I'm Rich Heller and this is a Surprise
Medical Billing and The No Surprises Act:
More Surprises Than You’d Think. Part two. So a brief review. In his State of the Union address,
President Biden talked about stopping so-called surprise
medical bills, proudly proclaiming that we're already stopping 1 million
surprise bills a month. That was due to a piece of legislation
called the No Surprises Act, which began in January of 2022. First and most importantly,
the law protects patients. It takes them out of reimbursement
disputes between insurance companies and medical organizations
like hospitals and physician practices, and to determine the value of the service
and the reimbursement level. It went with an arbitration model,
which it calls independent dispute resolution, or IDR, for short. I know it's a mouthful. Now, the law itself
actually went into pretty explicit detail about how the arbiters
should be making their decisions, and it listed out the criteria
that they should be using. And it went into pretty granular detail. As you can see here now,
one of the criteria that they listed was something called
the qualifying payment amount or QPA. As we discussed in part one,
that's the median in-network rate. That's the insurance companies
calculated median in-network rate. Now, recall that there were some in Congress
that wanted to use the QPA as a benchmark, even though that would benefit
the insurance companies. But Congress said, no,
we're going to use an arbitration model. Congress was striving for balance,
looking for a process that fairly balanced the concerns of both
the insurance companies and the medical providers, and that's why
they went with the arbitration model. Now, the compromise that was made
was that they used an arbitration model. But one of the criteria
in arbitration was that meeting in network Now, was the medical community
thrilled with this? No, because it's not counterbalanced
by other criteria and it benefits the insurance companies. But in a compromise,
you don't get everything you want. So that's the compromise that was made. The question was,
would the administration implement the law in the balanced manner
that Congress intended? So what the law actually says is that in
determining which offer to select the arbiter shall consider
and then at which those various criteria. Now, the way the system works
is that after the law is passed, the administration is charged with operationalizing
the law through so-called rulemaking. And one of these rules
that we were all anxious to see was how would arbitration actually work. So in late September of 2021, the administration issued their rule on
how the arbitration would function. And what they said is that the arbiter
must begin with the presumption, that the QPA is appropriate
and that the arbiter must be required to select the offer closest to that QPA
that median in-network rate, unless... unless the providers
can show otherwise, unless the providers can show why you shouldn't
be using that benchmark rate. So let's think about what they did
with this rule. With this rule, the administration
fundamentally changed the law. They took a law
that was rooted in arbitration and they said,
we don't want to do that anymore. We want to use a benchmark law. Now, there was still arbitration,
but the role of arbitration fundamentally changed.
The way the law was written. the role of arbitration was determine
the appropriate reimbursement amount. But with this rule, they said no, the role of arbitration is to
determine is the benchmark appropriate with the presumption that the benchmark
that meeting, the network rate is appropriate and the burden of proof
is on medical organizations, on physicians to show
why the benchmark is not appropriate. In part one, I showed this figure
and I asked the question what would happen if a law was passed that benchmarked off
the meeting network rate? Well, we said that practices would get
a letter from the insurance companies and it would say something like this. Dear Practice, You got two choices. One, you go out a network or two,
you take a rate reduction. That wouldn't
that wouldn't actually happen, though. You wouldn't actually get letters
sent to you saying, we're going to kick you out of network
if you don't take a rate reduction. That's exactly what happened. It was only a matter of weeks after that rule was issued
that the letters started arriving. This one came from BlueCross
BlueShield of North Carolina. But there were others. And what the letter said, which is exactly what we said
it would say, was that Dear Practices, you either take a rate reduction
or we're kicking you out of network. Now, I want to be really clear. In part one, we talked about how the law
could be used as a Trojan horse, taking the very real problem
of surprise medical billing, but using it to reduce physician reimbursement. This is the smoking gun.
