Health Insurers Ponder ‘No Surprises’ Impact

A law to ban unexpected medical bills that took effect on New Year’s Day sounds simple enough. But like many things out of Congress, the details are complicated.
There are questions about how the “No Surprises Act” will be calculated and enforced, and there already have been several lawsuits filed seeking to change or eliminate elements of the complex legislation.

Surprise medical bills have become so common, according to studies, it’s a wonder anyone is really shocked these days. The Kaiser Family Foundation says surprise medical bills number in the millions each year, and two in three adults say they fear unexpected charges when they obtain medical treatment.

The surprise bills typically occur when a patient seeks emergency treatment and has to rely on out-of-network providers that they did not choose. A Department of Health and Human Services report said patients can get clobbered with more than $1,200 in average unexpected charges for anesthesiologists, $2,600 for surgical assistants and $750 for birthing charges.

But anecdotal stories abound about people getting tagged with unexpected emergency services totaling tens of thousands of dollars that they never saw coming.

The new law aims to end such incidents. In what has been called one of the biggest consumer protections ever passed by Congress, when a patient receives emergency care or scheduled treatment from physicians and hospitals outside their insurance networks, they can only be charged for the in-network costs. The new rule applies to employer-based private health plans and to individual policies bought through the Affordable Care Act exchanges. Medicare and Medicaid already ban such charges.

The law covers most hospital, urgent care, free-standing emergency departments and air ambulance services. But perhaps most notable, the law does not cover ground ambulances, which frequently are a source of surprise charges. The law also covers nonemergency care in some situations, such as when an out-of-network anesthesiologist, surgeon or radiologist is ordered by in-network physicians.

In those cases, consumers would be responsible only for their in-network deductibles, coinsurance or copays. Should a patient choose care from an out-of-network source, the provider would have to give estimates of the charges at least 72 hours in advance, and the patient would have to pre-consent to the higher out-of-network costs.

CBO: Insurance Premium Cut

The Congressional Budget Office says the new law will cut insurance premiums by anywhere from 0.5% to 1%.

But who pays the balance of the charges and how the costs are calculated were the biggest sticking points to the law’s passage. And they remain controversial. The insurance industry lobbied to calculate payments on locally negotiated rates, arguing that surprise billing has exploded recently as private equity firms overtook physician groups and hospitals merged and consolidated services.

Providers and networks, however, called for negotiated prices or mediation, contending that fixed prices would lead to federal rate setting and take away incentives for insurers to contract for services.

The final law employs a system in which insurers and providers negotiate and turn to independent arbiters if they cannot resolve their differences.

The American Hospital Association and the American Medical Association have gone to court challenging the interpretation of the balance payments, saying they unfairly benefit the insurers.

The associations said the process will reduce access to care by discouraging meaningful contracting negotiations, reducing provider networks, and encouraging unsustainable compensation for teaching hospitals, physician practices and other providers.

“If regulators don’t follow the letter of the law, patient access to care could be jeopardized as ongoing health plan manipulation creates an unsustainable situation for physicians,” said AMA president Gerald E. Harmon.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].