Current arbitration proposals under consideration as part of federal reforms to address surprise medical billing would give a green light to certain out-of-network providers to continue charging exorbitant rates for care.

We can’t solve surprise billing without addressing market failure that drives it in the first place. Arbitration will not protect patients against sky-high charges from out-of-network providers – costs that translate into higher premiums and higher taxes for all of us.  More and more groups are urging Congress to reject arbitration as a remedy to surprise medical billing. Read below highlights from the growing chorus of concern among leading consumer groups, employers and policy experts:

“We have asked Congress for one key assurance – protect us, and our employees, from being locked into government-mandated binding arbitration, which is being pushed by Wall Street-owned doctor groups. Disappointingly, the House Energy and Commerce Committee is set to report out legislation that locks employers into exactly such a mandate. Baseball-style arbitration has no place in the health care system, which is already burdened by excessive and unwarranted costs, as it threatens to force employers and patients to pay medical list prices – prices that are unreasonable and unpredictable and will continue to bankrupt families. Employers believe that providers should be fairly paid, with costs known up front and transparent for everyone — not chosen by the whim of arbitrators.”

Annette Guarisco Fildes, President and CEO

ERISA Industry Committee (ERIC)

“Arbitration will not help patients facing surprise medical billing nightmares. Allowing out-of-network rate setting decision’s to a third-party will lead to more bureaucracy, less transparency and roughly $1 billion in additional costs to the health system. While the No Surprises Act seeks to protect patients from surprise billing, if the arbitration amendment is added we believe surprise billing will continue unabated.”

Janet Trautwein, President and CEO

National Association of Health Underwriters (NAHU)

“We are concerned about proposals for open-ended arbitration, which have been floated as a solution to the problem. If arbitration appears innocuous, it is to a large extent because it is not transparent. Experience suggests that arbitration would be cumbersome to deploy, and highly favorable to those health care providers who charge high prices today. If Congress were to endorse arbitration, it could potentially open the door to a system quite unintended – establishing an inflationary dynamic that accommodates and encourages the rapid growth of costs.”

American Enterprise Institute, 60 Plus Association, Foundation for Government Accountability, National Taxpayers Union, Galen Institute and Heritage Foundation, Heritage Action for America, Hoover Institution, Center for a Free Economy, Oklahoma Council of Public Affairs, HSA Benefits Consulting, Independent Women’s Forum, Hoppe Strategies, Small Business & Entrepreneurship Council, Alaska Policy Forum, 60 Plus Association, Mark Pauly (University of Pennsylvania), HSA Coalition, Pacific Research Institute, Manhattan Institute, former Idaho state legislator Eric Redman, The Foundation for Research on Equal Opportunity, Council for Citizens Against Government Waste, Mississippi Center for Public Policy, Grace-Marie Turner (Galen Institute), Association of Mature American Citizens, Council for Affordable Health Coverage

“…Arbitration is not the answer to fix surprise medical billing. Policymakers should not be fooled. Arbitration is neither ‘light touch’ nor a solution to the true problem at hand. Instead of solving the fundamental issue, it kicks the can down the road to an arbitrator who faces the same challenges of any rate setter.

David Hyman and Benedic N. Ippolito

American Enterprise Institute

“We believe these market-based negotiated rates, which are already substantially above Medicare reimbursement rates, represent fair compensation for health care providers without potentially imposing rates on employer plans that could be 600 to 800 percent of Medicare rates. We urge members to reject amendments that would force employers into some type of arbitration or independent dispute resolution process that will not solve the surprise billing problem, but instead pass surprise medical bills onto all employees through their employer-sponsored health plans that are already struggling to control costs in the private sector.”

D. Mark Wilson, Vice President, Health & Employment Policy
HR Policy Association  

Arbitration is a highly inappropriate and misguided fix to surprise billing. As we note in our joint statement, arbitration is ‘not transparent’ and ‘would be cumbersome to deploy, and highly favorable to those health care providers who charge high prices today.’ The utilization of arbitration for surprise billing ‘could potentially open the door to a system quite unintended – establishing an inflationary dynamic that accommodates and encourages the rapid growth of costs.’”

Karen Kerrigan, President & CEO
Small Business & Entrepreneurship Council

“Having a government-appointed arbitrator pick the price gives, well, arbitrary power to someone with no expertise in health care prices. That lack of expertise leads many arbitrators to side with hospitals, incentivizing even higher emergency care prices.”

Avik Roy, President
Foundation for Research on Equal Opportunity 

The Ruiz bill raises great concern by instructing arbiters to consider the 80th percentile of billed charges for a service in a given market, an extremely high rate that is largely unconstrained by any market forces… H.R. 3502 would almost assuredly result in significantly higher premiums, patient costs, and federal deficits. And this marked increase would come on top of the already inflated premiums people are paying due to today’s very high private insurer payments to emergency and ancillary clinicians that likely stem from the ability to leverage the threat of surprise billing patients …Eliminating surprise out-of-network billing is a laudable goal, but a solution shouldn’t simultaneously create another problem by inflating costs and shifting them to purchasers of health insurance (employers and consumers) and taxpayers.”

Loren Adler, Erin Duffy, Paul B. Ginsburg, Mark Hall, Erin Trish and Christen Linke Young

The Brookings Institution / USC-Brookings Schaffer Institute on Health Policy

“Families USA does not support the Ruiz/Bucshon amendment to the No Surprises Act. We believe the bill is stronger without the amendment and urge a no vote on the amendment. We believe this amendment adds a layer of complexity and uncertainty to the underlying bill.”  

Families USA

“Some believe that the federal government should instead establish a new system of third-party arbitration for settling billing disputes. Others would have the government pick one rate and then increase that every year by adjusting for inflation, even if health-care costs decrease. I believe the Senate’s solution, which protects patients and empowers local markets to determine the price of health care, is the best way forward.”

Sen. Lamar Alexander

Chairman, Senate HELP Committee

“…Policy makers should be concerned about any solution—be it baseball-style arbitration or other means—in which a provider’s inflated charges factor into the price that is paid. An arbitration approach leaves the charges mechanism largely in place as a starting point for the arbitration. Furthermore, providers may seek to increase charges to have a more favorable starting position in the arbitration process. The proposed legislation might move the financial burden from the individual patient to the insurer, but it also increases the leverage of the providers in the negotiating process, thereby increasing the medical costs for the health plan and the premiums for all health plan members.”

Kevin A. Schulman & Barak D. Richman, Duke University
Arnold Milstein, Stanford University