This is the proof of that. This has nothing to do with protecting
patients from surprise medical bills. Surprise Medical billing occurs
with out of network practices. These letters were sent exclusively
to in-network practices because you can't threaten
to kick somebody out of network who's already out of network. So this is the proof that it was
never about protecting patients, but always for the insurance companies
about reducing reimbursement rates. Now, when I was a child,
I love to watch Saturday morning cartoons and they used to include Schoolhouse Rock
and maybe to try to teach us stuff. And my favorite Schoolhouse
Rock was the story of how a bill named Bill,
by the way, becomes law. And it goes to the story
of how Bill goes to the House and Bill goes to the Senate
and Bill goes through committees. At the end, the president actually
signs Bill and makes Bill a law. In other words, a song. I won't sing it for you,
but many of you probably remember it. I'm just a bill. Yes, I'm only a bill. And I'm sitting here on Capitol Hill. I wonder if you remember
the last verse of that song. And after I become a lawyer
in the rulemaking process, the administration can change me
however they see fit. Do you know why
you don't remember that verse? You know why that verse doesn't rhyme? Because I wrote it. It's not a thing. You do not get to change a law
after it's a law. That's not a thing. And once it's a law, it's a law. You don't get to change it. So what happened when the administration
changed the law in rulemaking? Lots of lawsuits. These are only some of the organizations
that filed lawsuits as a result of this rule. Now, the first one to file was the Texas Medical Association. And what the judge said in
ruling for the Texas Medical Association is that nothing in the Act
instructs arbiters to weigh any one factor or circumstance
more heavily than the others. The Act nowhere states that the QPA
is the primary or most important factor. Hashtag shaking my head. Now I added in the hashtag
because I was disappointed that the verdict
didn't have any hashtags in it and I felt like SMH
was sort of aligning with the sentiment. But again, that was my addition.
The other stuff is verbatim from the judge. So this was in February of 2022. So this vacated that part of the rule. And so the administration
and now I'm presuming, read the verdict, read the law. Thought about it. Thought about how they were going to issue
new guidance to align with both the law and what the judge said,
because the judge was really clear, all the criteria equal, the QPA
can't be the first or most important. So the administration thought about it. And then six months later, in August
of 2022, they issued their new rule. And what it said is that the arbiters
must consider the QPA and then consider the other information. And furthermore,
if you arbiters give any weight to non-QPA additional information,
you have to explain in writing why the QPA doesn't already
take that information into account. In other words,
they read the judge's verdict. They read the law
and they doubled down on the QPA. The QPA comes first again. What!? Exactly. So, the Texas Medical Association
read the new rule. They read the judge's verdict. They reread the law
and they filed a second lawsuit. TMA II. Essentially second verse,
same as the first. The QPA was not intended
to be the primary or most important factor in arbitration. And the judge, again,
ruling with the Texas Medical Association, wrote that the departments
have not relinquished their goal of privileging the QPA,
tilting arbitrations in favor of insurers. The final rule continues to place a thumb on the scale for the QPA. So the judge vacated
this part of the rule. So after the judge vacated that rule,
the department issued new guidance, which you can see here. In this guidance,
they specify that arbiters, which are called certified IDR entities. Again, a mouthful
that those entities must consider the QPA and the other information. The QPA is no longer to be considered
first or given any extra weight. Finally. Let's hope
the arbiters understand this. And if administration does not again
try to favor the QPA. The administration has the right to appeal this decision,
and they have filed a notice of appeal. As I taped this in April of 2023. But let's hope that the administration
does not try to revise this again. So where are we now? Well, the American College of Radiology
wrote a letter and they noted it's taking medical practices
sometimes over seven months to go through the arbitration process
and get paid. And that's because of a huge backlog
of cases, among other factors. Now, medical practices are often
small businesses and taking over half a year to get paid
for many of them simply isn't sustainable. Recently, Secretary Becerra, the Secretary of Health and
Human Services, spoke with and met with Congress. In his meeting
with the Senate Finance Committee, He was asked about implementation
of the No Surprises Act by Senator Bennet. And what Senator Bennet, a Democrat
from Colorado who had worked on the issue of surprise medical billing, said
is the implementation is a big mess. And he talked about the issues
that were plaguing it. Now, the secretary replied that
and I'm quoting now, I want to say the vast majority,
but way, way too many of the submitted disputes are frivolous
because there's no cost to file a claim. So everyone is just filing
all sorts of claims. That's what is bogging down the system. The secretary did not provide evidence
to back up that frivolous claim, nor did the secretary define
what makes a frivolous claim. He didn't explain why a provider
would want to submit a frivolous claim because the arbitration process
is loser pays. So if you go to arbitration, particularly,
you go to one with a frivolous claim and you lose.
