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Providers and payers should negotiate without government interference, AHA tells Senate committee

The Lower Health Care Costs Act from the Senate HELP committee will be marked up next week prior to going before the full Senate.

Susan Morse, Senior Editor

In testimony before a Senate subcommittee today, the American Hospital Association time and again urged the government to stay out of contract negotiations and payment disputes between providers and payers.

AHA Executive Vice President Tom Nickels was among six witnesses testifying before the Senate Committee on Health, Education, Labor & Pensions on its proposed bill, the Lower Health Care Costs Act.

The bill has three options to resolve payment disputes between providers and health plans: an in-network guarantee; an independent dispute resolution process; and a benchmark rate.

The first option would require in-network facilities to guarantee to patients and health plans that every practitioner be considered in-network.

"The AHA opposes this option because it interferes with the fundamental relationship between hospitals and their physician partners and severely limits practitioners' ability to negotiate contract terms with insurers," Nickels said. "Providers consider a number of factors besides reimbursement when determining whether to contract with a payer, including whether the payer is a fair business partner in terms of administrative burden and processes. In addition, providers and health plans should be able to develop networks that meet consumers' needs, and neither party should be compelled to enter into a contract based on the decision of a third party."

Under the second option, an independent dispute resolution would be established for payment disputes over $750. Disputes would be settled through "baseball-style" arbitration, in which the arbiter would take into consideration information on the median in-network rate for services in the geographic area. The arbiter's decision would be binding and the losing party would pay the arbitration costs. Balance bills valued at $750 or less would be paid at the median contracted rate for that service in the geographic area.

"The AHA believes that hospitals and payers should be left to negotiate reimbursement for out-of-network claims without government interference; however, there may be a role for an alternative dispute resolution process for physician claims," Nickels said.

He said several states have passed laws to establish a process to mediate out-of-network claims between physicians and health insurers.

Under Option 3, the health plan would pay the out-of-network practitioner and/or the facility based on the median contracted rate for services in the geographic area.

"We urge committee members to reject a legislative proposal like Option 3 that would have the government dictate rates between two private entities," Nickels said. "Health plans and hospitals have a longstanding history of resolving out-of-network emergency service claims, and this process should not be disrupted. We are particularly concerned that any attempt at setting a reimbursement standard in law will have significant consequences, including by disincentivizing insurers to maintain adequate provider networks."

America's Health Insurance Plans also weighed in, by statement, on the bill's proposal to end payment disputes and surprise medical bills.

"We strongly agree that federal legislation is needed to protect patients from surprise medical bills," AHIP said. "Our recommendations reflect our strong belief that policy solutions should ensure premiums and out-of-pocket costs do not go up for patients and consumers. To accomplish these goals, payments to out-of-network providers should be based on a federal standard and not based solely on Independent Dispute Resolution or arbitration processes."


HELP Committee Chairman Senator Lamar Alexander said he expected the committee would mark up the bill next week and then get it before the full Senate for a vote.


Legislators have been looking at ways to lower the cost of healthcare.

Pharmacy executives and pharmacy benefit managers recently testified before the Senate Finance Committee.

The HELP committee had received over  400 recommendations after it released the bipartisan legislation in May. They have since gotten an additional 400 comments, Alexander said.


Among the bill's proposals is an end to surprise billing and the creation of more transparency by requiring that patients be given more information on cost and quality of care.

The bill would end pharmacy gag clauses and anti competitive terms in insurance contracts, Alexander said.

It would designate a nonprofit entity to unlock insurance claims for employers.

It would ban pharmacy benefit managers from charging more for a drug than the PBM paid for the drug.

It would increase prescription drug competition by promoting lower cost generic drugs and speed drug development through searchable databases.

It would improve the Food and Drug Administration drug patent database and eliminate a loophole for pharmaceutical manufacturers to keep exclusivity by tweaking current drug formulas.

It would require hospitals to provide a summary of services and to send bills within 30 days.

The AHA recommended basing the 30-day timeframe for sending timely bills on the date the health plan adjudicates a claim and sends remittance information to the provider, rather than on the date of discharge.

Other witnesses Tuesday included Sean Cavanaugh, chief administrative officer, Aledade; Benedic Nippolito, research fellow, American Enterprise Institute; Elizabeth Mitchell, president and CEO of Pacific Business Group on Health; Frederick Isasi, executive director, Families USA; and Marilyn Bartlett, special projects coordinator for the Commission of Securities and Insurance Office of the Montana State Auditor.


"The discussion draft includes a number of new requirements that would severely impede provider and health plan contracting. We do not support these policies because they would unnecessarily increase costs, discourage commercial health insurers from pursuing value-based care arrangements with providers and/or put consumers at risk of being subject to practices that would limit their access to care," Nickels said.

Twitter: @SusanJMorse
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