On Friday evening, Democrats and Republicans in Congress unexpectedly announced they had reached a deal on legislation aimed at stopping surprise medical bills, one of the most widely loathed and predatory features of the American health care system. The breakthrough came after nearly two years of wrangling on Capitol Hill, amid an enormous lobbying battle that pitted insurers and consumer advocates against health care providers and private equity firms. Lawmakers are hoping that the painstaking compromise will be included in the year-end spending bill that members must pass to keep the government funded before they leave town for the holidays.
It is not yet clear whether that will happen. House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer have backed the plan, meaning the Democrats are on board. But the legislation’s fate likely lies in the hands of Senate Majority Leader Mitch McConnell, who has yet to endorse it and has not shown any particular interest in addressing surprise medical bills more generally, despite the national outcry over them. Nevertheless, there are at least a handful reasons for optimism. Here’s what you need to know.
What are surprise medical bills again?
They’re a menace, basically. Surprise billing occurs when patients go for treatment at an in-network hospital, thinking they’ll be covered by their insurance, and unknowingly receive treatment from an out-of-network physician who then sends them the tab afterward. It frequently results from trips to the emergency room, where visitors have little say over who handles their care, and often involves specialists like anesthesiologists, whom patients typically meet just briefly before a surgery, or radiologists, whom they might never meet at all.
These stealth charges are becoming more common—according to a 2017 study, one out of every six insured hospital patients now receives a surprise bill—and more expensive. (One paper found they rose from an average of $220 in 2010 to $628 in 2016.) In extreme cases, consumers sometimes face financially devastating charges for tens of thousands of dollars. Unsurprisingly, voters hate the practice, since it tends to victimize helpless patients, and some states have tried to address the issue. But because of rules governing how health insurance is regulated in this country, the only way to fix the problem entirely is through a federal bill.
Why was this so hard to fix?
Almost everyone ostensibly agrees that surprise medical bills are a problem that should be addressed. But coming up with a solution has led to an epic clash of special interests that’s made it difficult to reach a deal. The problem is that, while surprise billing may seem self-evidently grotesque to most people, a lot of doctors have used it as a threat to gain leverage in negotiations over reimbursement rates with insurers. (If Humana or Aetna refused to pay the rate they demanded, they could just bill patients directly.) Physician staffing companies, which contract to run emergency rooms on behalf of hospitals, have made big profits off surprise billing, and the private equity firms that own many of those outfits poured big money into the lobbying effort to prevent reforms.
If you want to get into the weeds a little, advocates basically proposed two different fixes for the issue. Both of them would have forced insurers to pay providers when surprise bills came up, instead of leaving the patients to fend for themselves. But in one, called “benchmarking,” the government would essentially set a formula for the payments. Patient groups and insurers liked that strategy, because they believed it would keep costs down. The other approach would send the insurer and provider to arbitration; the doctors and private equity suits preferred that one, because past experience in states like New York suggested that it would be better for their bottom line. They basically fired off a cannon of lobbying cash, complete with a fusillade of TV ads, to try and get their way.
Last year, the House and Senate appeared to reach a bipartisan deal that combined the two approaches (benchmarking for smaller bills, arbitration for bigger ones). But Rep. Richard Neal of Massachusetts, the powerful Democratic chair of the House Ways and Means Committee, who is extremely tight with the doctor and hospital lobby, essentially stopped the agreement in its tracks. The whole incident raised serious questions about whether Democrats would ever be capable of serious health care reform.
So why did they reach an agreement now?
Apparently Pelosi finally leaned on her committee chairs to stop squabbling and come up with a compromise they could all live with. The end result was a somewhat friendlier bill for the M.D.s and private equity guys.
What does the legislation do?
It would mostly ban surprise medical bills and send insurers and medical providers to arbitration to work out payment for unexpected out-of-network care, which pleases the doctors groups. However, it aims to keep a reasonable lid on payments by requiring the arbitrator to consider the median in-network rate for any service, among other factors. (Limiting the amount carriers have to pay also helps patients, since it keeps their premiums lower.) “I think consumers should be pretty happy,” Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, told me. He believes the deal will protect individuals from facing catastrophic costs and give insurers more leverage than they have today, which probably means lower profits for some medical practices. “I don’t think the private equity folks really won. I think they got a couple concessions,” Adler told me.
But McConnell could kill this thing?
Yes, people are afraid he won’t let it into the big omnibus bill Congress has to pass.
Why would he do that?
Aside from the fact that he’s a sepulchral evil spirt who haunts progressives’ nightmares? Vox’s Dylan Scott has a good rundown of the politics. And to be clear, McConnell hasn’t really tipped his hand yet, because he prefers the world to live in terror of his intentions. But the man tends to take his cues from the insurance industry (Humana is based in Kentucky), which probably isn’t happy that Congress decided to go with arbitration instead of benchmarking.
So is there any hope?
Yes, actually, though partly because of dumb interpersonal dynamics. The driving force for this deal in the Senate has been Tennessee’s Lamar Alexander, who is retiring this year, and who is extremely close with McConnell; the majority leader literally choked up while giving a goodbye speech to his friend from the chamber floor. People genuinely think there’s a chance McConnell might let this pass as a last hurrah for his buddy. The bill would also save the federal government some money, which would help offset the cost of the spending bill, which is a plus. So it’s possible we’ll finally see some consumer-friendly health care reform for all the wrong reasons. And if not? I guess it’s another issue for Democrats to campaign on in Georgia.
Update, December 15, 2020: This post has been updated to reflect that, in most circumstances, anesthesiologists do meet their patients before procedures.