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July 18, 2019

The House Energy and Commerce Committee’s Subcommittee on Health recently marked up and voted in favor of drug transparency and surprise billing legislation.

No Surprises Act (H.R. 3630) – Now incorporated as Title IV in the Reauthorizing and Extending America’s Community Health (REACH) Act (H.R. 2328) –


Since its release in discussion draft form earlier this year, the bill has undergone several revisions.  Among the most notable changes appearing in the latest version include:

– pegging the median contracted rate to costs in 2019;

– creation of an audit process run by HHS to make sure plans are correctly implementing the median contract rate calculation and payment requirements; and

– establishment of and independent dispute resolution process post-automatic payment by the plan for providers to seek more than the benchmark payment (or for plans to seek to pay less).

These changes and other core features of the bill are described below.

Balance billing prohibited in certain circumstances:

  • Prohibits balance billing for emergency services performed by an OON provider and/or at an OON facility and for post-stabilization care after an emergency if the patient cannot be moved; and
  • When non-emergency services are performed by OON providers at in-network facilities (includes hospitals, ambulatory surgical centers, labs, radiology facilities and imaging centers).  This rule always applies to “specified providers”: facility-based providers, including emergency medicine providers, anesthesiologists, pathologists, radiologists, assist surgeons, neonatologists.  It also always includes OON providers when there is no in-network provider to provide the service at the facility.  For other non-specified providers and when there are in-network options available, the rule applies unless the patient receives at the time the appointment is made oral and written notification (ultimately signed by the patient) of the provider’s OON status, the estimated amount the patient will be charged, and in the case of an OON facility, a list of any in-network providers at that facility.

Automatic payments to providers in the above-referenced circumstances:

  • The plan pays the facility/provider the difference between the patient’s in-network cost-sharing amount and the “recognized amount,” which: (1) for states with their own method for determining surprise billing payments owed by plans, is no more than that amount plus the patient’s cost-sharing amount imposed by the plan; and (2) for states that do not have a law stipulating the payment amount, is at least the median contracted rate (described below).
  • The median contracted rate is the median of negotiated rates recognized by the sponsor/issuer (determined with respect to all plans of such sponsor/issuer) as the total maximum payment for the same service or item under such plans in 2019 (indexed for inflation thereafter) provided by a provider in the same or similar specialty in the same geographic region; or, if insufficient information is available to calculate the median rate, sponsors/issuers may use a database for the region that is “free of conflicts of interest;” or, if the region was not offered any health plans in 2019, HHS will establish a methodology for calculating the rate.  HHS is tasked with conducting a rulemaking to provide details on these calculation methods/options.

Audit and Independent Dispute Resolution Processes:

  • The bill calls for an audit process run by HHS to ensure that plan sponsors and issuers are complying with the median contracted rate payment requirement and that those rates are accurate based on the law’s calculation requirements.
  • An amendment offered by Rep. Ruiz during the full House E&C Committee markup of the bill establishes an IDR process following payment by the plan of the automatic payment amount.  The IDR process has the following key features:
  • The process may be initiated by the plan (seeking to pay a lower amount) or the provider/facility (seeking a higher amount) for claims worth more than $1250 in 2021 (indexed for inflation thereafter);
  • There are strict timelines for initiating the process (within 30 days of the plan’s payment), for a final amount to be determined (within 30 days of the arbiter’s selection), and for a final amount to be paid (within 30 days of a final decision);
  • Within the 30-day decision period, the arbiter (chosen from approved entities certified by HHS) may direct the parties to negotiate in good faith on a settlement for up to 10 days;
  • The arbiter chooses between offer amounts submitted by the plan and the provider and the decision is binding;
  • In making his/her decision, the arbiter must consider: the median contracted rate for the item/service; the level of training, education, experience, and quality outcomes of the provider/facility; and “extenuating circumstances” related to the acuity of the individual who received the services and the complexity of providing the services;
  • The arbiter may not consider Medicare reimbursement rates for the item/service;
  • The losing party pays for the fees and costs of the arbitration; if a settlement is reached, the parties split the costs; and
  • Requires HHS and DOL to post publicly for each year the number of claims filed under this process; the number of claims that reach a final arbiter determination; and for those that get a final determination: a description of the item/service involved, the amounts offered, and final amount chosen, and the category of professional specialty involved (the identity of the parties involved is kept confidential).

Other miscellaneous issues of interest:

  • Requires plans/issuers to: establish processes to update and verify provider directory information at least every 90 days; respond within 1 day to enrollee questions about providers’ in-network status; and maintain on a public website a database of all in-network providers and facilities and directory information for each of them; also requires providers and facilities to transmit updated directory information to issuers/plans with whom they contract.
  • Plans/issuers and healthcare providers and facilities must make publicly available (e.g., on a website) information about the federal law’s (and any applicable state’s) prohibitions and rules on balance billing and contact information for appropriate state and federal agencies to report any problems.
  • Provides grant money to states to establish all payer claims databases or to maintain existing databases.
  • Imposes a one-year statute of limitations on services provided such that providers and facilities may not bill individuals for services more than one year after those services are rendered.
  • Finally, he bill does not address surprise billing for regular or air ambulances, but does require air ambulance providers to report annually to HHS details on claims paid (broken down by various categories such an in- or out of network, hospital-based or independent services, rural versus urban transport, etc.) and cost data, and requires HHS to publicly publish such information.

More Efficient Tools to Realize Information for Consumers (METRIC) Act (H.R. 2296)

In general, in addition to requiring drug manufacturers to report explanations for drug price increases and more reporting around Medicare programs, the bill does the following to help improve transparency with respect to PBMs and the drug supply chain:

  • Calls for a FTC study of, and recommendations for addressing: PBM pricing/rates, anticompetitive steering practices to certain pharmacies and other anticompetitive behaviors toward competing pharmacies, and use of formulary design to push higher-cost drugs; how companies and payers assess contracts with PBMs and other intermediaries and whether more information should be available to companies and payers in this context; and any legal or regulatory burdens inhibiting a competitive and transparent drug supply chain.
  • To facilitate comparison of PBMs’ negotiated rebates and discounts, as well as fees, beginning in 2020, HHS must publish on its website for each PBM (drug and plan information will be anonymized):
  • Percentage of all prescriptions, paid by the health plan or the PBM under the contract, that were provided through retail pharmacies and by mail order and percentage of such prescriptions for which a generic was available and dispensed broken down by pharmacy type (e.g., independent, chain, supermarket, etc.);
  • Aggregate amount and types of rebates, discounts, or price concessions (including service and other fees) negotiated by the PBM that are attributable to patient utilization under the plan; aggregate amount of rebates, discounts and concessions that were passed on to the plan sponsor; and total number of prescriptions dispensed; and
  • Aggregate difference between the amount paid by the plan to the PBM and the amount the PBM pays retail pharmacies and mail order pharmacies, and the total number of prescriptions dispensed.