In December 2020, after years of heated debate and mounting anxiety from patients, Congress passed legislation to ban surprise medical bills.
The No Surprises Act provides sweeping protections for patients from these unexpected charges, which reportedly accompany 20% to 44% of elective surgeries or hospital visits, and can range from a few hundred dollars to more than $100,000 (JAMA Intern Med 2019;179[11]:1543-1550; JAMA 2020;323[6]:538-547).
Surprise bills typically occur when a patient with commercial insurance unknowingly receives care at an out-of-network facility or from an out-of-network provider. That facility or provider can bill outside the limits of in-network rates, but if the insurer refuses to cover the charge in full, patients are often on the hook for the balance.
The No Surprises Act goes into effect on Jan. 1, 2022. It prohibits out-of-network providers or facilities from balance billing patients in both emergency and nonemergency settings, including out-of-network air ambulances but not ground ambulance transport. In other words, patients will no longer be responsible for paying more than the in-network cost-sharing rate, which may include a commercial plan’s deductibles, coinsurance and copayments.
“Essentially, the new law takes patients out of the middle of insurers and health care providers—an outcome everyone can support,” said Patrick Bailey, MD, FACS, the medical director of the American College of Surgeons.
Although the legislation lays out a framework for banning surprise bills, several key details remain unwritten. These unknowns, and their potential consequences to providers’ income, have left some surgeons on edge.
Mit Desai, MD, a general surgeon at Lutz Surgical Partners, in Brooksville, Fla., expressed concern about how the federal legislation will affect his private practice. When Florida passed comprehensive surprise billing legislation in 2016, Dr. Desai’s business came under intense financial strain.
“Insurance companies disputed anything I submitted a claim for and we’d go through a process of negotiating,” Dr. Desai said. “It took nine months from when the Florida bill went into effect and when I first got paid by insurance.”
Dr. Desai ultimately had to hire a full-time employee to handle billing, but often still waits six to nine months for insurance companies to follow through on paying claims.
What We Know
Ultimately, the No Surprises Act will protect more than 135 million Americans in employer-based plans regulated under the federal law known as the Employee Retirement Income Security Act (ERISA), and millions more in state-regulated plans in areas with no surprise billing legislation.
However, insurers and providers need a forum to settle payment disputes for out-of-network bills. The law maps out an independent dispute resolution process called “baseball-style arbitration”—an approach that only comes into play when insurers and providers fail to reach a voluntary agreement about a charge after 30 days.
In baseball-style arbitration, each party makes a payment offer and the arbitrator must select one of the two amounts. The losing party subsequently will pay the administrative costs of arbitration.
No payment standard exists, but an arbitrator can weigh a host of factors, including median in-network rates, a physician’s training, experience and quality, as well as the complexity of services provided. But the arbitrator cannot consider billed charges or Medicare and Medicaid rates.
James Hobley, MD, Chair of the American College of Gastroenterology’s Legislative & Public Policy Council
Does ACG support this law?
Yes. The legislation is designed to help patients and avoid crippling bills due to out of network services. The law also provides for an independent dispute resolution (IDR) process when an insurer and provider cannot agree on a payment rate for out of network services. The law provides guidance on the process as well as what factors the arbiter can use when making a final decision on payment. This is important as it helps ensure the provider can receive a fair and equitable payment. ACG wanted the law to resemble state laws with stronger IDR protections (New York is one example). But we support the final law, and we joined a coalition of other specialty societies in advocating for these stronger patients and provider protections.
How does this law affect gastroenterology practices?
Surprise billing directly affects gastroenterology less than other specialties like emergency medicine or ambulance costs. A 2019 study in JAMA Internal Medicine (179[11]:1543-1550) found that shares of out-of-network ER and inpatient visits in GI occurs less than 10% of the time. However, it occurs more often with GI ancillary services such as pathology and anesthesiology. Thus, it still is a very important for GI patients.
The idea here, Dr. Bailey explained, is to encourage insurers and providers to come to an agreement before arbitration and dissuade excessively high or low payment offers during the process.
The No Surprises Act does include an exception to the balance billing protections, called a notice and consent waiver. In specific circumstances, certain out-of-network providers can ask patients for written consent to send balance bills in the nonemergency setting. The notice must include details such as a good faith estimate of the charges, the fact that the provider or facility does not participate in the patient’s health plan, and a list of in-network physicians or facilities where the patient can receive care instead. The law also bars specialties with a history of balance billing from using these waivers.
“These two categories—arbitration and consent waivers—will have the biggest impact on surgeons’ income, but it will be a while before we know the nuts and bolts of the legislation and the specific details of those regulations,” Dr. Bailey said.
What We Don’t Know
How two key aspects of the legislation will play out in real time is unclear. The first is arbitration decisions. If arbitrators base their payment picks on the insurer’s median in-network rates—the amount an insurer pays other local doctors for the same service—health care costs will likely decline, as will physician income.
Calculating median in-network rates depends on many variables, including what constitutes a geographic region and how to deal with newly covered services or providers. Some providers argue that relying on median in-network rates as a benchmark will give health plans an incentive to reduce these rates, for example, by terminating in-network contracts that raise the average rate.
For venture capital–backed physician groups, which are responsible for the lion’s share of surprise bills, relying on median in-network rates will likely minimize inflated charges. But for the private practice physicians who have faced declining reimbursement rates for years, a further reduction in reimbursement may mean a death sentence for their business.
“The venture capital groups who have purchased specialty physician groups have killed it for everyone,” said Eileen Natuzzi, MD, an acute care surgeon in California. “In going after these shady billing practices by private equity–backed companies, the little guy is getting slammed. I believe the No Surprises Act will be the last nail in the coffin for private practice.”
The outcomes of arbitration also may affect health insurance premiums, but it’s unclear in which direction. The Congressional Budget Office estimates that the federal law will reduce commercial insurance premiums by between 0.5% and 1%, if insurers win in arbitration. Alternatively, some experts worry that premium costs could rise if insurers lose in arbitration.
The second uncertainty is how exactly the federal law will interact with existing state laws. The answer, Dr. Bailey said, depends on whether a person has a federal-regulated plan or a fully insured state-regulated plan.
For the 18 states that have comprehensive surprise billing legislation, the federal law defers to the state regulations for fully insured plans. However, because states cannot regulate employer-based plans, which fall under ERISA, the federal regulations take precedence. State laws will also remain primary when state-level requirements extend beyond those detailed in the new federal law.
“In states with their own laws, there is a potential for very different outcomes on claims for similar services depending on whether the patient’s plan is subject to state or federal regulations,” Dr. Bailey said. “This could create confusion for the out-of-network surgeon when determining what steps can be taken regarding a payment from an insurer.”
—Victoria Stern