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Where we share our weekly news debriefs and discussions with industry experts. These are lo-fi recordings aimed at giving our readers more opportunities to engage with our analysis and a view into some of the conversations that shape it.
we have Loren Adler.
He's a fellow and associate director,
uh, for the Center on Health
Policy at the Brookings Institute.
I'm gonna bring him forward.
Today we're talking about
the no surprise act.
Loren, it's nice to meet you.
Nice to meet you.
Hey, Loren.
Hi.
How are you doing today?
Loren: I'm doing great.
Uh, how are y'all doing?
Kevin: Doing great.
So I think with our audience, the health
tech nerds, you can assume a pretty basic
level of understanding on the No Surprises
Act and IDR, balance billing, baseball
style arbitration, bankruptcy of Envision.
These are all things that we've
been talking about for a while.
But for people who are just kind of tuning
back in to the, this after the coverage,
um, in The New York Times, what's
working well and what isn't working well
roughly f- four years into the process?
Loren: Sure.
I think it's a great question and
good to level set, uh, in all of
these discussions here, but right.
So basically, we had this issue
of surprise billing, right?
The canonical case, it's
an emergency situation.
You go to the ER.
Actually, most of the time,
the hospital itself is in your
insurance company's network, right?
We're talking about folks with
commercial insurance, uh, here.
This isn't sort of Medicare or Medicaid.
And it turns...
You know, the hospital's in-network,
but it turns out the emergency
physician group, uh, is not in your
insurer's network, and basically,
you know, uh, there's no contract
there, so the insurer pays something.
The, the provider group bills you, bills
the patient for the difference between
what the insurer pays and, and what
they, what their sort of like dream
list price, uh, is for this issue, and
patients kind of get stuck in the middle.
I think the, right, the good parts
are, right, the No Surprises Act
pretty clearly protected the patient
from those one-off large bills, right?
It pretty cleanly took
them out of the middle.
And it's, right, it's not just emergency.
The other, the other sort of big case
here is, I think elective surgeries,
where again, you pick your surgeon,
you probably pick your hospital,
but you're do- not picking the
anesthesiologist who, uh, you know,
is putting you under for the surgery,
or the radiologist or the pathologist
where your labs are going, right?
Those are the pieces where you kind
of get stuck in this same situation.
So basically, the law came in
and really did this sort of
three-prong, okay, fine, you can't...
The pa- the provider can't balance
bill the patient anymore in these
out-of-network situations, and the insurer
has to treat this as an in-network service
for purposes of patient cost-sharing.
And then the last piece, which is
sort of where all the, the fighting
and implementation challenges is,
uh, have been, are, okay, we need
to require the insurance company to
pay the provider, the out-of-network
provider something here, right?
There's no contract.
So what do you do there?
And, uh, sort of in prototypical Congress,
they kind of effectively punted and
created this, uh, bureaucratic, uh,
pretty opaque process called independent
dispute resolution or, or think of it
like an arbitration process and then
the insurers and providers have to hash
out, you know, sort of what the, the...
They have to each make their best offer
of what they think the right price
should be, uh, and then this arbitrator
is with some guidance in the statute,
but not super clean guidance on exactly
how they're supposed to consider that.
They have to decide, you know,
whose price- Should hold the
day, um, for these services.
So again, right, the, the key
is the patient has been removed.
They're not getting, you know, this
large bill, you know, in emergency room.
You know, they were often patients
getting hit with $1,000 balance bill.
That part is not happening.
However, we've sort of moved a little bit
downstream, and now we have this question
of, uh, this arbitration process to date,
at least, has been awarding prices that
are far higher than what price prevailing
rates used to be for these services.
So I think that's what the some of
the work that myself and colleagues at
Brookings and other folks as well have
done is trying to compare the prices
emerging from this arbitration process
to sort of the prices that used to be.
And then, uh, Congressional, uh,
Research Service has also sort of
compared them to current contemporary,
contemporary rates as well.
A- and the sort of core finding is,
right, the prices here are just far
higher, uh, than they used to be.
In radiology, for instance, the average
outcome in IDR is a- almost four times
higher than what average prices used
to be, uh, what average and network
prices used to be for these services.
