State Policy Options
Prior to the new federal law, 33 states had state laws providing some level of protection for consumers from surprise bills. Of these, the Georgetown Center for Health Insurance Reforms identified 18 states with comprehensive consumer protections. These state laws extend protections to both emergency settings and in-network hospital settings; apply to all types of health insurance; hold consumers harmless from costs above their cost-sharing obligation and prohibit providers from balance billing; and establish a process for resolving payment disputes between providers and insurers.
As previously mentioned, the No Surprises Act defers to state surprise billing laws in a few key areas. These include how a state determines payment (including patient cost-sharing and amounts paid by the health insurer) to out-of-network health care providers and requirements for insurers to update their in-network provider directories. However, issues surrounding self-funded health plans—which states are largely unable to regulate—may arise when determining how the new federal law interacts with state laws. Various policy experts also noted certain gaps in federal protections—including for ground ambulance services—where consumers still may be susceptible to surprise and balance billing, which may leave room for state action.
Although federal surprise billing protections now exist, states still have opportunities to step in and establish surprise billing protections and procedures. State legislators may consider the following policy options related to surprise billing and the implementation of the No Surprises Act:
Consider the benefits and limitations of establishing a state-led payment standard or independent dispute resolution process.
States may prefer to establish or maintain their own process for resolving payments disputes between providers and insurers for various reasons, such as avoiding inflation in reimbursements to providers and insurance premiums.
However, these state-led protections only apply to certain health plans, including individual and small group plans and fully insured large group plans. Self-funded health plans are subject to requirements and protections laid out in the No Surprises Act. Some researchers note this may cause confusion and administrative complexities for states, since regulations and requirements will differ depending on the type of health plan involved in the surprise billing dispute.
For the 18 states providing comprehensive protections against surprise bills, four states rely solely on a payment standard, five use arbitration only and nine established a hybrid approach.
Georgia requires insurers to reimburse a provider either the most recent negotiated rate between the provider and insurer or the average median reimbursement rate paid to all in-network providers for that given service. Providers have 30 days after receiving payment to initiate “baseball-style” arbitration, where the provider and insurer each submit a reimbursement proposal and an arbitrator chooses one of the two proposed payments.
New Mexico uses claims data to calculate the reimbursement amount, requiring insurers to reimburse providers the 60th percentile of the allowed commercial reimbursement rate for the same service in the same geographic area.
Texas established a non-binding mediation process for settling payment disputes between insurers and out-of-network facilities and an arbitration process for disputes between insurers and out-of-network providers (not facilities).
Identify gaps in protection or opportunities to exceed federal standards for surprise billing.
Although the No Surprises Act required an advisory committee to further study surprise billing for ground ambulance services, the federal law currently does not establish protections for consumers who may receive a surprise or balance bill after receiving these services. Regulating ambulances often presents unique challenges to state policymakers, since many are owned and operated by local governments and municipalities.
Colorado requires health insurers to reimburse non-contracted private ground ambulances 325% of the Medicare rate for the same service in the same geographic area.
Connecticut requires ambulance providers to make good-faith efforts to bill a patient’s insurer before seeking payment from the patient. Ground ambulance providers are authorized to seek payment from the patient if the insurer declines to cover the ground ambulance services.
Ohio prohibits out-of-network ground ambulances from balance billing patients and established a payment standard where insurers must pay ground ambulance providers based on an insurer’s in-network reimbursement rates, out-of-network reimbursement rates or Medicare rates.