No end to surprise-billing surprises

Apr 17, 2024

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By Ben Leonard and Chelsea Cirruzzo

With Robert King

Driving The Day

Rep. Brett Guthrie (R-Ky.) asks questions.

Rep. Brett Guthrie says the No Surprises Act isn't working according to plan. | Greg Nash-Pool/Getty Images

A SECOND OPINION ON SURPRISE MEDICAL BILLS — Lawmakers thought they solved the issue of surprise medical bills nearly four years ago, but new federal data shows the solution might need a second look, Robert reports.

Early data shows that private equity firms disproportionately benefit from the No Surprises Act, and insurers are flouting its rules. Now, some experts warn that a law meant to save money could increase costs for consumers.

“It’s not working the way we want it to work,” said Rep. Brett Guthrie (R-Ky.), head of the House Energy and Commerce Health Subcommittee. Guthrie said he recently met with CMS to discuss the law’s implementation.

“We have to figure out what it’s going to take to get it to work,” he added.

The law aims to shield patients from a surprise bill if they inadvertently get care outside of their insurance network. It set up an arbitration system where payers and health providers can settle disputes.

But early data released by CMS in February shows private equity-backed groups initiate most disputes — and often win them.

An analysis from the Brookings Institution explored disputes across three categories: imaging, neonatal/pediatric critical care and emergency care. The analysis found that four private equity-backed firms generated 74 percent of the disputes.

A major reason smaller groups don’t participate more often is the wait time, experts said. It can take months to wind through the arbitration process because of a system backlog.

HHS initially estimated that only 17,000 claims a year would reach arbitration. From April 2022 through June 2023, there were nearly 490,000 disputes, according to a report from the GAO.

HHS told Robert in a statement that it has brought more third-party arbiters online, and more disputes are being processed. CMS proposed a rule in October requiring insurers to divulge additional information to speed up the process.

WELCOME TO WEDNESDAY PULSE. We hope you were able to meet the therapy dogs in the Senate yesterday. Reach us and send us your tips, news and scoops at bleonard@politico.com or ccirruzzo@politico.com. Follow along @_BenLeonard_ and @ChelseaCirruzzo.

Around the Agencies

Besse Cooper, 114, naps while her daughter-in-law Edith Cooper, 72, and nurse Terry Cobb, left, talk in March at the nursing home where she lives.

A federal mandate requiring a minimum level of staff in nursing homes could come at any time. | AP

STAFFING MANDATE ON TAP — The White House Office of Management and Budget has concluded reviewing the Biden administration’s minimum staffing mandate for nursing homes, indicating it could be released imminently.

The regulations would for the first time set minimum requirements for staffing levels at homes participating in Medicare and Medicaid. They’ve been among the administration’s most controversial health care regulatory proposals.

The industry has pushed back against the proposal, saying it would be too costly and could lead to facility closures, while some patient advocate groups have argued it doesn’t mandate enough workers per resident.

The timing suggests the administration could finalize the regulations before a key deadline, likely in a bid to safeguard them. If former President Donald Trump were to beat President Joe Biden in November and bring a Republican Congress with him, Congress could overturn them via the Congressional Review Act.

The exact deadline for when the administration would need to finalize the rules isn’t clear, but rules finalized fewer than 60 legislative days before the end of a congressional session — which could be late spring or summer — would be at risk.

A number of other rules could be in the crosshairs, including those adding protections for abortion data and against discrimination under the Affordable Care Act and banning menthol cigarettes.

Also finished at OMB: The OMB has concluded its review of a proposed rule aiming to bolster Medicaid access and transparency in the program.

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In Congress

TOP TAKEAWAYS FROM AHA — Some of the country’s top health care policymakers spoke on the final day of the American Hospital Association’s annual membership meeting in Washington on Tuesday. Some major issues discussed included:

Cybersecurity: After the Change Healthcare ransomware attack disrupted payment processing, boosting preparedness was top of mind. House Energy and Commerce Health Subcommittee Chair Brett Guthrie (R-Ky.) said he opposes a “top-down” mandate in health care cybersecurity.

