Moreover, arbitration awards >25x median in-network prices were not uncommon.
New Jersey, similar to New York, illustrates the danger of basing an arbitration system on unilaterally-set provider charges.
Such an approach is destined to unnecessarily increase health costs.
However, it's important to disentangle the benchmark from the mechanism. Arbitration in it of itself is not necessarily the problem in New Jersey (or NY). The problem is basing decisions on the 80th %-tile of provider charges, an extremely high amount untethered by mrkt forces.
The new federal law also utilizes arbitration, but takes heed of the lessons from NJ & NY, and generally follows the better approach we outline in the paper by prohibiting consideration of charges & limiting arbitration to infrequent or unusual services.
In light of this analysis (& others), states such as NJ & NY should strongly consider adopting the more consumer-friendly version of arbitration established in the federal law for their entire state.
Such a decision should result in substantial savings for state residents and avoid the bureaucratic nightmare of two parallel arbitration systems running in a state.
/FIN
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Today’s surprise billing fix is a huge win for consumers!
As of 1/1/2022, it will be illegal nationwide for an out-of-network provider to surprise bill a patient for more than their standard in-network cost-sharing obligations.
The protections from surprise billing will apply in all emergency situations (w/ lone exception of ground ambulance rides) & for non-emergency out-of-network physician services received at in-network facilities.
These are arguably broader than the protections in any state law and will be difficult to game.
Patients can now feel safe they won't get a surprise bill from the emergency room or from an anesthesiologist or assistant surgeon involved in their elective surgery.
27 Senators sign a bipartisan letter supporting inclusion of the recently-announced surprise billing agreement in the year-end spending legislation: cassidy.senate.gov/imo/media/doc/…
Unfortunately, the AMA is opposing the bipartisan surprise billing legislation.
Interestingly, they previously seemed to support the Neal/Brady bill (left), and the new bill is identical other than a couple concessions to provider lobbying.
The way this is written, you’d think AMA and other provider groups weren’t the ones pushing arbitration (and the administrative headache that goes along with it) this whole time.
Surprise billing would be prohibited for all OON emergency services (& post-stabilization), much OON care at in-network facilities, & air ambulances.
Out-of-network payment can be challenged to an arbitration process that's instructed to mainly consider median in-network rates.
Arbitration can be a bit clunky & opaque (& adds administrative cases), but the legislation does a pretty good job placing guardrails on the process to prevent abuses.
1) There's a strong anchor to median contracted rates
While the debate has largely broken down as benchmark vs. arbitration, much more important is how generous the out-of-network payment mandate ends up being.
E.g., arbitration based on Medicare rates would be more consumer-friendly than a benchmark based on charges.
Or to take concrete state examples, CT's surprise billing law that uses an OON benchmark payment mandate at the 80th percentile of charges for emergency services is just as bad for consumers as NY's that relies on arbitration to get to the same end state.
Or in a more consumer-friendly fashion, NH's law that strongly anchors their arbitration process to median in-network rates ends up pretty similar to CA or OR laws that get to a similar place through a benchmark.
First, the paper itself provides some great new descriptive work on physician salaries that should prove valuable for future research, but I don’t think it tells us much about the normative question of whether doctor pay is too high/too low.