Although it has been discussed and debated at the federal level for years, viable bi-partisan surprise billing legislation had not been proposed until recently, in the form of the No Surprises Act (“the Act”). It seems likely that the current federal legislation will pass soon, which would be a first step towards a nationwide approach to consumer protection from balance billing.
There are two types of billing that often result in consumers being hit with high costs, even when they are diligent in ensuring they are seeking in-network care and utilizing benefits included in their health insurance plan. The first is traditional balance billing, which is defined as the practice of a provider charging an enrollee the difference between the provider’s fee and the sum of what the enrollee’s health insurance company pays.
The second type—and the target of the pending Act —is surprise balance billing. This refers to billing a consumer for the full charge of a service provided at an in-network facility because the provider is out of the enrollee’s network. The high amount owed on the resulting medical bill is often a surprise to the consumer. Even if this consumer made sure to seek treatment at an in-network facility for a covered service, they may still owe the full allowed out-of-network cost solely because of the provider who rendered the service—an aspect of care that a consumer could not reasonably control, especially in an emergency medical situation.
See Figure 1 below for a comparison between these two types of balance billing.
Industry advocates, including American’s Health Insurance Plans, support the No Surprises Act. Currently pending in the House Energy and Commerce Committee, and sponsored by Committee Chair Frank Pallone Jr. (D-NJ) and Representative Greg Walden (R-OR), the Act calls upon lawmakers to enact protections for consumers and increase transparency into both in- and out-of-network provider costs and billing practices.
To accomplish this, the currently pending version of the No Surprises Act includes the following protective measures:
- Out-of-network physician charges in emergency situations would be capped at the in-network cost-sharing amount.
- Hospitals would be required to obtain written permission from patients before letting an out-of-network physician treat them for a scheduled procedure.
- Instead of billing patients directly, providers would be required to collect payments from the insurance company for the median in-network rate in the service area.
Unlike some state approaches to the issue of surprise billing, the current version of the Act does not include an option for arbitration to resolve pay disputes between hospitals, physicians and insurers . That omission has been a point of debate since the Act’s proposal, as the arbitration (or “pay dispute”) method would allow providers and payers to settle on a price for services—either through agreement or reference pricing parameters—without being restricted to in-network pricing. The proposed federal approach would not supersede state approaches that may afford different pay resolution methodologies or additional consumer protections above and beyond those outlined in the federal Act.
Recent State Action
As of recent counts, only nine states have comprehensive approaches to the issue of surprise/balance billing, making federal legislation crucial to protecting consumers in states without any enumerated payment standards or dispute resolution process.
As lead sponsor of the No Surprises Act, Rep. Walden has promoted the success of state approaches to the issue of surprise billing—particularly in his home state of Oregon. Since its March 2018 enaction, Oregon HB 2339 has led to several positive changes for enrollees, including alleviating the potential of direct billing from providers and capping costs for out-of-network services at the in-network rate. California enacted similar consumer protections in 2017, capping a patient’s responsibility for unforeseen out-of-network services at the in-network rate.
In 2018, New Hampshire took steps to provide a more comprehensive approach to protection of consumers from surprise/balance billing with HB 1809. This bill expands existing protections to include hold harmless protections for care received at in-network facilities by certain providers—in particular, anesthesiology, radiology, emergency medicine, or pathology service providers—again capping costs at the standard copay, deductible, or coinsurance amounts. It also limits the costs for such services to a commercially reasonable price. In the case of an unresolvable dispute between the provider and the insurance carrier, the Commissioner of Insurance has the authority to require arbitration between the parties, as well as make decision on what a commercially “reasonable” price for the services should be.
Health Policy News released a white paper on state approaches to surprise/balance billing in 2017; for additional insights on previously proposed state legislation, please reference it here.
For states still seeking a solution to surprise medical bills and additional consumer protections, both the National Association of Insurance Commissioners and National Conference of Insurance Legislators have released model acts.
National Association of Insurance Commissioners Model Act
The National Association of Insurance Commissioners (NAIC) released the Health Benefit Plan Network Access and Adequacy Model Act (“the NAIC Act”) in 2015, Section 7 of which is entitled “Requirements for Participating Facilities with Non-Participating Facility Based Providers.” This section seeks to provide states with model language to protect consumers from unexpected medical bills following out-of-network care.
One proposed provision mandates provider contract language to prevents balance billing in the event of a carrier/provider insolvency or operational shutdown. If implemented, it would require providers to continue rendering services without balancing billing until the termination of the consumer’s coverage (for those in active treatment), or until the conclusion of the carrier/provider contract period. The NAIC Act also proposes mandating that participating facilities, when rendering non-emergency services, provide an out-of-network written disclosure notice and obtain consent from the consumer for the potential of out of-network services and charges.
Some additional approaches highlighted by NAIC include:
- Require facilities to provide a written notice or disclosure at the time of pre-certification about the potential for costs incurred when a non-network provider renders care at an in-network facility.
- For emergency services rendered out-of-network, mandate that non-participating facility providers include a statement/billing notice stating that the consumer is responsible for the in-network share but has no legal obligation to pay the remaining balance (with suggested language included in Section 7, subsection C the NAIC Act), and should send the bill to their insurance carrier for consideration under the NAIC-proposed Provider Mediation process (found in Section 7, Subsection G of the NAIC Act).
- Require health carriers to develop a payment plan for out-of-network facility-based provider payments, suggesting that the benchmark for non-participating payments is presumed reasonable “if it is based on the higher of the contract rate or a percentage of the Medicaid payment rate for similar services in the same geographic area”.
National Conference of Insurance Legislators Model Act
In 2017, the National Conference of Insurance Legislators (NCOIL) adopted a model act entitled the Out of Balance Billing Transparency Act (“the NCOIL Act”). NCOIL had previously adopted the Healthcare Balance Billing Disclosure Model Act in 2011, but their updated model act represents a significant expansion of the topics addressed therein.
The NCOIL Act set forth the following approaches for consideration by states:
- Cap payment for services rendered in an emergency setting at the in-network provider rate.
- Require facilities, providers and the health insurance carriers to provide advance notice and cost transparency notices to consumers. Suggested areas for advance or point-of-service notice include:
- Referral or pre-authorization requests for services from an out-of-network provider when the network does not have a geographically accessible similarly situated provider;
- A clear methodology of the reimbursement for out-of-network health care services: a description of the amount the carrier will reimburse for out-of-network services (set forth as a percentage of the usual and customary cost for out-of-network services), examples of the anticipated out-of-pocket costs for frequently billed out-of-network health care services, and information that permits an enrollee to estimate the cost based on the proposed geographic location of the services to be rendered; and
- Electronic or written notification to enrollees, no later than 48 hours after pre-certification, that details whether the enrollee’s provider is a participating provider and in-network, whether the proposed non-emergency care is a covered benefit, and what the co-pay, deductible and coinsurance cost will be.
 Representative Raul Ruiz (D-CA) recently filed an alternative to the No Surprises Act entitled the “Protecting People from Surprise Medical Bills Act.” (Protecting People Act). The Protecting People Act is gaining bi-partisan support and does include arbitration provisions. In the event of a dispute over payment, the Ruiz approach would allow arbitration to determine the usual and customary cost as up to 80% of the charges for comparable services in a geographic area.