And that leads to the question
of, okay, those costs don't just,
like, disappear into the ether.
Those don't just come
out of insurer margins.
Those are fundamentally costs that
are going to get passed on to patients
and consumers through higher premiums
and higher cost-sharing, right?
I think, yes, they're protected from
that balance bill itself, but if you
are gonna raise the price of something
by, you know, 100%, then eventually the
insurers are gonna start charging more
cost-sharing, uh, you know, along with
that service, even if they can't...
You know, they can't change the cost
sharing on the individual service
that was in the process, but, you
know, if we're talk- taking a five,
10-year lens here, uh, that they will.
Kevin: Lauren, so if I, if I think
through the logic, um, that cost, uh, uh,
largely in the employer market, is going
from being balance billed to employees,
so them having to pay for it directly.
Now it's being paid for by the employers.
I would think that would be
showing up in employer rates, what
they're paying for medical care.
And then you made this point, I think,
on Twitter, what was formerly known as
Twitter, now X, about a week ago, that
if that's showing up in employer, uh,
premiums, um, or what, what employers
are play- paying, that will eventually
come back to hospitals and rate
negotiations and those conversations.
Are you seeing evidence of that
kind of sequence of events playing
out in the market right now?
Loren: I'd say so far it is
mostly still anecdotes, and
I, I think that is difficult.
I don't think we have good
systematic data on the question.
I will say part of that, in my view, is it
took a while for market actors to figure
out how this process was going to go.
I, I think if you polled stake--
industry stakeholders back in 2022 when
this law was first being implemented,
or in 2021 right before it was being
implemented, a lot of folks thought
this process was going to lead to
prices coming out of arbitration that
looked actually pretty close to, uh, to
average and network prices beforehand.
And there was this thought that they'd
actually look like median prices.
And right in, in these specialties
in particular, there was kind of
this dynamic where there's, you know,
twenty, thirty percent of the market
in something like emergency medicine is
these large private equity backed firms.
And the thought was that
they were getting paid...
You know, they were earning sort of
substantially higher rates than the
average, um, which sort of meant like
the mean, you know, the actual sort of,
uh, weighted average was higher than
the median because there's, you know,
they're only thirty percent of the market.
Uh, and so there was this
thought that there might actually
be some rate compression.
Uh, and, and I think you saw some of that.
Again, it's anecdotally in sort of the
initial way this law was being framed.
In 2022, you saw lots of complaints
from provider groups about, "Oh, this
insurer is taking an aggressive tactic
to try to negotiate down my, my prices."
So a-a-and then, you
know, it wasn't really...
We had a lot of court cases over the
implementation of the arbitration
process, and it really wasn't until
2024 or so that it became clear, I
think, how high the prices actually
have been coming out of this process.
And then, so we're, we're sort of
finally starting to see that now
factor into future negotiations.
I think in 2025 is probably the first
time you plausibly would have seen that,
but I really think it's 2026 is kind of,
right no-right now is the first year,
and certainly you're hearing anecdotes.
That New York Times story that you
referenced, you know, had a couple
anecdotes of payers talking about it
adding one or two percent to premiums.
But it is-- I think we still don't
have a great answer, and I'm...
This is my, uh, I don't know that we will
have a clean answer for another couple of
years, in part because there still are...
I should note, one big issue right now is
that a lot of providers are complaining,
yes, they're winning all the time, but
the insurers are not necessarily always
actually paying at the end of the day.
And, uh, and now there's-- a lot
of courts have weighed on in, in on
this, and it is unclear at, at best
whether there is any pri-private right
of action to enforce these awards.
I think most courts have said
you can't enforce these awards
in courts, but it's been split.
Um, the government can fine the
insurers actually quite a lot of
money if they aren't paying up,
but they have not done so to date.
But all, all, all to say, this is
just sort of one of these, another
hindrance towards getting toward
equilibrium, is that right until the
provider can only use it in negotiations
if they're actually getting paid
by the insurer in this situation.
So, uh, it's just another sort of hiccup
on the road to, to, to figuring out kind
of how this, uh, this all plays out.
