Viewpoint: Arbitration for surprise medical bills just 'kicks the can down the road'

While arbitration has gained attention among policymakers recently as a potential solution to surprise medical bills, it is not the right fix, according to a piece published by RealClearPolicy authored by scholars from the American Enterprise Institute and Georgetown Law Center.

Surprise medical bills occur when insurers and physicians disagree on what the care is worth, and the patient ends up on the hook for the balance after the insurance company pays its portion of the bill. They often happen in emergencies when patients see out-of-network providers.

The issue has come to the forefront since President Donald Trump vowed to end surprise medical bills, and U.S. lawmakers have been seeking information and working on a consensus on how to stop them.  

One potential solution, arbitration, is already being used in some states, including New York, according to Bloomberg. In this scenario, the physician and insurer each submit a price, an arbiter picks one, and the decision is binding on both sides. Patients who received out-of-network care reportedly are charged no more than the amount they would owe to in-network providers.

But David Hyman, MD, a professor at the Georgetown University Law Center in Washington, D.C., and Benedic Ippolito, PhD, a research fellow in economic policy studies at the American Enterprise Institute, a conservative think tank, contend arbitration "is likely to do more harm than good."

"At first glance, this approach probably sounds appealing. Arbitration seems like a fairly light-touch policy that sets up a way for stakeholders to adjudicate their issue with minimal government intervention," they wrote.

"Policymakers should not be fooled. Arbitration is neither 'light touch' nor a solution to the true problem at hand. Instead of solving the fundamental issue, it kicks the can down the road to an arbitrator who faces the same challenges of any rate setter."

They also argue that rate-setting can result in "large market distortions and unintended consequences."

Instead of arbitration, Dr. Hyman and Dr. Ippolito recommended that policymakers encourage market actors to determine appropriate prices on their own.

 

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