Health insurers were dealt a major blow this week when President Trump signed a year-end spending package that included legislation to protect patients from surprise medical bills.
Lobbying efforts around the issue had sparked a fierce multiyear fight pitting doctors and medical providers against insurance companies.
At stake was whether to use arbitration to determine how much insurers would pay doctors in common situations like when patients receive care from an emergency room doctor who isn’t covered by their insurance plan.
Doctors and providers won out in the end, and the insurance industry now faces a new payment process that could drive up their expenses and create more administrative hurdles.
“This was easily the largest lobbying and public affairs battle in the last several years. The big health insurers and employer groups placed a massive bet. … They were ultimately outmaneuvered on the political front,” a health care consultant on K Street told The Hill.
The legislation included in the $2.3 trillion coronavirus relief and omnibus spending package marks the end of a long and expensive effort, with key stakeholders spending tens of millions on lobbying over the past three years.
Going forward, certain medical bills will now be resolved through an arbitration process instead of setting payments based on median rates and location, an approach included in other versions of legislation to prevent surprise medical bills.
The trade group representing insurance companies, America’s Health Insurance Plans (AHIP), said in response to the year-end spending package that the best way to protect patients is by relying on fair, market-based prices based on locally negotiated rates.
“Private-equity firms will continue to find ways to exploit the arbitration process to price gouge patients and raise health care costs for everyone,” the group said.
AHIP spent more than $8.1 million on lobbying in 2020, though the expenditures included battles over issues like drug pricing and the coronavirus in addition to surprise medical bills. In 2019, the group spent more than $9.4 million on lobbying, up from $6.7 million the previous year.
The other side of the debate included private equity firms that back provider groups from dental and surgeon practices to X-ray clinics. Big names in private equity like Blackstone, which owns the doctor staffing company TeamHealth, were invested heavily in the lobbying fight.
Blackstone spent more than $4.2 million on lobbying this year, up from $3.6 million in 2019 and $2.3 million the year before that. Aside from health care, the company has also lobbied on finance, tax and energy issues.
The American Investment Council, which represents the private equity industry, spent $1.5 million on lobbying this year.
The American Medical Association, the main trade association for doctors, spent more than $15.2 million on lobbying this year, compared with $21 million in 2019 and $20 million the year before that. They lobby on the opioid issues, medical device user fees and drug pricing, as well as surprise medical billing.
In the final legislation, medical providers didn’t get everything they wanted but can still claim this as a win, experts said.
“The big lobbying goal of providers was to somehow base things on the charge or list price that doctors have, which is a super inflated price. Providers never thought they had much chance of that in Congress,” said Loren Adler, associate director at the USC-Brookings Schaeffer Initiative for Health Policy.
A source familiar with the lobbying effort by medical providers said “neither side probably can claim 100 percent victory.”
Provider groups stood to lose tens of billions of dollars if the final version of the legislation didn’t include arbitration.
“The worry is that the insurers would squeeze the doctor groups ability for compensation and that was the challenge, that the doctor groups and a small X-ray practice versus UnitedHealth or Blue Cross Blue Shield, they’re going to lose the payment battle against a big insurer,” the source said.
Earlier versions of medical billing legislation would have set the payment rate based on the median rate in that geographic area. The House Energy and Commerce, House Education and Labor, and Senate Health committees backed that approach, called benchmarking.
“One option would have been to set the payment that the insurer would be responsible for at a rate something like the median rate for in-network providers within a geographic area. That would have been a specific price and the providers and private equity firms that own those groups wouldn’t have been able to get more than the median in-network rate. Now it’s possible that there could be a fee paid that’s higher than that as a result of arbitration,” said Stephen Zuckerman, health economist at the Urban Institute.
“One thing that the insurance companies did lose out on is the prices that these providers would have received from public payers like Medicare and Medicaid can’t enter into the arbitration. That raises the floor on what insurance companies will have to pay,” Zuckerman said.
Another source familiar with lobbying efforts by providers said insurers and employer groups convinced themselves that “anti-provider price controls were achievable on the Hill.”
“But they were very wrong. Once the provider community activated the grass roots, benchmarking stalled and arbitration quickly became the only politically viable solution to surprise billing,” the source said.
The legislative deal eventually came together after House Ways and Means Committee Chairman Richard Neal (D-Mass.) dropped his opposition when he was able to include changes that favored doctors and hospitals. He had previously pushed his own proposal.
The Trump administration over the summer called on Congress to take action on surprise medical billing but did not specify its position on issues like arbitration.
Sen. Bill Cassidy (R-La.), who is a doctor, and Sen. Maggie Hassan (D-N.H.) helped lead the push to include arbitration.
“The final legislation reflected bipartisan compromise, and the winners are the millions of patients who will no longer be subjected to these types of unfair surprise medical bills,” Hassan’s communications director, Aaron Jacobs, said.
Cassidy’s office did not respond to a request for comment.
The final legislation takes consumers out of the middle of the debate, which some experts say makes it a consumer-friendly solution.
“I think for consumer groups, this law is a net win still. Most likely, you are going to get modestly lower premiums and obviously surprise bills are now illegal. The clean consumer friendly solution is to say that surprise billing is illegal and let the market decide what you pay, but that was not ever politically tenable,” Adler said.
Zuckerman added that the new law protects patients because they are removed from the arbitration process.
“This outcome resulted in protecting consumers from surprise billing and that was the most important part of the process,” he said. “This is one of those situations where it was hard to understand why there was any question about if surprise billing should be eliminated.”
Families USA, which advocates for health care consumers, commended Congress for including legislation in the year-end bill to end surprise medical bills.
“The provision seeks to stop exploitative practices by some members of health care industry that unfairly drive up health care costs for families, workers, and employers—more crucial than ever as the country continues to grapple with the health and economic devastation from COVID-19,” Consumers First, an alliance that includes Families USA, said in a statement.