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February 7, 2020

Dusting off Dick Woodson

A winter storm is currently falling on Denver.  How do we keep warm?  Turn on the fire, grab some hot tea, and then enter the following into the search bar:

‘When do pitchers and catchers report?’

NEXT WEEK.

Baseball fan or not, this is one of the official early signs of spring.

Baseball is also in the healthcare news as the House Ways and Means Committee announced they are releasing the committee’s bill on surprise medical billing in anticipation of the targeted February 12 mark-up date.

What, you ask, does that have to do with baseball, and where, you ask, does this Dick Woodson fella come into play?

We are glad you asked.

The ‘benchmark payment mechanism’ provision favored by payers is not included and this is a win for most physician groups. This idea, though clouded in as much obfuscation as possible, would essentially have defaulted any surprise billing disputes to the contracted in-network rate.  Of course, payers liked this idea.  They would never really have to have a fair negotiation with any physician group as the resolution process would always land on the number they wanted.

Instead, the proposed solution, which appears to have both bi-partisan and bicameral support (shocking after this week), relies on negotiation and then arbitration.

In short, if there is a dispute over a surprise medical bill, patients get protected while the provider and payer enter a period of negotiation.  If they cannot agree, then they enter into binding, third-party, baseball-style arbitration (submitted your ‘best and final’ offer and arbiter picks one…no compromise). Loser also pays the administrative cost.

Here are the proposed guidelines for the arbitrator:

  • No required ceiling on the provider payments, but no floor, either.
  • Billed charges are irrelevant to your evaluation (those of you with a 10x Medicare charge master…whatever), but then again so is the payer’s ‘usual and customary’ rate.
  • You do have to consider the median in-network rate, but it is only an input to your evaluation, not part of a formula.

A good compromise…everyone loses a little. In fact, Kevin Brady (R-Texas), ranking member on the committee, said the goal is to develop an arbitration process that neither side wants to use.

‘You kids sit down and figure it out.’

So, who is Dick Woodson?

In 1968, Marvin Miller brokered baseball’s first collective bargaining agreement that had an arbitration provision for player salaries.  Woodson, a Minnesota Twins pitcher coming off a middling 10-8 season in 1973, was selected by Miller as the first player to enter the process.  He had made $15,000 that year.  The Twins offered him $23,000 for the next season.  Representing himself, he asked for $30,000 and won.

Interesting and instructive footnote: Comparable pitchers, in terms of stats, were already making $25,000 – $30,000 a year more than his $30,000 request.  The arbiter’s final question to him at the end of the hearing – ‘Why did you ask for so little?’

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.