Thread by @zackcooperYale

A big day of surprise billing proposals from the Hill yesterday. Below is a thread on the different options proposed by ED and Labor and Ways and Means, the trade-offs between arbitration and benchmarking, and possible ways to reconcile the ED+Labor and the Ways and Means plans

The Ways&Means plan includes a hold harmless proposal + arbitration where the arbitration is linked to in-network payments and there’s no cap on size of bills that go to arb.

ED & Labor has a hold harmless and uses benchmarks for bills < $750 and arbitration for bills > $750

Both are sensible proposals, but both have different trade offs. They represent different approaches to addressing the same issue.

Re: Arbitration
+ it involves negotiations over rates, not regulation
+ it’s tied to in-network payments

- it’s scary to have possible arbitration over so many bills
- possible admin costs
- devil is in the details re: how arbitration rules are set

Benchmark
+ lower admin costs than arbitration
+ certain outcomes

- perpetual lobbying over benchmark rate (e.g. SGR BS)
- links to an existing payment rate that is a function of the underlying market failure
- usual challenges with regulation - e.g. creates distortions

These proposals can be combined introduce benchmarking + arbitration together!

Best outcome would be a benchmark like ED&Labor that’s tied to in-network payments and then allow providers to take that outcome to arbitration if unhappy

So, benchmark backstopped by arbitration.

This addresses big issues w/ each policy
- would reduce number of arbitrated cases (eg lower admin costs) via the benchmark
- would allow arbitration to avoid downsides of regulation getting payment level wrong - if there was bad regulated outcome, arbitrator could correct it

When we consider arbitration, we also have to ask why we want arbitration over individual bills arbitration over contracts between insurers and providers. You could easily require network matching and then have an arbitration process over failed insurer/physician contracting

Whatever we do, it should start sooner than 2022. Absent intervention, tens of thousands or even hundreds of thousands of Americans in the lower half of the income distribution (who are struggling already) will get crushed by these bills without action.

Finally, in many ways, the downsides of both arbitration and regulation highlight why @ProfFionasm and I prefer a bundling policy where a hospital is required to sell a package of care that includes hospital-based MDs.

In practice, policy-makers could require network matching between docs and hospital if hospitals did not sell a package that included hospital-based MDs