Surprise medical billing, also known as balance billing, happens when someone seeks care at an in-network facility or provider but receives services that are out-of-network. Many times, patients receive such care without prior knowledge or authorization.
One of the most common situations where patients might incur a surprise bill is from an emergency room visit, where patients typically have little control over the facility or provider treating them. As reported by Health Affairs, 1 in 5 patients who sought care at an emergency department received services from an out-of-network provider.
State policymakers and industry experts alike agree that consumers should not be held responsible for surprise bills from situations where patients are not given a choice, but opinions commonly diverge in the amount providers should be reimbursed. Some suggest setting a benchmark standard where reimbursement is tied to a reference point, such as the median in-network rate paid within a certain geographic area, or to a percentage of current Medicare rates.
Others recommend that the provider or facility and the insurer should first negotiate on their own to resolve payment. Should those negotiations fail, an arbiter appointed through an independent dispute resolution process would choose between proposed payments submitted by both the provider and the insurer. Still others propose a hybrid of the two.
Legislative efforts to protect consumers from surprise bills have been steadily increasing, illustrated by recent laws enacted across the nation and political spectrum. To date, 33 states have some sort of consumer protections in place. When compared with guidelines created by researchers at the Georgetown University Center for Health Insurance Reform, 18 of those states have comprehensive safeguards against surprise bills while 15 have a more limited approach. The Georgetown experts assessed states on the comprehensiveness of their laws based on the following indicators:
- Extends protections in both emergency department and in-network hospital settings.
- Applies laws to all types of insurance, including health maintenance organizations and preferred provider organizations.
- Protects consumers by holding them harmless from costs above their cost-sharing requirement and prohibiting providers from balance billing.
- Adopts a state-specific payment standard or process for resolving payment disputes between providers and health insurers.
In December 2020, Congress passed the No Surprises Act, which outlines several consumer protections and a payment process. Patients who are seen by an out-of-network provider will not be responsible for any amount over their normal cost-sharing requirement for an in-network provider, and providers are barred from seeking anything above this threshold from patients. The law also protects consumers against being surprise-billed in both emergency and nonemergency settings. Payment disputes are resolved by using a “baseball-style” arbitration process, where each party makes an offer and an independent arbitrator chooses between them.
Notably, the federal act includes consumer protections against surprise bills from air ambulance providers—a policy area states have, historically, had little authority to regulate.
Enforcement of the No Surprises Act will fall to the states and their insurance departments. For states with no protections and for large employer plans guided by the Employee Retirement Income Security Act of 1974, the requirements outlined in the federal act will apply. For states with broader consumer protections, the No Surprises Act defers to state law, and state-regulated plans will still be subject to state payment dispute processes. Federal guidance in 2021 should further clarify how the No Surprises Act will interact with state laws.