As political pressure to address health care costs continues to rise, Congress has increased its focus and attention on unexpected charges from out-of-network (OON) providers, or what has become known as “surprise” medical bills. This issue arises, for example, when patients visit a hospital or facility in their insurer’s or health plan’s network but are seen by a provider practicing at the facility (e.g., a physician) who is not contracted with the insurer or plan (i.e., is OON). The hospital may bill at the in-network rate the patient expects to see, but the OON physician may separately bill an amount that well exceeds what the patient would have been charged by an in-network provider.
According to a Brookings Institution report, one in five emergency department visits to an in-network facility involve an OON physician, and nearly 10 percent of scheduled hospital stays at an in-network facility lead to a surprise bill. The New York Times has reported that patients subject to surprise bills often face out-of-pocket (OOP) costs in the hundreds of thousands of dollars. State legislatures have been active in addressing surprise billing, with several states adding comprehensive patient protections in recent years even while debate heats up at the federal level.
As a result of growing patient OOP costs and financial liability, surprise billing has been subject to considerable criticism from stakeholders and on a bipartisan basis from members of Congress. For example, on February 5, 2019, a group of bipartisan senators sent a letter to insurers and providers asking questions about balance billing. The White House has also voiced support for dealing with surprise medical bills. Despite widespread agreement among policymakers that surprise billing must be addressed, consensus has yet to emerge on the best approach. Legislators have introduced various bills with differing mechanisms to protect patients and shift responsibility to providers and payers.
Key distinctions among current proposals indicate potential challenges in reaching consensus on a bill that can get to the President’s desk. For example, some proposals call for the use of arbitration to determine how much insurers and plans must pay OON providers, while others use a predetermined reimbursement rate or method.
In light of the significant focus on surprise billing and the impact on patients, Congress will likely take action in 2019, but a clear policy solution has not yet emerged. This leaves open the question of how any final legislative action may impact payers (insurers and health plans), providers, and patients.
White House Position on Surprise Billing
On May 9, 2019, the White House issued principles for any effort to address the issue of surprise billing. The principles include:
- Patients receiving emergency care should not be forced to shoulder extra costs billed by a care provider but not covered by their insurer.
- Patients receiving scheduled care should have information about whether providers are in or out of their network and what costs they may face.
- Patients should not receive surprise bills from OON providers they did not choose.
- Federal health care expenditure should not increase.
The White House has expressed its preference that surprise billing issues not be resolved through arbitration. On a call with reporters, a senior White House official stated that the White House does “not have a lot of enthusiasm for arbitration. We believe that that would be disruptive.”
Legislative Activity in the 116th Congress
Multiple bills have been introduced or released in draft form, all of which generally adhere to the principle that patients should not be subject to surprise bills resulting from emergency care or OON providers they have not chosen to see. Most legislation also includes provisions related to improving transparency for network status and possible OON charges. The variety of legislative proposals highlight the myriad ways the surprise billing issue could be addressed. The proposals tend to include the following major categories:
- Prohibit balance billing in certain situations (e.g., emergency care, services provided at an in-network facility by an OON provider).
- Limit patient cost-sharing liability to a predetermined rate (e.g., in-network rate).
- Limit provider reimbursement to a predetermined rate (e.g., in-network rate, geographic median in-network rate for the geographic area, or a percentage of the Medicare rate) or a rate resulting from a specified process.
- Apply penalties to providers (in some cases the insurer or health plan) for surprise billing.
Primary differences across the legislative proposals include:
- The situations in which a patient would be protected from surprise billing, including the transparency and notice requirements to educate patients about a provider’s network status.
- The methodology for establishing the appropriate reimbursement rate for OON services.
- The dispute resolution process between insurers/health plans and providers, including whether arbitration is available.
- The plans surprise billing policies would apply to.
- Interaction of federal and state law.
Comparison of Legislative Proposals Addressing Surprise Medical Billing
The following table provides a high-level summary of three bipartisan proposals addressing the issue of surprise medical bills:
- A discussion draft of the No Surprises Act, released on May 13, 2019, by House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) and Ranking Member Greg Walden (R-OR).
- The Stopping the Outrageous Practice (STOP) of Surprise Medical Bills Act of 2019 (S. 1531), introduced on May 16, 2019, by Senators Bill Cassidy (R-LA), Michael Bennet (D-CO), Todd Young (R-IN), Maggie Hassan (D-NH), Lisa Murkowski (R-AK), and Tom Carper (D-DE).
- A discussion draft of the Lower Health Care Costs Act of 2019, released on May 23, 2019, by Senate Health, Education, Labor & Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA).
Please note that the table is a summary only and does not include full details of the various provisions. Some provisions may be further clarified as the legislative process progresses. These bills may serve as the foundation for further congressional action to address surprise billing. Note that there are additional proposals are also being developed.
1 Note that technical changes may be needed in some cases to incorporate provisions into ERISA and the Internal Revenue Code, as appears to be the intent.