Several politicians and insurance companies have proposed using the median in-network reimbursement rate as a benchmark payment in the case of out-of-network bills. Here is why government rate-setting is not the right solution:

  1. Gives More Control To Big Insurance Companies. Big insurance companies already have near monopoly control in several communities across the U.S. Benchmarking out-
    of-network rates to a median in-network rate will allow them to manipulate both rates by canceling or failing to renew current contracts above the median in-network across
    physician groups, or forcing providers to accept a substantially lower rate.

     

  2. Lower Reimbursements. Rate setting will drive down in-network reimbursements. The CBO predicts it could lead to a 20 percent reduction in physician reimbursement nationwide. For hospitals that serve a high number of Medicare, Medicaid, and the uninsured, this will have disastrous effects.
     

  3. Hospital Closures. Safety-net hospitals are already operating on thin or negative margins due to inadequate government reimbursements. More than 20 percent of rural hospitals across the country are at high risk of closing unless their financial situations improve. A decrease in commercial rates will drastically reduce these margins, which could result in hospital closures, forcing patients to forgo care or travel further in times of need.
     

  4. Doctor Shortages. When doctors are removed from networks by insurance companies or are driven out of business by unreasonably low reimbursement rates, patients will
    face a crisis of access to medical care. The Association of American Medical Colleges already projects a physician shortfall of between 46,900 and 121,900 physicians by
    2032. Rate-setting will worsen these projected “supply shortages” and “[undermine] the benefit of protecting patients from balance billing.”

     

  5. No Independent Database. There is no known independent, transparent, and verifiable database that has information on the depth of services across the country that could serve as an appropriate dataset to determine median in-network rates.

GOVERNMENT RATE-SETTING

Government rate-setting is bad policy