN, has previously expressed support for—what’s termed an “in-network guarantee.” That approach would have required all physicians at the same facility to be considered in-network—and was opposed, naturally enough, by physician groups. A third option that was considered and rejected was arbitration.
The resolution that ended up attached to the proposed legislation, however, is the benchmark, which is pegged to the median in-network rate for an area. According to Modern Healthcare, the resolution would “ban surprise medical bills through a cap on the pay physicians, hospitals and air ambulances can collect for out-of-network care.”
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Alexander plans a vote on the legislation next week, which has undergone a number of changes since it was first brought up in committee—including the benchmark, which covers air ambulances that were not included in the original discussion draft. It is opposed by both hospital groups and air ambulance companies.
House Energy and Commerce Committee leaders have also proposed the benchmark rate, which won out over both a proposal for arbitration and Alexander’s original preference for an in-network guarantee.
As might be expected, not everybody is happy with the legislation, even those who might logically support it. Elizabeth Mitchell, CEO of the Pacific Business Group on Health, says that since a quarter of hospitals do fine on the Medicare rate, to really bring down the cost of care, the proposed legislation should instead have pegged the benchmark rate to 125 percent of Medicare instead of starting out with a benchmark that instead “locked in already-high premiums.”
Still, according to Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, the benchmark rate is preferable to the arbitration model championed by doctors and hospitals. Adler calculated that “the proposal could lower private insurance premiums by about half a percent across the country, based on the Congressional Budget Office’s projection of $25 billion in federal savings.”
For its part, the American Hospital Association has characterized the benchmark rate as “unworkable” and liable to result in “significant unintended consequences for patients and create a disincentive for insurers to maintain adequate provider networks, particularly in rural America,” according to the group’s executive vice president Tom Nickels.
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