You have to pay for arbitration. So there's not only no incentive
to submit a frivolous claim, there's a pretty strong disincentive
to submit a frivolous claim. But let's talk about this. No cost to file a claim because there's lots of myths,
and that seems to be one of the myths. This is clearly not true. Not only is there not no cost to file
a claim, it's freakin’ expensive! So in addition to the fees you have to pay
to the government for the administration of the process as well as the fees
you've got to pay to the arbiter. Practices actually
have to dedicate resources and time and money
to putting together these disputes, put them together in a thoughtful way
and then submitting them. That is not a free process. And that's in addition to the fees they
actually have to pay to go to arbitration. So the big picture
is that delays in the system hurt medical practices
because it delays their payment. Medical practices want to be paid
in a timely fashion and then arbitration delays that. Practices want to be
in network. If practices are in network. they get paid more reliably, more timely. It's less costly to get paid. So if practices have to go out of network,
that's not the preferred option. And if they have to go to arbitration,
well, that's the last resort. I would hope the administration recognizes
that if there are lots of cases being submitted for arbitration,
that's a red flag. That's a sign
that the process is not balanced. Speaking of expense,
so a little Christmas tale. Twas the Friday before Christmas
when no one was looking. CMS thought, Let's get something cooking. Not a warning was given. No, it's not an event. We're just increasing your fees 600%. So here's a tale of two holidays. It was Halloween of 2022, and the administration issued guidance
saying that in 2023, the administrative fee to access
arbitration would not be changing. It was $50 in 2022. And on Halloween, they said it's
going to remain $50 in 2023. Now, this is important information
for medical practices to know as they make their plans. But then on the Friday before the long
holiday weekend for Christmas, it was a three day weekend. On that Friday, they said, you know what? We changed our minds. We're going to increase that $50 fee. How much? 10%. 20%.... 600%.! You're increasing it 600%! Yes. So the Friday before Christmas,
they said starting January one, the fees are going to increase 600%. Surprise. And by the way, that's only a few business
days before the start of the new year. Surprise.
So let's do a little bit of math. Let's imagine that you're a physician,
a radiologist, and that you typically would be reimbursed
for a exam, $60. I'm making up these numbers
and instead you get paid $10. So let's go through the math on this. Well, you got to pay a $350 nonrefundable
administrative fee to the government. You don't get it back if you win. That's simply
the fee to go to arbitration. $350. That's the rate they're charging in 2023. You know, separate from that. And in addition to that,
you have to pay the arbiter’s fee. Now, that ranges between 350 and 1200
dollars. Now, you do get that money back
if you win. You do not get it back if you don't win. And you do not get the interest on it. So if the process takes months,
your cash is held up in this process and you're not going to get any interest
on it. Now, lots of practices
are small businesses. They may not be able to afford
to have this much cash if they're submitting lots of disputes held up in this process,
even if they're winning. This impacts their cash flow
and they're losing the interest. This is even
more challenging for some specialties. For example, radiology. Most of our claims are for less than $100,
and almost all of them are for less than $350. So for us to be able to access
arbitration, we have to be able to put many of them
together using that prior example. It's not worth it
to go to arbitration to try to gain $50 if you're going to have to spend $350. Even if you win,
you'll still be down $300. But what if you could take multiple claims
and put them together? Now that's batching. The one not only permits batching,
it actually encourages it. But in rulemaking, the batching ability
has been severely limited. As a result, practices are submitting a lot more disputes
with fewer claims in them. It would be more efficient if we submitted fewer disputes
with a lot more claims in them. That would be a more efficient process. But because of batching limitations,
we can't really do that. And for
radiology, it's even more of an issue because if you can't batch
claims together and you can't reach that $350 threshold, you don't have access
to arbitration, do you? I mean, you can go to arbitration
if you want. If you want to go for it
and spend $350 minimum to try to gain $50. Knock yourself out.
