FAH Hospital Policy Blog

Perspectives on health policy affecting America's hospitals and the patients we serve.

Surprise Billing | FAH Policy Blog Team

Letter to Congress from FAH, AHA & AMA on Surprise Billing

Below is a joint letter sent to leaders of several Congressional Committees today from the Federation of American Hospitals (FAH), the American Hospital Association (AHA) and the American Medical Association (AMA) on the issue of surprise billing.

The letter shows a unified front among health care providers to protect patients from surprise medical bills, but it also points out pitfalls of the complex, untested concept of hospital bundled billing to address this important issue.

The letter was sent to the leaders of the House Energy and Commerce Committee, Ways and Means Committee & Education and Labor Committee, as well as the Senate Finance and HELP Committees.

Dear Chairman Pallone and Ranking Member Walden:
America’s physicians, hospitals and health systems are fully committed to protecting patients from
surprise medical bills. No patient should have the added stress and financial burden of receiving a bill for
out-of-network emergency care that they could not avoid or out-of-network care that they reasonably
could have expected to be in-network. Our organizations support a federal legislative solution to protect
patients in these scenarios that limits patients’ cost-sharing obligations to the in-network amount, and
prohibits balance billing when the opportunity for health plans and providers to arrive at a fair payment
rate is ensured.

The simplicity of the solution outlined above is in stark contrast to the complexity of another, untested
idea that has been raised as part of the important dialogue about solving this issue: hospital bundled
billing. This concept may seem simple and straightforward in theory; in reality however, this approach
would be administratively complex, fundamentally change the relationship between hospitals and their
physician partners, and alone, does nothing to protect patients from surprise bills. We strongly oppose
such a model.

Bundled billing is not appropriate for many types of medical services. For example, the unique nature of
emergency care – namely uncertainty and the potential for high variation – makes it a poor candidate for
bundled payments. Several variations of bundled payments for episodes of care have been implemented
over the past decade with mixed success. Developing such an arrangement involves a complex array of
clinicians, statisticians, lawyers and others to define the services and duration of the bundle, to
appropriately price it, and to ensure that any financial relationships between the various providers adhere
to state and federal law, including the Stark law and the Anti-Kickback Statute. To-date, bundling has
been tested by the Center for Medicare & Medicaid Innovation and some commercial payers in limited
circumstances and, in general, early results indicate it could work for services for which the clinical care
pathway is well defined and little variation is expected, such as for certain planned joint replacements.
Even so, for the vast majority of these bundles, physicians and hospitals continue to negotiate their own
rates with insurers. Any individual visit to an emergency department can involve countless possible
services – from initial diagnosis and confirmatory tests to complicated trauma and surgical procedures
involving multiple physicians and other providers, depending on an array of factors. Simply put: bundled
payments are not appropriate for emergency care and have not been sufficiently tested for widespread
adoption for other types of care.

Surprise bills are a direct result of a lack of negotiated contract between the patient’s insurer and the
hospital and/or physicians that provided their care. We support solutions that focus on arriving at a fair
payment from an insurer to a provider while protecting patients from the consequences that can arise
when an insurer lacks adequate contracted providers. In contrast, bundling facility and physician
payments in these situations simply allows insurers to transfer to hospitals their responsibility for
establishing comprehensive physician networks and managing the associated financial risk.
We should remain focused on taking patients out of the middle of standard negotiations between insurers
and providers and protecting them from “surprise bills” when they have not had the opportunity to choose
who provides their care, while rejecting unproven proposals that would up-end the foundation of
relationships that hold the health care system together.


Federation of American Hospitals
American Hospital Association
American Medical Association

You can also find the letter online by clicking here.