Just when Congress is considering taking decisive action to protect patients from surprise medical bills, should we be surprised that those who stand to benefit from unfairly charging consumers are pushing to keep the status quo?

Action4Health is the latest group to tout the preferred surprise billing “fix” championed by private equity firms and out-of-network providers – the very providers who caused the surprise billing crisis in the first place. Let’s be clear – there is no “fair” approach to government-mandated arbitration. As we have seen in states that have implemented arbitration models, such as New York and Texas, this convoluted mediation process gave private equity firms another way to bilk the system, demanding far higher costs that we ultimately all end up paying. The data speaks for itself:

  • “…Laws in Texas, New York, and New Jersey go further than most in using arbitration to settle disputes. And in all three of those states, out-of-network providers are the clear winners, data shows…Eighty-five percent of arbitration requests in the first six months of the Texas law were from Team Health, SCP Health, and Tyvan Billing [private equity-backed providers]…” Bloomberg: Texas ‘Surprise’ Hospital Bill Ban Points to Capitol Hill Clash
  • “The average arbitration award [in Texas] for emergency room physicians in 818 cases is $660. In contrast, The most expensive Level 5 average network rate is less than $500… The $660 arbitration average for all levels of care, which are intended to reflect the complexity of cases, means ‘you are substantially paying higher’ than negotiated network rates. The high payments are ‘because they’re basing the awards off of billed charges, not average network rates. In addition, the cost of arbitration is averaging about $1,000 per claim, twice as much as the total cost of care.” Bloomberg: Texas ‘Surprise’ Hospital Bill Ban Points to Capitol Hill Clash
  • “In 2015, New York passed a surprise billing law that uses ‘baseball-style’ arbitration as a way to settle payment disputes between insurance companies and doctors… ‘According to an analysis of newly released data from New York’s Department of Financial Services, the New York model is making health care substantially more expensive in the state. In fact, arbiters are typically deciding on dollar amounts above the 80th percentile of typical costs.” NPR: To End Surprise Medical Bills, New York Tried Arbitration. Health Care Costs Went Up
  • According to the analysis, the number of bills undergoing arbitration went from 115 in 2015 to 1,014 in 2018…and on average, arbitration decisions have been 8% higher than that 80th percentile mark.” – NPR: To End Surprise Medical Bills, New York Tried Arbitration. Health Care Costs Went Up

Everyone Agrees: IDR & Arbitration Keeps Costs High

Leading policy experts and organizations representing consumers, employers and unions have urged Congress to avoid arbitration proposals at all costs. Bottom line: protecting consumers means avoiding a costly, burdensome arbitration proposal that would incentivize price-gouging moving forward. Read more.

  • We “are deeply concerned about any mechanism that uses billed charges as a basis for or factor in setting out of network payment. Billed charges are often several times higher than the rates providers typically receive for delivering care and using charges as a basis for or factor in setting rates would inflate costs throughout the system, ultimately raising premiums for consumers.” – Families USA, AFSCME, American Medical Student Association, Community Catalyst, Consumer Reports, Doctors for America, First Focus Campaign for Children, Health Care for America Now, Mental Health America, MomsRising, National Alliance on Mental Illness, National Association of Social Workers, National Consumers League, National Health Law Program, National Partnership for Women & Families, NETWORK Lobby for Catholic Social Justice, Voices for Progress, 1,000 Days
  • “Specifically, 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, American Enterprise Institute, 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
  • “…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
  • “In New York, the largest state where arbitration is used for surprise bills, arbitrators are instructed to use the 80th percentile of hospital list prices as the benchmark for their decision. These hospital list prices are a lot like paying full fare for an airline ticket; they often come out to 10 or 20 times what Medicare pays emergency rooms for the same services. By benchmarking out-of-network prices at such a high rate, the New York law incentivizes ER doctors to raise their prices even higher, knowing that by doing so, the benchmark for arbitration will also go up.” – Avik Roy, The Foundation for Research on Equal Opportunity
  • “The Congressional Budget Office and independent economists have found that restricting access to the IDR process would help rein in excessive provider charges and reduce workers’ health care premiums. California’s experience of implementing a surprise medical billing law that relies on a payment benchmark and limits provider appeals shows that consumer costs can be contained without narrowing insurance provider networks.” – William Samuel, AFL-CIO
  • “Rather than contain costs, therefore, baseball-style arbitration would give providers new incentives to raise their billed charges over time.” – Tara Straw, Center for Budget and Policy Priorities