But it's not cost effective. This is a barrier to arbitration
for many physicians. So I think of it as three buckets of problems
with the out of network process right now. The first one is that access issue
because of limitations on batching,
because of that $350 administrative fee. Lots of organizations
are not able to access arbitration in a cost effective manner. Separate from that is the need to have
a balanced, fair arbitration process. Now, we didn't really get into the QPA. That's its own talk. Maybe I should do one,
but that's its own talk. Problems with the QPA. But here they are in a nutshell. The first one, There's serious concerns
about the calculation methodology, which has been specified
in rulemaking by the administration. Specifically, the rules
allow the insurance companies to ratchet down
the rates to non real world. And furthermore, there's a concern
about a lack of integrity of the rates because the insurance companies
calculate their own QPAs and they may do so
in a nontransparent fashion. If a medical practice gets a QPA,
they think that looks funny or strange and they want to see the math, insurance
company doesn't have to share their math. Now, the administration can certainly
audit them, but the physician practices, no, you don't get to look at the QPA. We the insurance calculate it
and we tell you what it is. You don't get to see our math. Now, despite serious concerns
about the calculation methodology
and the lack of integrity of the QPA, the administration has now twice
tried to make the QPA the primary factor. that arbiters should be using
when making their determinations. And finally,
even practices can access arbitration. And even if they win a determination
in the arbitration process, there are reports that the insurance companies
are not paying in the appropriate fashion. They're not paying on time
or they're not paying completely. Senator Bennett alluded to this
in his comments with Secretary Becerra. So I mentioned the TMA lawsuit previously. So they have filed several lawsuits. So here they are, the first two lawsuits
filed by the Texas Medical Association were essentially
the same. That the law was never intended to make the QPA the primary
or most important factor. That's what TMA one said. That's what TMH two said. Both of those have been decided, both
in favor of the Texas Medical Association. Each time the judge said correct,
the QPA was never intended to be the primary
or most important factor in arbitration. Arbiters should be considering all of the criteria. The third lawsuit submitted by the TMA regards that QPA, specifically
the calculation methodology and that the QPA calculation methodology
results in non real world economics. And the fourth lawsuit from the Texas
Medical Association deals with that barrier to access. That $350 fee,
which limits practices from being able to access arbitration
the way the law intended. Again, as I'm taping this in April of 2023, the third and fourth lawsuits in the Texas
Medical Association are still pending. Now, I want to make sure
that for practices that are watching this, they understand this is relevant to them,
whether they are in-network or out-of-network. If you're in-network,
you run the risk of getting those letters, threatening you with rate reductions
or kicking you out of network. And then if you're out of network,
there's a risk of delayed payment, reduced payment
or potentially even nonpayment. Another issue is administrative spending. Administrative spending can account for up
to 30% of health care spending. We spend more on health care
spending administratively in this country than other comparable nations,
and much of it is wasteful. I hope that we would all agree that the
money the practices are spending right now having to go through all of this arbitration process
would be better invested in clinical care. But even more, the administrative waste
is the impact on patients. Now, this article is on the economic
challenges faced by medical practices focusing on Medicare,
which may not always cover the costs of delivering care
without adequate reimbursement. Medical practices
cannot sustain patient care services, and as they scale back,
especially in rural and underserved areas,
patient access to care may be threatened. This is why advocacy is so important. It's important
that we make sure that those in Congress, that those in the White House
and in the administration understand the concerns that we, the House
of Medicine are all aligned, supporting the intent of the law to protect patients
from these so-called surprise medical bills. But the law is not being implemented in a fashion
that aligns with congressional intent and that practices and patients access
to care are being threatened. This is a list of
some of the organizations have been active in advocacy. I also want to include Americans
for Fair Health Care and include a QR code. People can learn more about Americans for Fair Health Care and consider signing the community statement. Hopefully in his 2024
State of the Union address. The president can claim
that not only is surprise billing improved, but wasteful administrative spending
has been reduced and medical practices and the patients they care for
are better protected than ever before. Thank you very much.
