It seemed like deja vu—another mid-December bipartisan compromise on banning surprise medical bills negotiated behind closed doors is announced just days before a crucial end-of-year government funding deadline.
Unlike their 2019 failure, lawmakers this year succeeded in sealing the deal by including language in the massive COVID relief and federal spending package that President Donald Trump signed into law on Dec. 27. The surprise billing ban takes effect in 2022.
The years-long battle involved mudslinging and big spending by some of Washington’s most powerful healthcare industry interests. The final sprint was a chaotic process that ended with major capitulations to healthcare providers.
The political dynamics in 2020 had just enough differences to tip the scale. Banning surprise bills was a legacy item for Sen. Lamar Alexander (R-Tenn.), a friend of Senate Majority Leader Mitch McConnell (R-Ky.). Alexander, chair of the Senate health committee, is retiring after three terms in the Senate. Both the House and Senate are facing narrower margins for the majority parties next term and new leadership for key committees. A package of costly healthcare policies included in the budget package had to be offset. And perhaps most importantly, House Speaker Nancy Pelosi’s (D-Calif.) office put the pressure on her bitterly divided caucus to find a way forward.
This article is based on interviews with more than a dozen congressional aides, lobbyists and consultants knowledgeable about negotiations in recent weeks.
Too little, too late
In 2019, surprise billing was one several healthcare issues vying for congressional attention. Pelosi’s top healthcare aide, Wendell Primus, had spent nearly the entire year laser-focused on muscling a major drug-price negotiation bill through the House.
On the day Primus’ banner drug-pricing policy came up for a floor vote, his thoughts were already turning to the thorny issue of banning surprise billing. Six House and Senate committee leaders had agreed on one approach, which was endorsed by the White House, but leaders the House Ways & Means Committee refused to sign on and at the last minute began calling for a different, more provider-friendly path.
Moments after a chilly news conference on the Capitol steps touting the drug-pricing vote on Dec. 12, 2019, Primus chatted with former HHS Secretary and Rep. Donna Shalala (D-Fla.) about whether compromise was possible on surprise billing reform.
“I told him that there was a good compromise there in which no one would be completely happy but it would be more fair,” Shalala said at the time.
Pelosi had issued a deadline to warring House committee chairs to resolve their differences on surprise billing that expired the same day. The push was too little, too late and the policy was left out of a 2019 year-end government funding bill.
Election creates urgency
House leadership in early 2020 pushed committee leadership to hold markups hearings before Presidents Day, but progress was derailed by the coronavirus pandemic. Talks continued on and off throughout the summer and fall, but a breakthrough proved elusive.
After the November election, House Democrats realized they would face a challenging narrow majority in 2021, and Pelosi’s office was motivated to get a deal. Leadership also had to figure out how to pay for expensive, multi-year funding extensions for community health centers, the National Health Service Corps, teaching health centers that operate Graduate Medical Education programs, diabetes programs and other policies known on the Hill as Medicare and Medicaid extenders. Though lawmakers agreed on a $900 billion COVID-19 relief package, they insisted on finding offsets for the extenders, and finding a solution on surprise billing was an obvious saver that had already gone through substantial scrutiny by congressional committees. The Congressional Budget Office estimated that various surprise billing proposals would save the federal government between $18 billion and $24 billion, depending on the payment mechanism.
After early rounds of negotiations sputtered out in late November and early December, Pelosi spoke with Ways & Means Chair Richard Neal (D-Mass.), a longtime holdout for a provider-friendly back-end payment mechanism, the first weekend of December.
But talks again hit roadblocks, and by the end of the day on Monday, Dec. 7, negotiations looked dead. Neal told Politico that he wanted to delay action on surprise bills until 2021. Lawmakers were facing down a government funding deadline at the end of the week—which was ultimately delayed another 10 days—and the committees hadn’t begun exchanging legislative text.
“The chairman wants to find a balanced path forward on this issue that prioritizes patients but also treats fairly community doctors and hospitals that have been completely overwhelmed by the COVID crisis,” a spokesperson for Neal said.
A spate of press coverage characterized Neal as obstructing progress.
“We have offered multiple alternatives and suggestions in an effort to find common ground,” Rep. Greg Walden (Ore.), the top Republican on the Energy & Commerce Committee, told The Hill. “For whatever set of reasons, there’s one committee that just can’t take yes for an answer.”
On Dec. 8, the Senate health committee reached out to top lobbyists at the Federation of American Hospitals and the American Hospital Association to explain potential concessions and ask what it would take to get them on board. Provider lobbyists had been unsure about offers of rumored concessions earlier in the week because they hadn’t seen legislative text, but the conversations led to productive dialogue.
