Surprise medical bills emerge when a patient receives care from an out-of-network provider at an in-network facility or hospital. These surprise bills commonly occur in emergency and ancillary care scenarios.
Rising health care costs have been a major concern among people in the US, and the surprise bills from out-of-network services are devastating. Consumers are surprised with expensive bills from providers who are not in their insurer’s network and whose care they did not request.
Federal and state policymakers have been planning to end surprise medical billing, and some proposed solutions are intended to address this issue.
Table of Contents
- What is Surprise Medical Billing?
- Facts about Surprise Medical Billing
- Government’s Intervention to Prevent Surprise Medical Billing
- New Legislation to End Surprise Medical Billing
What is Surprise Medical Billing?
Surprise billing or balance billing is the difference amount that the healthcare provider bills a patient after deducting the amount the insurance pays from the total cost of services charged.
Surprise billing can happen in circumstances when a patient receives services from an out-of-network provider at an in-network hospital and is charged for those services. Sometimes, these medical bills can be prohibitive. Most of the time, the patient is not aware of the out-of-network care they received and is charged with costly bills.
Surprise medical billing typically occurs in the following circumstances:
- An out-of-network care provider offers service to a patient receiving care in an in-network hospital.
- Non-surgical hospital stays and emergency department admissions, where patients may not be in a position to choose health care providers within their health care plan.
- Surgical complications – When a procedure gets more complex, more people may get involved during the treatment process, and one or a few might be out-of-network.
Mostly, surprise bills occur due to anesthesiologists, surgical assistants, surgeons, pathologists, or radiologists, who may be out-of-network and are typically not chosen by patients. Hospitals may employ specialists on a contract basis to cut costs, and this can make the medical claims processing arduous and burden the patients with inconceivably large bills.
Facts about Surprise Medical Billing
Surprise medical billing has impacted patients and has garnered attention from healthcare stakeholders and the federal government. Listed below are a few facts:
1. The Proportion of Surprise Medical Billing
Surprise medical billing has caused a significant impact on the number of emergency department visits. According to the analysis, surprise billing occurs in about 22% of all emergency department admissions. About 16% of in-network facilities and 18% of emergency room visits result in 1 out-of-network bill.
Nevertheless, the prevalence value differs for different states. In states such as Alabama, Nebraska, Minnesota, South Dakota, and Mississippi, about 5% of the emergency visits resulted in out-of-network bills. On the other hand, in New York, California, Texas, and Mexico, approximately 30% of the visits ended up with out-of-network bills.
According to the polls, about 29% of Americans are worried, and 38% are extremely worried about being able to afford surprise medical billing for themselves and their family members.
2. Prevalence of Surprise Medical Billing
The prevalence of surprise medical bills continues to increase day by day. Studies have found that privately insured patients most commonly get out-of-network billing even if they visit an in-network hospital.
Researchers have found that out-of-network bills for emergency room visits increased from 32.3% to 42.8% for people with private health care insurance during 2010 and 2016, with an average potential cost increased from $220 to $628. They also stated that out-of-network bills for inpatient admissions increased from 26.3% to 42.0%, with an average potential cost increased from $804 to $2040.
3. How Do Patients See Surprise Medical Bills?
Surprise medical billing has been leaving patients with large unexpected medical expenses in the United States. There have been stories of patients charged with thousands of dollars after receiving the medical care they thought was covered by their health care insurance.
Surprise medical billing has been viewed as an unjust practice and often results in financial hardship for patients. It also leads to affordability concerns for many families.
Most often, patients receive unexpected medical bills after unplanned emergency care. When patients get into the emergency department, they know the facility is under the health insurance plan but are unaware if the physician (whom they do not know) has a contract with the insurer.
4. What Should Health Insurers Do?
Health insurers base the responsibility for cost-sharing and pay in-network hospitals or out-of-network providers and then maintain the amount in Explanation of Benefits (EOB). They are also deemed responsible for calculating the amount that has been paid for any emergency and out-of-network services.
5. Policy Strengthen Provider Networks
Despite the criticism that the insurance providers may have decreased the number of specialty doctors in their networks, a survey done on health insurance providers has shown the number of in-network specialists to have either grown or remained stable.
There has been a step-up in the number of in-network emergency medicine physicians and general surgeons by about 10%, diagnostic radiologists by 26%, anesthesiologists by 18%, and pathologists by 1%.
Government’s Intervention to Prevent Surprise Medical Billing
The federal government and regulatory agencies outlined an action plan to tackle the occurrence of surprise medical billing and stated the insurance companies and hospitals would be held accountable. Besides this, the guiding principle mainly includes that care providers must not charge the patients for out-of-network services in emergencies.
In non-emergency care services, the patient must receive an honest and clear bill along with the prices of all services mentioned and the costs for out-of-network services they must pay. The in-network facility should not charge the patients for services from out-of-network providers they did not choose.
Later, another bill was introduced for consumer protections against surprise out-of-network medical bills. Some favored an independent dispute resolution process to resolve surprise bill payments, and some favored setting a regional benchmark payment based on the in-network cost-sharing amount. However, the argument is that this measure would result in detrimental cuts in payments to physicians.
New Legislation to End Surprise Medical Billing
After several years of working, Congress enacted the law “No Surprises Act,” providing new consumer protections federally against surprise medical bills. The new legislation will take effect from 2022 and apply to almost all private health plans provided by employers and non-group health insurance policies provided through and outside the marketplace.
The “No Surprises Act” contains the following key elements:
- Prevent consumers from being billed by out-of-network physicians after receiving treatment in an in-network hospital.
- Prohibits surprise medical billing for emergency and non-emergency care.
- Written consent from the patient is required for patients to be balance billed in a non-emergency care setting.
- Consumers are only required to pay cost-sharing amounts to in-network services, including any applicable coinsurance, co-pays, and deductibles for out-of-network emergency medical care at in-network facilities and hospitals.
- Private health plans should provide coverage for surprise medical bills, including air ambulance services in emergencies and out-of-network provider bills for services offered at in-network hospitals and facilities.
The legislation has also created an independent dispute resolution process (IDR) that ensures doctors and health insurers can resolve their billing disputes. The key elements include:
- The initial payment to the out-of-network provider will be made by the health plans/payers. If any dispute occurs, the providers and payers can try to negotiate within 30 days before accessing the IDR/arbitration process.
- The IDR/arbitration process follows the baseball style where each party submits an offer, and the IDR chooses the most reasonable offer.
- The arbitrator can consider several factors, including data submitted by the provider and insurer, the median in-network rate for the service, the complexity of the case, and the power of the provider and payer in the market, etc.
- They cannot consider public payer rates such as Medicare and Medicaid.
- An arbitrator makes the final decision, and payment should be done within 90 days. The loser pays the fees.
- A cooling-off period of 90 days is provided. During this period, the providers and insurers cannot start a new arbitration process for the same service(s) or item(s). Still, they can continue to gather and batch cases and submit them for arbitration at the end of the 90-day period.
- During this period, payers must provide regular payments to the providers.
- Regular report generation after enacting the new law to ensure rigorous supervision of the IDR/arbitration process development.
The surprise billing provisions do represent a significant improvement from previous pro-health insurer proposals. However, the efficacy of the legislation on patients’ access to quality care and effective control of healthcare costs will need to be evaluated over time.