Surprise! New Law Bans "Surprise" Medical Billing

A legislative "solution" to surprise billing managed to find it's way into the year-end spending and COVID-19 relief packages.  The heretofore elusive ban on surprise billing, ironically, comes as a surprise, albeit one welcome by consumers and advocates. 

“It seemed like déjà vu,” wrote Modern Healthcare’s Rachel Cohrs, “another mid-December bipartisan compromise on banning surprise medical bills negotiated behind closed doors is announced just days before a crucial end-of-year government funding deadline....[But] [u]nlike their 2019 failure, lawmakers this year succeeded in sealing the deal."  The surprise billing ban takes effect in 2022. 

Surprise bills occur:

 “when an out-of-network provider is unexpectedly involved in a patient’s care. Patients go to a hospital that accepts their insurance, for example, but get treated there by an emergency room physician who doesn’t. Such doctors often bill those patients for large fees, far higher than what health plans typically pay,"

explained Sarah Kliff and Margot Sanger-Katz,  writing for the The New York Times. 

According to Kliff and Sanger-Katz:

Academic researchers have found that millions of Americans receive these types of surprise bills each year, with as many as one in five emergency room visits resulting in such a charge. The bills most commonly come from health providers that patients are not able to select, such as emergency room physicians, anesthesiologists and ambulances. The average surprise charge for an emergency room visit is just above $600, but patients have received bills larger than $100,000 from out-of-network providers they did not select.  

The new law will make those surprise bills illegal. Instead of charging patients, health providers will now have to work with insurers to settle on a fair price. The new changes apply to doctors, hospitals and air ambulances.  The law does not apply to ground ambulances.

The new law requires insurers and medical providers who cannot agree on a payment rate to use an outside arbiter to decide. The arbiter would determine a fair amount based, in part, on what other doctors and hospitals are typically paid for similar services. Patients could be charged the kind of cost sharing they would pay for in-network services, but nothing more. Several states have set up their own arbitration systems, and have found that most price disputes are negotiated before an arbiter is involved. 

By the way, an excellent description of the legislative path for this welcome consumer protection, is provided by Modern Healthcare’s Rachel Cohrs, who has recited the work and effort expended both in support, and in opposition to the bill.  It is an interesting read.