Commercial risk will be a critical catalyst of progress – it’s complicated, but is it possible? We think so.


March 20, 2019

Insurers want lawmakers to establish set payment rates to address surprise bills—but providers are pushing back

Daily Briefing

    America's Health Insurance Plans (AHIP) and other large groups representing insurers on Monday urged congressional leaders to address so-called "surprise" medical bills by establishing set payment rates for care, but the American Hospital Association (AHA) and Federation of American Hospitals (FAH) quickly raised concerns about the proposal.

    'Surprise' medical bills, explained in 5 charts

    Insurers call for set payment rates

    AHIP and 16 other groups representing health insurance brokers, insurers, and businesses in a letter to congressional leaders called on Congress to pass legislation intended to control out-of-pocket health care costs. Specifically, they called on Congress to help:

    • Avoid arbitration processes regarding surprise medical bills;
    • Ensure protections against surprise medical bills apply to all health plans, including self-funded health plans;
    • Prohibit physicians from sending patients surprise medical bills in cases involving emergency or involuntary care;
    • Require provider facilities inform patients whether providers are in their health plans' provider networks, but not require patients to consent to out-of-network care;
    • Require providers facilities to give patients options to seek care elsewhere; and
    • Set reimbursement rates based on the market rates insurers pay similar providers in a geographic region or on a share of Medicare reimbursements.

    The groups wrote that setting reimbursement rates are needed because, "[i]n many cases, the charges [for health care services] bear no relation to the actual cost of care or market rates." For instance, the groups wrote that the "out-of-network anesthesiologists bill, on average, [is] 580% of the Medicare reimbursement rate" and, "[f]or emergency medicine physicians, the charges can be even higher, with one study finding the average bill to be 798% what Medicare would pay."

    In addition to AHIP, the groups that signed the letter were:

    • American Benefits Council;
    • Associated Builders and Contractors;
    • Auto Care Association;
    • BlueCross BlueShield Association;
    • The Council of Insurance Agents and Brokers;
    • The ERISA Industry Committee;
    • Food Marketing Institute;
    • HR Policy Association;
    • National Alliance of Healthcare Purchaser Coalitions;
    • National Association of Health Underwriters;
    • National Business Group on Health;
    • National Retail Federation;
    • Pacific Business Group on Health;
    • Retail Industry Leaders Association;
    • Self-Insurance Institute of America; and
    • Silicon Valley Employers Forum.

    Hospital groups raise concerns

    AHA and FAH in a joint statement issued Monday pushed back against the insurer groups' recommendation to have federal lawmakers establish payment rates.

    AHA and FAH wrote, "Beyond protecting patients and ensuring adequate health plan provider networks, it is essential that insurers and providers of care retain the ability to negotiate appropriate payment rates." They continued, "Not only is it a dangerous precedent for the government to start setting rates in the private sector, but it could also create unintended consequences for patients by disrupting incentives for health plans to create comprehensive networks."

    AHA and FAH also argued that insurers should be a part of the solution to surprise medical bills. "Consumers, health insurers, employers, and hospitals all … should seek a common solution," they wrote (Baker, "Vitals," Axios, 3/19; Reed, FierceHealthcare, 3/18; AHIP et al. letter, 3/18; AHA/FAH statement, 3/18; Diamond, "Pulse," Politico, 3/19).

    Health Insurance 101: Get the slide decks

    Confused about the U.S. health insurance system? You're not alone—it's one of the most complicated systems in the world. If you missed our recent webconference series diving deep into the system, don't worry; we've got you covered.

    Review the slide decks from our recent webconferences for a quick overview of each program:

    Get the Decks

    Have a Question?


    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.