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August 3, 2016

Exploring the Changing World of Surprise Bill Legislation

August 3, 2016

surprise bill legislation

The idea of a “surprise bill” – a bill that contains costs the patient didn’t expect or necessarily know about before treatment – has been around for decades.

Now, though, legislatures and regulators at the state and federal level have begun to take action against surprise billing to protect consumers.

Here’s how it usually works: a patient will undergo treatment under a health plan that covers the hospital where the treatment will take place and the surgeon who will be performing the operation. What the health plan may not cover, though, is the anesthesia and the provider. Thus, when the bill is issued, the patient is often alarmed to see a drastic difference between the full charge and what the plan actually covered.

Large balance bills not only subject patients to a great degree of stress; they also result in medical debt (in fact, they are one of the primary sources of medical debt in the United States). Since medical debt is the largest single cause of bankruptcy in the U.S., the motivation to end surprise billing is at an all-time high.

For anesthesia providers to avoid running afoul of regulations, they need to be aware of the surprise bill legislation that is out there and coming down the pike. This world is constantly changing, but is steadily progressing to more – not fewer – limitations on surprise billing. Some legislation applies to insurers and not anesthesia providers, but some statutes directly affect anesthesiologists and their practices.

Surprise Bill Legislation at the State Level

The drive to limit surprise billing has flourished at the state level, as over half of the states have enacted some form of surprise bill legislation.

The latest came this past April in Florida, with a law that basically says patients will not be responsible for out-of-network rates if they lack the opportunity to receive treatment from a provider who participates in the network.

This law – and others like it – have been opposed by the American Society of Anesthesiologists, who believes that the legislation places providers “at the whim of insurers’ determination on usual and customary charges as no independent benchmarking system is provided within the language.” This opposition, however, has not stemmed the tide of surprise bill legislation.

Generally speaking, statutes enacted against surprise billing fall into one of four paths:

  1. Tougher disclosure and transparency requirements to clearly communicate the additional costs of going out-of-network for treatment
  2. Prohibitions against out-of-network providers from billing patients
  3. Hold harmless provisions that require the health plan to hold plan members harmless by giving providers the charges that they bill
  4. Provisions to ensure adequate payment, either through specific rules to set payment rates or pushing all parties toward a mediation or dispute resolution to determine mutually acceptable payment rates

The path followed depends on the state. Colorado, for example, has enacted hold harmless provisions, while the Florida law referenced above is a combination of both adequate payment methods. New York outright bars balance billing in emergency situations.

While not every state has some kind of legal protection against balance billing, many do – and more are considering taking action.

Surprise Billing at the Federal Level

The federal government has gotten in on the anti-surprise billing bandwagon, primarily through the Affordable Care Act’s provision that health plans must provide acceptable emergency coverage even if the providers who administer the emergency treatment are not in-network. This does not extend to non-emergency care, however – a sticking point for some patient advocates when the ACA was drafted.

Over the last year, Congress and the Obama Administration have both explored balance billing legislation. The latest major attempt to enact legislation, though, has not made it out of committee since it was referred to the House Subcommittee on Health in October 2015. Limiting surprise billing, while not viewed as a pressing legislative priority, could see renewed interest after the November 2016 election.

President Obama, for his part, included a provision in the 2017 Department of Health and Human Services budget that would seek to “eliminate surprise out-of-network healthcare charges for privately insured patients.” Details are unclear on this provision, but it would basically call for providers who routinely provide care in hospitals to accept in-network payment rates even if they aren’t in the network. Hospitals would probably be required to help patients see in-network providers for care, although the enforcement mechanism isn’t contained in the budget provision.

The most direct action against surprise billing at the federal level came in March 2016, when CMS issued a rule addressing surprise medical bills. The rule covers non-emergency care for people who are covered by ACA-qualified health plans via the health insurance exchanges. As we covered previously, the ruling states that “insurers must count the cost sharing charged to the enrollee for certain out-of-network services (provided at an in-network facility) towards the enrollee’s annual limitation on cost sharing.” Additionally, exceptions will only be granted if the issuer “provides 10 days’ notification to the enrollee that an out-of-network provider may be providing these services and that the enrollee may incur additional costs.”

Adapting to Surprise Billing

The first step to conforming to balance billing legislation is to thoroughly understand your state’s applicable laws. While most states have taken action, some have not, and there may not be any balance billing statutes by which you must abide.

For those providers who are in a state with significant legislation against balance billing, try to communicate clearly with all partners (insurers and hospitals) and patients about clarifying potential costs. Surgical patients should be given written notice before a procedure is performed that they may be charged for anesthesia. These notices should include an estimate of the charges, if possible.

Additionally, providers can work to participate in every health plan that covers in-network facilities.

Fortunately, many anesthesia providers are already accustomed to rigorous standards for balance billing, through the hospitals in which they work. That experience will help many providers adjust to the shifting landscape of anti-surprise billing regulation that will undoubtedly expand in the coming decade.

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