Surprise billing hurts patients. What is being done to address this costly phenomenon?

November 13, 2019

Surprise billing. Those two words should sound familiar if you’ve been paying attention to the news. Surprise healthcare bills have become so commonplace that news outlets like Kaiser Health News feature a “Bill of the Month” series to highlight stories of ordinary people receiving shockingly high medical, hospital or physician bills, often for a minor procedure or service.

So what is surprise billing, why is it happening, and how is it being addressed?

WHAT IS SURPRISE BILLING?

Generally, if a consumer has health insurance, they can expect their health plan to cover a variety of services when visiting in-network hospitals, doctors, and other care providers. These “in-network” providers exist as a result of negotiations between health insurance companies, physician networks and hospitals in order to provide enrollees “discounted” prices. Yet, the last few years have shown that while this arrangement should be benefitting the consumer, that’s not always the case.

WHY IS IT HAPPENING?

Surprise bills most commonly stem from a patient – often inadvertently – receiving care from an out-of-network provider. This occurs when a patient requires emergency care and doesn’t have time to find an in-network provider nearby, or when a member of their care team (a physician, anesthesiologist, etc.) is out-of-network in an in-network hospital. Unfortunately, patients are usually forced to pay out-of-pocket when this happens since insurers are not obligated to cover all or part of an out-of-network bill. The lack of transparency surrounding cost of care serves as a serious detriment to the consumer, who is baffled when they receive a bill in the mail that doesn’t seem to correspond to the care they received.

HOW IS IT BEING ADDRESSED?

So far, a lack of federal action has pushed states to take the lead on patient protections from surprise bills. Yet, as of December 2018, only 25 states have protections in place through legislation, with only 9 states offering “comprehensive protections.” Even in states that have adopted comprehensive protections, gaps still exist. Some of the most widely adopted safeguards by states include:

• Protecting patients with both HMO and PPO managed care plans from balance billing (CA, CO, FL, IL, MD, NH, NJ, NY, OR)
• Prohibiting providers from balance billing in some form (CA, CO, FL, IL, MD, NH, NJ, NY, OR)
• Creating a bill resolution process that better addresses disputes between providers and insurers (CA, FL, IL, NH, NJ, NY)

While states are standing up for patients, efforts to address this nationwide crisis have stalled at the federal level. In September 2018, a group of bipartisan senators released draft legislation, Protecting Patients from Surprise Medical Bills Act, to start the conversation. The draft outlines some protections for consumers, including limiting patient cost-sharing to an amount they would owe in an in-network care facility and focusing on the most frequent sources of surprise bills: out-of-network emergency care and out-of-network care delivered at an in-network facility. In May, this bill was referred to the Senate Committee on Health, Education, Labor, and Pensions, and a summary is in progress.

Earlier this year, Representative Lloyd Doggett (D-TX) introduced the End Surprise Billing Act of 2019 , which would require providers to inform patients about potential out-of-network charges before they receive any service. It has since been referred to the Subcommittee on Health.

While there has been an appetite on both sides of the aisle to tackle this low-hanging fruit in health care policy, the question of who would eat up costs – hospitals or insurers – has been a point of contention. Lobbying efforts from the American Hospital Association on one side and health insurance companies on the other have stymied progress in passing comprehensive legislation. The American Hospital Association argues they already negotiate costs with insurers, and setting a benchmark rate at which they could charge in-network insurers for out-of-network costs would disincentivize insurers from maintaining provider networks at all. Meanwhile, insurance companies argue that setting median rates across the board would be fair, but that increased arbitration would raise costs all around, especially for self-insured companies that would need to hire outside negotiators.

In addition to lobbying efforts from hospitals and insurers, physician groups are also joining the fight. They’re worried that the benchmarking approach would most likely mean a major pay cut and provide insurers too much leverage.

Unfortunately, the more these discussions play out in the public eye, the longer it takes and the more likely it is for patients to be stuck in the middle – as they have been for years. While some can rely on state laws to protect them, we recommend all consumers visit our website to learn more about surprise billing and how to avoid it. We will continue to track state and federal action and hope to inform patients of nationwide progress very soon.