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What is “baseball arbitration” and how can it be used effectively to resolve disputes?

Medical bills can be burdensome to deal with, particularly when they come unexpectedly. One of the ways patients can be surprised by medical bills is when they end up receiving a service from a provider or facility that is outside their network. This can happen even to patients who are careful about selecting health care within their network.

A bill recently introduced in the Pennsylvania House of Representatives seeks to address this problem by requiring insurers, providers and facilities to work with patients when they unexpectedly receive billing for out-of-network services. Consumers would, under the bill, only be obligated to pay for an amount equal to what they would pay for in-network services. This means that insurers and providers would have to work out who pays the difference. 

The bill also provides that when insurers and providers cannot agree on how to deal with payment for out-of-network services, they would resolve the dispute through arbitration. The measure specifies a form of arbitration often called “baseball arbitration,” which involves both parties submitting a proposal to the arbitrator in advance, and a decision between the proposals. Sometimes, baseball arbitration can involve the rendering of a decision and then selection of the proposal that most closely matches the decision.

To be effective, baseball arbitration requires that both parties submit reasonable proposals since unreasonable proposals will quickly be thrown out in favor of the alternative. Careful preparation is necessary to ensure one has a strong chance of a favorable outcome in this form of arbitration.

In our next post, we’ll continue looking at this topic. 

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