To address the significant financial burden that surprise medical bills can impose upon patients, various policy proposals have been advanced at both the federal and state level to address the problem, according to a January 2017 Kaiser Family Foundation (KFF) report. A Center on Health Insurance Reforms (CHIR) report, however, stated the federal law and most states do not provide broad protection from these types of bills pointing out that "most states struggle with how to implement protections while balancing legitimate interests of health plans and health care providers. A brief issued in 2016 by the National Academy for State Health Policy (NASHP) examined the emergence of surprise medical billing and tracked pending state legislation in 2016 that would establish protections for consumers from surprise medical bills and balance billing.
Part 1 of this two-part Strategic Perspective, Concerns over surprise medical bills grow as coverage becomes more complex, April 26, 2017, identified the situations in which surprise bills arise, discussed study findings on the impact of out-of-network (OON) provider billing and the charges of providers that are most likely to be OON. Part 2 of this Strategic Perspective provides an overview of actions that federal and state governments have identified, proposed and, in some cases, implemented to prevent or limit the impact of surprise bills.
Federal Government Actions
TheKFF, NASHP, and CHIR, acknowledged the incremental steps the federal government has taken to address balanced billing. The government has adopted or proposed standards for OON emergency and nonemergency services for private health plans, and qualified health plans offered through the Marketplace. In addition, according to the Consumer Reports article, Sen. Bill Nelson (D-Fla) asked the Federal Trade Commission to look into surprise medical bills in emergency situation when patient are treated at in-network hospitals by OON doctors and Rep. Lloyd Doggett, (D-Tex) introduced the End Surprise Billing Act to protect consumers from balance bills in emergency situations.
The ACA. The CHIR report pointed out that the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) addresses surprise medical bills by requiring health plans to provide coverage for emergency services even when the providers are OON. The health plan must pay these providers the median payment amount for in-network providers. The ACA, however, does not prohibit balance billing nor require plans to hold the consumer harmless. In addition, the ACA does not apply to situations in which the consumer is unaware that the provider is OON or when an in-network provider is not available. Although Sections 1311(e) (effective January 1, 2014) and 2715A (effective September 23, 2010) of the ACA require health plans in and out of the marketplace to report data on OON costs to enrollees, the provisions had not been implemented at the time of the study.
Medicare. The Omnibus Reconciliation Act of 1989, established limits of 115 percent of Medicare fee schedule amounts on charges from nonparticipating Medicare providers. Medicare Advantage regional and local preferred provider organizations (PPO) plans, (1) to the extent they apply a deductible, must have a single deductible related to all in-network and OON Medicare Part A and Part B services; (2) must have a total catastrophic limit for in-network and OON benefits under the original Medicare fee-for-service program; and (3) the description of the plan must include any OON coverage. Plans generally are required to reimburse noncontracting providers at least the original Medicare rate for Medicare covered services.
Marketplace and private health plans. CMS has adopted rules (see Final rule, 81 FR 12204, March 8, 2016) governing coverage of OON nonemergency services by qualified health plans offered through the marketplace. Beginning in 2018, issuers will be required to count a plan member’s payments to OON providers who furnished services at a network facility toward the member’s cost-sharing limit. In addition, the rule requires health plans to notify enrollees of a potential surprise medical bill in writing.
Nongrandfathered health plans in and out of the marketplace must provide coverage for OON emergency care services and apply in-network levels of cost-sharing for emergency services even if the plan does not otherwise cover OON coverage. It does not limit balance billing by OON emergency providers.
The 2016 NASHP brief explained that states are taking action to explore the impact of surprise billing and manage the interests of carriers, providers, and consumers to address the issue. NASHP tracked pending state legislation and identified the following:
- Most states have focused on methods to increase consumer understanding and awareness of situations that may result in a surprise bill, including enhancing requirements for patient notifications regarding the delivery of OON services and providing cost estimates. In addition, some states would require provider directories to be published timely when there is a change and include hospital affiliations and physician privileges.
- Eleven states would limit or restrict costs of services performed by OON providers by capping or limiting charges by OON providers, establishing specified rates, or limiting OON cost-sharing to the in-network cost-sharing amount.
- A few states have proposed to extend protections to nonemergency situations, for example when services provided by an in-network provider are outsourced to OON providers.
- A number of states have proposed processes to resolve billing disputes.
- Four states proposed studies to examine the impact of balance billing in their states.
CHIR analyzed the legal framework in seven states that represent a wide range of approaches to balance billing protections for consumers. The seven states are California, Colorado, Florida, Maryland, New Mexico, New York, and Texas. Specific findings include that while nearly all states require HMO contracts to hold consumers harmless for balance bills when they go to in-network providers; fewer states apply the same consumer protections for PPOs. In addition, about 25 percent of states protect consumers against bills from non-network providers in some circumstances, such as ambulance services, while most states provide protections from balance billing and surprise medical bills for emergency services received from OON providers.
CHIR identified four key elements in state approaches to protecting consumers from balance billing:
- Disclosure and transparency. Many states require insurers to have language in notices and plan summaries about the financial consequences of going OON. Some states require notices to consumers describing the potential for seeing an OON provider and receiving a balance bill.
- Balance billing prohibitions. Some states prohibit OON providers beyond any allowed cost-sharing. In some states, the OON provider may accept assignment, in which case, the consumer transfers the right of reimbursement to the OON provider. The insurer pays the OON provider directly and the OON provider accepts the payment from the insurer as payment in full. The consumer is only responsible for the cost-sharing portion.
- Hold harmless provisions. This prohibition does not ban balance billing, rather it requires insurers to hold plan members harmless in emergency situations by paying providers their billed charges or a lower amount that is acceptable to the provider.
- Adequate payment. Same states have specific rates for OON situations. For example, requiring insurers to pay non-network providers at the usual and customary charges they pay network providers.
Although federal and state legislatures have proposed and implemented legislation to address and prevent surprise medical bills, studies have shown that significant numbers of patients continue to receive these bills and experts have expressed their concern that this problem will grow. Federal authority to track the incidence and impact of surprise medical bills exists, but it has not yet been implemented, the KFF report noted. Gerard F. Anderson, PhD, professor in the Department of Health Policy and Management at the Johns Hopkins Bloomberg School of Public Health and Ge Bai, PhD, CPA, assistant professor of accounting at the Carey Business School, authors of a Johns Hopkins University national study on surprise medical bills, urged Congress to "take steps to require physicians to disclose their network status to each patient before delivering the service and improve price transparency by posting out-of-network prices." Bai added, "Protecting patients from surprise medical bills from out-of-network physicians is an important issue in the ongoing national debate about the affordability of health care."
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