“[There are] very sophisticated hackers,” Guthrie said. “To have some top-down mandate on hospitals that requires you to spend an enormous amount of money without us figuring this out together — we don’t want that to happen.”

That contrasted with Senate Finance Chair Ron Wyden (D-Ore.), who called for federal cyber mandates at the conference a day earlier.

HHS Deputy Secretary Andrea Palm acknowledged that, in the wake of the Change attack, she’s “sure there are things that happened … that we hadn’t thought of,” — though she didn’t delve into specifics. She added that the agency seeks additional industry feedback.

“We will be more prepared for the next one than we were for this one,” Palm said.

Telehealth: Medicare’s eased virtual care rules adopted during the height of the pandemic expire at the end of 2024. Guthrie said that “there will be some extension” and “you're going to like it more than you don't like it.”

Senate Minority Whip John Thune (R-S.D.) is optimistic about a telehealth extension but said, “We have to figure out how to pay for it.”

Avian flu: CDC Director Mandy Cohen said the threat of the avian flu “keeps me up at night” but added that the country is “really prepared.” She also acknowledged that the CDC likely won’t get new resources or authority from Congress this year.

Other congressional priorities: Guthrie expects that the Support Act tackling the opioid epidemic will be reauthorized at some point this year after expiring last year. Thune hopes to get 340B reforms in an end-of-year spending package.

SPENDING UNDER SCRUTINY — Medicare Advantage spending for durable medical equipment — which can be pricey — rose 59 percent between 2020 and 2023, according to watchdog testimony before a House Energy and Commerce subcommittee Tuesday.

HHS Inspector General Christi Grimm said in written testimony before the Oversight Subcommittee that “increases of this magnitude signal a need for heightened scrutiny” to ensure that the rise isn’t due to fraud. Durable medical equipment like wheelchairs is often a target for fraudsters in federal health care programs.

Susan Reilly, spokesperson for the Better Medicare Alliance, which represents MA insurers, pointed to the substantial growth in Medicare Advantage enrollment in recent years and the pandemic as likely reasons for the growth.

Health Costs

CBO EXAMINES ACOS — The Congressional Budget Office found that accountable care organizations led by either independent doctor groups or groups with a more significant share of primary care providers were associated with more savings than other ACOs, including those led by hospitals.

ACOs are in value-based payment arrangements that try to spend below a certain amount in exchange for a share of the savings. If they overspend, they must repay Medicare.

The details: CBO found that independent physician group-led ACOs had more savings than hospital-led ACOs partly because they have “clear financial incentives to reduce hospital care” and hospitals have less control than other providers over the care they provide.

ACOs with a high share of primary care providers also generated more savings than other types because they play a significant role in sending patients from more expensive to less expensive settings.

The nonpartisan agency found that large health systems’ and hospitals’ incentives to avoid providing low-value care or sending care to lower-cost settings are limited because they would lose revenue by doing so.

Other factors tied to lower levels of savings included insufficient resources for providers to participate in ACOs and model design “that facilitates favorable selection.” The Biden administration has recently made efforts to make it less costly for providers to move to value-based care.

ACOs respond: David Pittman, a spokesperson for the National Association of ACOs, said that many of CBO’s recommendations to bolster savings — including provider incentives and improving patient engagement — have already been discussed with Congress.

“We hope this report spurs additional interest in these topics from Capitol Hill,” Pittman said.

Names in the News

Former pharmaceutical and biotech firm executives Michel Vounatsos (Biogen), Rob Scott (AbbVie) and Christian Hein (Novartis) are joining QuantHealth’s inaugural advisory board.

Robert Nelb is now policy director for America’s Essential Hospitals. He was previously a principal analyst for the Medicaid and CHIP Payment and Access Commission.

Monica Auciello is now chief legal officer and general counsel for the Blue Cross Blue Shield Association. She was previously general counsel at Sidecar Health Insurance Company.

WHAT WE'RE READING

Healthcare Dive reports that UnitedHealth foresees costs as high as $1.6 billion from the Change Healthcare cyberattack.

The Wall Street Journal reports on “a growing body of research” showing mental health benefits from religious practice.

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