How to End Surprise Medical Bills

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One gift tucked inside the $2.3 trillion Covid relief and government spending bill Congress passed during Christmas week is a ban on virtually all surprise medical bills. No longer will insured patients be hit with enormous unexpected invoices from emergency room doctors, anesthesiologists, radiologists and other health care providers who work outside health insurance networks. Charges like this have cost Americans with employer-sponsored health insurance some $40 billion a year, arousing universal outrage and bipartisan promises to crack down.

After long delays and despite strenuous industry lobbying, lawmakers finally agreed to act. Doctors are now forbidden to charge patients directly for out-of-network care administered without patients’ consent, which must be given at least 72 hours in advance. Yet two crucial questions aren’t fully resolved: Who pays for the procedures if not the patients concerned, and who sets the price?

Congress has set rules that call for arbitration to decide whether the doctor’s preferred price or that of the insurer will prevail. In making this judgment, the arbitrator is told to consider median in-network prices. These are considerably less than what many out-of-network providers had been billing (though still higher than what Medicare pays for the same services). But the law allows arbitrators to agree to higher prices in cases where providers show evidence that higher payment is warranted by their training, the quality of their work, or the complexity of the case.

There’s a danger that this process will be overwhelmed with disputes, and that arbitrators won’t settle cases in line with good objective criteria. The necessary administrative regulations will be written by Biden’s health and labor agencies before the law takes effect next year. These will need to be carefully crafted to ensure that the new system isn’t swamped and will work as it’s meant to.  

Regulators should also ensure that the rules on patient consent are clear. People shouldn’t be asked to sign confusing consent forms presented by doctors or blanket consent forms issued by hospitals that result in their receiving the kind of surprise bills the law is intended to stop. The goal must be kept firmly in mind: The law’s purpose is to forbid all unexpected charges to patients and, at the same time, maintain downward pressure on the overall cost of health care.

The scandal of surprise bills has been tolerated far too long. The new law is an important step forward — but it’s too soon to declare it a success. First, it must be made to work.

Editorials are written by the Bloomberg Opinion editorial board.

©2021 Bloomberg L.P.

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