August 22, 2022

PBGH Statement on New Surprise Billing Rule

On August 19, the Departments of Health and Human Services, Labor and Treasury released a final rule implementing portions of the No Surprises Act, relating to settling disputes when patients face the prospect of “surprise bills” for seeing an out-of-network provider through no fault of their own. These most recent rules implementing the law, are a direct result of litigation in Texas that invalidated and threatened to weaken some portions of the arbitration guidelines established in the earlier interim final rule in 2021.

Strong arbitration standards are critical to protecting patients from unaffordable and unexpected medical bills and to reducing costs for America’s employers. To keep rates paid for out-of-network services in line with negotiated rates between health plans and in-network providers, the original interim final rule would have required the arbitrator to concentrate on the median contracted rate used by a health plan for a specific service.

This new version of the rule attempts to clarify mechanisms for arbitrators to use that would assure outsized profiteering on out-of-network charges are not allowed. The regulations make clear that the Qualified Payment Amount remains the starting point, but that other factors can be used to award a higher amount so long as it is credible information that hasn’t already been accounted for in the billing codes. Greater transparency and a written explanation are required from the arbitrator.

PBGH is pleased by the transparency required by the new final rule but remains concerned that the new process could lead to more providers seeking to settle disputes through arbitration and increased out-of-network rates that don’t reflect market-driven rates. Currently 46,000 arbitration  cases are pending.

Only time will tell whether the law and this new rule will succeed in helping hold down costs for employers and American workers. We urge the administration to closely monitor and publicly report on the use of arbitration and its outcomes, with a recognition that further rulemaking may be necessary to ensure the No Surprises Act meets its two-part goal of ending surprise billing and holding down health care costs for patients and purchasers.