But certainly eventually, and you
certainly hear it in- The way some
of the provider groups discuss
this, that it is, okay, I'm getting
paid eight times Medicare or four
times what I used to get paid.
Like, I would love to be in network
if you can pay me more than you
used to be paying me, and...
Right?
This is sort of replacing.
I, I think there was a great-
Kevin: Yeah
... Loren: Team Health, who's one of the large
PE-backed emergency physician staffing
companies, had this great quote about how,
you know, uh, basically to the effect of
we don't want to do balance billing, but
balance billing is a contract leveraging
tool, uh, for them, which is now I think
the IDR process has sort of replaced
that as their contract leveraging tool.
But a- again, I think we're starting
to kind of see that now in this cycle
and, uh, more probably into 2027
and beyond how that, when this sort
of starts flowing through, uh, more
to, to, uh, to the sort of premiums.
Kevin: So it feels to me like
neither provider groups nor
insurers were particularly
pleased with the status quo ante.
Now they're, neither group seem
particularly pleased with this
compromise and the implementation of it.
There's a bit of, like,
sort of Washington, D.C.
consensus, which is that if everyone's
unhappy, it was, like, the right solution.
I don't know that that is true for, for
this particular case, but I'm curious
to get your perspective on whether
this was the best that we could do.
Um, and if we had another bite at
the apple, what would you recommend?
Loren: That's a great question.
Uh, the short answer is certainly far from
the best we could have done, uh, here.
But right, I think if you poll market
participants now, I think the provider
groups are quite happy with how...
They want the law, right?
They want the payments enforced that
insurers have to actually pay them, but
I think, I think in their wildest dreams,
they couldn't have hoped to be getting,
you know, uh, the CRS report is three
times the median in-network price today
they're getting through arbitration.
I, that, I, I think very few people
would have even dreamed they were gonna
do that well, uh, in this process.
I think from the get-go and from the
congressional re- back when this debate
was happening before 2020, there was a
lot of, I mean, these sort of economist
types like myself and some folks at
AEI who I had, had worked with, were
sort of advi- uh, explaining that
arbitration had a lot of risk to it,
in part because it is very opaque.
You, you don't really know what's
going to happen in the process.
It risks being captured by providers.
I think at the end of the day, these are
human beings making these decisions in
arbitration, and human beings tend to be
more sympathetic to, uh, to physicians
than they do to insurance companies.
And I think very few kind of think
through, okay, if we raise prices, if we
double prices on everything, around 10%
of claims spend, that's gonna affect,
uh, you know, that's gonna affect how
much, uh, people are paying in premiums.
Um, obviously, employers are pretty
unhappy a- at the way things have gone.
You know, I'll say I, I think given
the political realities of Congress,
I, I think most of It would have been
much cleaner to just pick some sort of
benchmark and say insurers have to pay.
The out-of-network rate is now gonna be...
It's fine.
If you wanted to base it on average
in-network prices beforehand, you
would have said, okay, or even convert
that to a percentage of Medicare.
So you'd say, okay, the insurer
has to pay 250% of Medicare for
this service, and then it's done.
But like, that, that's,
that's how it exists.
I think another piece that myself and
some colleagues had, particularly for the
non, for the non-emergency services in
particular, the cleanest solution here
always seemed to me to sort of deal with
this by regulating the contract design.
'Cause at its core, the issue is that
the anesthesiologist group, the surgery
group, and the hospital are allowed to
negotiate discordant contract statuses
with the same insurance company, whereas
to a patient, that seems insane, right?
It, it just, it makes no sense to me as a
patient that the hospital I'm going to and
the anesthesia group, who I have no choice
over, who I see can have a different
network status with my insurance company.
You could simply make that illegal, right?
That, that is one of the solutions
that came up in the Senate.
The, the, the Health Committee in
the Senate had raised this as one
possibility earlier in the debate.
They called it the in-network guarantee.
Um, it sometimes got
called network matching.
But that's the basic idea, is you
just say, you can't have discordant
network status here, and then you
just sort of force there to be a
tri-party market negotiation between
the insurance company, the hospital, and
the anesthesia group here, and then...
But now the patient's out of the
middle, and you have this actual...
And then the market gets to
decide what the price is.
