Surprise Medical Billing

Published: 9/20/2024

ACP supports efforts to provide greater protections for patients from unexpected out-of-network health care costs, particularly for costs incurred during an emergency or medical situation in which out-of-network clinicians provide additional services without the patient’s prior knowledge.

Background

Surprise medical billing has drawn increased attention from policy makers over the years, as patients are left saddled with unexpected medical bills through no fault of their own.  This practice of surprise medical billing can occur when an insured person inadvertently receives care from an out-of-network clinician or facility leaving them with an unexpectedly higher cost than they would have had if they had been seen by an in-network clinician or in an in-network facility. This is especially common in an emergency, where patients might not be able to choose the clinician. Most surprise bills are generated by emergency and ancillary clinicians and “providers,” such as radiologists, anesthesiologists, pathologists, emergency physicians, emergency ground ambulances, and emergency outpatient facilities.  In 2020, the American Journal of Managed Care (AJMC) did a study of 2017 commercial claims data from the Health Care Cost Institute, comprising 568.5 million claims from 44.8 million covered lives in three large U.S. insurers: UnitedHealthcare, Aetna, and Humana. That study revealed that “more than 10 percent of health plan spending is attributable to ancillary and emergency services that commonly surprise-bill.” In addition, Brookings states that surprise medical billing is “one of the most urgent topics in health care,” and can have devastating financial effects on patients who receive them.

To address the problem of surprise medical billing, federal and some states governments have adopted laws to prohibit or limit surprise medical bills.

Federal Activities

In 2020, Congress passed, and former President Trump signed into law the No Surprises Act, which provided new federal consumer protections to hold consumers harmless from the cost of unanticipated out-of-network medical bills (surprise medical bills). ACP weighed in with congressional committees during the development of this legislation, offering  recommendations to the House Energy and Commerce Committee during its deliberations.  ACP also developed a set of key principles surrounding surprise medical billing, as outlined below, and shared those with all relevant stakeholders:

  • Hold Patients Harmless: Provide protections for patients from unexpected out-of-network health care costs, particularly for costs incurred during an emergency situation or medical situation in which additional services are provided by out-of-network clinicians without the patient’s prior knowledge.
  • Ensure Network Adequacy: How network adequacy and the fair payment of services for physicians may contribute to the increase in patients receiving out-of-network care should also be examined by Congress to ensure an appropriate number of available in-network physicians, especially in the emergency setting. Health plans also have an affirmative obligation to pay fairly and appropriately for services provided in- and out-of-network, and regulators should ensure network adequacy in all fields, including emergency care.
  • Ensure a Fair Arbitration of Payment Instead of Set In-Network Rate: Caps on payment for physicians treating out-of-network patients should be avoided, preferably by establishing an arbitration process that would allow an independent arbitrator to establish an appropriate and fair payment level between the insurers’ in-network rate and the clinician’s charge.

As of January 1, 2022, federal protections born out of the No Surprises Act were implemented to shield patients from financial hardships stemming from surprise medical bills. The protections apply to group health plans, health insurance issuers, carriers under the Federal Employees Health Benefits (FEHB) Program, health care clinicians and facilities, and air ambulance service providers.

The law provides the following protections:

  • Bans surprise billing for emergency services. Emergency services, regardless of where they are provided, must be treated on an in-network basis without requirements for prior authorization.
  • Bans out-of-network cost-sharing for emergency and some non-emergency services. Patient cost-sharing, such as co-insurance or a deductible, cannot be higher than if such services were provided by an in-network doctor, and any coinsurance or deductible must be based on in-network provider rates.
  • Bans out-of-network charges for ancillary care (like an anesthesiologist or assistant surgeon) at an in-network facility in all circumstances.
  • Bans other out-of-network charges without advance notice. Health care “providers” and facilities must provide patients with a plain-language consumer notice explaining that patient consent is required to receive care on an out-of-network basis before that “provider” can bill at the higher out-of-network rate.

Other protections implemented under the No Surprises Act, include provisions related to the independent dispute resolution (IDR) process, good faith estimates for uninsured (or self-pay) individuals, the patient-provider dispute resolution process, and expanded rights to external review.

Centers for Medicare and Medicaid Services (CMS) implemented rules that outline the processes for payers and physicians and other healthcare “providers” to settle disputes over out-of-network payments beginning with a 30-day open negotiation period. If they fail to negotiate an agreement, a formal IDR process, using an outside entity to weigh their cases, may be initiated by either side to come up with an agreement based on the “qualifying payment amount (QPA)” (median-in-network rate). The rule clarifies that before any dispute can begin, that an initial payment or notice of denial must be sent to the provider and any initial payment should be an amount that the plan or issuer reasonably intends to be payment in full based on the relevant facts and circumstances.

A new dispute resolution process was implemented for uninsured patients who believe they’ve received an overly pricey medical bill. Physicians and other “providers” are now required to give patients an estimate of their costs prior to a procedure. If the charges ultimately prove to be much higher, uninsured patients can enlist an outside arbitrator to challenge them.

ACP submitted comments to CMS based on ACP’s guiding policy on surprise medical bills which is outlined in its position paper entitled, “Improving Health Care Efficacy and Efficiency Through Increased Transparency.”

State Activity

So far, in 2024, ACP has identified several bills that  have been introduced in state legislatures to address surprise medical billing.  According to the Centers for Health Insurance Reforms, more than 50 percent of states have protections in place to prevent or limit surprise medical billing for some of their residents.  Those state laws vary from comprehensive to limited protections.

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