“Despite the fact that the surprise billing legislation had been considered for more than a year, proponents on the Hill stuck with rate-setting framework. Once they were willing to move away from that to allow insurers and hospitals to work out their side of the payment, we felt we could see light at the end of the tunnel,” FAH President and CEO Chip Kahn said.
The American Hospital Association declined to comment about the call.
Things came together quickly after a final push. Pelosi’s office facilitated another meeting between aides on the House Ways & Means and Energy & Commerce Committees the afternoon of Dec. 9, and a deal in principle was reached. Pelosi met virtually with House Energy & Commerce Chair Frank Pallone (D-N.J.), Education & Labor Committee Chair Bobby Scott (D-Va.) and Neal the next morning.
“If Wendell had not started the process, this end product wouldn’t have happened,” a hospital lobbyist said.
Eight committee chairs and ranking members from both parties and chambers released details of the deal the evening of Dec. 11. Compared with the product from 2019, the legislation made huge strides toward providers’ demands. An interim payment based on median in-network rates was removed, with payment disputes to be settled through the Ways & Means Committee’s preferred method of negotiation and arbitration. There was no cost threshold to enter arbitration, and providers could batch as many similar claims together as they wanted. Despite the concessions, the fight wasn’t over.
“We are pleased to share this language for stakeholder feedback and look forward to continuing to work together to finalize and attach this important new patient protection to the end-of-year funding package,” the eight leaders said in a joint statement.
The committees got an earful. Congressional staff spent that weekend briefing stakeholders on the deal but industry players were still skeptical.
The AHA released a lengthy list of demands to change the bill, including a request to exclude public payer rates from consideration by the arbitrator. The American Medical Association outright opposed the legislation.
“We oppose enactment of the bill in its current form because it would significantly disadvantage already stressed physician practices, particularly small physician practices that may not have the resources to take advantage of the independent dispute resolution process to obtain fair compensation for their services,” AMA CEO and Executive Vice President Dr. James Madara wrote to lawmakers.
A coalition of insurers and employers including America’s Health Insurance Plans, the Blue Cross Blue Shield Association, the ERISA Industry Committee, the National Business Group on Health, American Benefits Council and Pacific Business Group on Health bashed the deal.
“Unfortunately, by relying solely on arbitration, this bill rolls out a red carpet to private equity firms and their lawyers with the intent of making health care even more complicated and burdensome,” the coalition wrote to lawmakers.
Industry stakeholders that were the most ardent supporters of the deal had caused serious problems for prior proposals: the Greater New York Hospital Association and private-equity backed physician staffing firm TeamHealth.
“Providers were happy to walk away at any time, which gave them a lot more leverage. They got 90% of what they wanted,” said a lobbyist who advocated for the policy approach insurers and employers preferred.
Senate Minority Leader Chuck Schumer (D-N.Y.) quickly endorsed the deal, but Senate Majority Leader Mitch McConnell (R-Ky.) was initially quiet.
A group of five conservative senators, led by Sen. Marsha Blackburn, had voiced concern about public payer rates potentially being included in the arbitration process, though four of them ultimately voted against the package. Blackburn represents Tennessee, which is home to several prominent health systems, including HCA Healthcare. Company employees and a political action committee combined made HCA one of Blackburn’s largest donors in the 2020 campaign cycle, according to the Center for Responsive Politics’ OpenSecrets database. HCA’s profit grew more than 9% in the third quarter of 2020 year-over-year, even after it returned federal pandemic relief funds. HCA did not respond for comment.
Blackburn approached both McConnell and Alexander with her concerns. Providers were worried that with billed charges excluded from consideration by an arbitrator, public payer rates could drive down payment.
Individuals familiar with the discussions said McConnell pushed for public payer rates to be excluded. A spokesperson for McConnell did not respond to a request for comment on the issue. In the final version of the bill text, the arbitrator is prohibited from considering public payer rates, and timely billing provisions that had rankled physicians were stripped out.
Surprise billing reform passed on Dec. 21 attached to a COVID-19 relief package and government funding bill.
Though the stakeholders involved had various complaints with the final product, they generally agree that the new law protects patients from some devastating medical bills.
“I feel the final product solves the problem for patients, and it sets up, hopefully, a balanced approach for settling the final payment for services for providers and insurers,” Kahn said.
The rulemaking process to establish the arbitration mechanism will be another lobbying battlefield in 2021, and it remains to be seen how the fix will ultimately affect costs in the U.S. healthcare system.
“At the end of the day this is a huge step forward for consumers,” said Families USA Senior Director of Federal Relations Jen Taylor. “It’s a sign that even if the process is painful, we can work together to get big things done.”