We can talk all day about problems
with markets and healthcare.
Uh, I don't pretend that that
is sort of leading you to
necessarily the perfect price.
Uh, but it is a...
I, I always found that the cleanest
solution, um, but it never...
I, I mean, it had some appeal,
but did not get terribly far
in the congressional debate.
Kevin: I'd be curious about your sense
of where all this lands in the near term.
It sounds like last week there was
some provider group advocacy, uh,
reporting, uh, that, you know, insurers
aren't following the NSA process.
Um, CMS sounds like it's
considering new IDR entities.
There's an IDR operations rule at OMB.
Martin knows more about that than I.
But I, I'd be curious.
Seems like there's a lot of
activity, increasing coverage.
We're seeing the New York
Times articles, et cetera.
Um, we're seeing both payers
and providers making their cases
on social media and elsewhere.
Where does this land in the near
term over the coming months?
Loren: I honestly, I think there's
probably not a ton of movement that
happens on the big picture changes
on, you know, sort of what are the
prices that are coming out of IDR.
I think it's honestly hard to see Congress
coming back to that question in the
near term, next year or two at least,
uh, in that sort of timeline, in part
because this is sort of the standard
difficult political economy question,
where you have a very concentrated
ga- uh, group of winners here, right?
You have just sort of emergency medicine
and anesthesia groups, particularly the...
Right?
This process has been dominated
by a handful of firms.
You know, it's TeamHealth, SCP
Health, and, uh, Radiology Partners
are just a huge chunk of what's
happening in this process, right?
They would lose from a law that does,
that, that sort of tried to bring
this back down to market prices, but
the gainers are very diffuse, right?
So you have this concentrated losers
in that situation and a very diffuse
group of benefits, beneficiaries
who are, you know, all premium
payers, all employers in the country.
That, that sort of makes the politics of
this, uh, quite challenging, honestly.
So I think you'll get these
things at the margins, right?
There is this rule right now, but that's
more about making the process itself move
a little smoother, so it's more technical.
It's trying to say, "Okay, let's
try to help, to improve the flow of
communication between the two parties."
That's useful.
Uh, it's just not gonna change the
sort of overall cost impact of the law.
One good thing that they are trying to
do is there's been a lot of ineligible
submissions going through the process.
So there's been a lot of services that
were not eligible f- like they were
either covered under a different state
law, there have been reports of Medicaid
claims or a Medicare Advantage claim
running through this process that never
belonged there in the first place.
So part of what this rule is trying to
do is trying to weed those out and sort
of penalize you for doing ineligible
submissions, and also forcing insurers
to give sufficient information to
providers so they know how to do that.
I think some of that, some of the
problem wasn't just on providers doing
this on purpose, it was partially
just not getting correct information.
So I think there's some smoothing of
the process, but again, nothing, uh,
nothing near term seems like it is
going to change the fact that we're
getting, you know, prices at, you know,
radiology prices four times higher
than, than prior in-network rates.
That certainly doesn't seem
like a near-term, uh, fix.
I think the only other, uh, near-term
one which maybe has some play, the
providers have been pushing a bill to
up the penalties on insurers who don't
pay in a timely fashion the awards.
That has had some legs on the
Hill, but it's unclear how much.
And again, the, the government
already has the authority to fine
insurers a pretty substantial amount,
uh, i- if they are not paying.
So I, I think there's a little
bit of everyone trying to figure
out exactly what's going on before
they start levying those fines.
But, uh, I don't have a great
answer for exactly why that, uh,
why that hasn't happened yet.
Kevin: Lauren, we've kept you
a little bit after your time.
This has been hugely helpful.
Where can folks follow for your writing
and thoughts on healthcare policy?
Loren: Sure.
So you can look me up.
All my, uh, all my writing tends to be on
the Brookings Institution, uh, website.
Uh, you can look up my name.
I think I'm the only, uh,
Loren Adler in the US at least.
And, uh, and I...
Find me on Twitter at, @lorenadler, or
on X I should say, uh, as well- Loren
... where I usually am pushing out my work.
Kevin: Thank you so much
for your time today.
Loren: Yeah, thanks for having
Kevin: me.
I appreciate you, Loren.