Biden Administration Should Take Next Step To Protect Patients From Out-Of-Network Bills

In recent years, policymakers have taken strong steps to add more transparency to the health care system. Towards the end of the Trump administration, two rules were implemented to increase price transparency for both hospital services and insurance offerings. To his credit, President Biden has started to enforce and strengthen them.

Equally important was the bipartisan “No Surprises Act”, legislation designed to protect Americans from medical sticker shock by limiting surprise billing and out-of-network cost sharing for most emergency and non-emergency services. These bills were a previously (and surprisingly) common phenomenon when a patient received a bill from an out-of-network provider, even when receiving care at an in-network facility. The process set up in this law protects patients from most of these crazy bills.

But while the new law went into effect at the beginning of the year, it seems the legislation has only been as effective as the way it is interpreted.

The current administration has chosen not to require transparency around a little-known service, often referred to as “shared savings fees” which are charged by health insurance companies to manage out-of-network medical claims. These shared savings should not be confused with the Medicare shared savings program, which is entirely different.

Given the new law, and the process it lays out to deal with surprise bills, the need for this service should have been largely eliminated, but the fees are still being charged. A lack of transparency around the amount of revenue generated by these fees means that they are mainly serving to drive up the cost of premiums for Americans. Yet another example of waste in American health care that hurts patients.

The root cause of the continuation of these shared savings fees may be the lack of sunshine on them. Despite the implementation of the No Surprises Act, its narrow interpretation has resulted in virtually no transparency requirements around these hidden fees. As a result, insurers are not facing any pressure from plan sponsors—such as large employers—to lower them or ditch them altogether.

Transparency could be helpful so employers can make informed decisions on if they are getting a valuable service or just getting ripped off. Last month, a coalition of more than a dozen advocacy organizations called on Sec. Marty Walsh at the Department of Labor to “require transparency and disclosure to employers” regarding these fees. The American Association of Anesthesiologists echoed this sentiment last year when it noted that “…shared savings fees have grown rapidly, with shared savings expenses exceeding total administrative fees for many employers” before calling on the Department to require greater transparency surrounding these schemes.

Following the advice of these organizations and requiring more transparency around shared savings fees would bring much-needed accountability around the level of necessity of such fees. This would be another price transparency win for both patients and employers alike.

Federal policymakers have an opportunity to build on recent progress made on price transparency. Now they need to bring price transparency to all areas of health care.