Some unhappy about rules against surprise medical bills

Kaiser Health News reported on some backlash against legislation passed last December against surprise medical bills. The legislation protected patients from unexpected bills, and left unresolved disputes between insurers and providers to be resolved by arbitration. It appears that Health and Human Services (HHS) recently released guidance on how arbitration would work, and many providers are unhappy. Apparently, the starting figure that might anchor the discussion is "the median rate the insurer pays in-network providers for similar services in the area." Although physicians can point out factors that might raise the arbitrated amount, the starting number seems to be what insurers would want in their ideal world: in-network prices. If out-of-network prices are essentially equivalent to in-network prices, insurers have much less incentive to offer higher prices to attract providers to join its networks. Not only that, insurers have an even stronger incentive to lower the amounts offered to its network, since that would affect both in-network and out-of-network prices.

A couple of ideas that probably would have been more fair would be to either require insurers to sign up some large percentage of relevant providers in the area (e.g. 50%) or to use median prices across all insurer-provider combinations in the area. Both of these approaches would suffer some distortions if one side had too much market power in the area. For example, if a provider group had 60% of the relevant providers in that area, they could almost dictate whatever price they want. Inversely, if an insurer sold 80% of the relevant policies in that area, they could dictate fairly low prices. Getting health pricing policy right can be difficult.