No Surprises Act Targets One Common Practice: Sending Large, Unexpected “Account Balance Bills” to Insured Patients

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It is not known whether the changes to the law made by the No Surprises Act, which takes effect on January 1, will have the unintended consequences of changing costs and generating higher insurance premiums.

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Patients are months away from not having to worry about most surprise medical bills – those added costs that can run into the hundreds or thousands of dollars when people are unknowingly treated by an out-of-network doctor or hospital.

What is not clear is whether the changes to the law made by the No Surprises Act, which takes effect on January 1, will have the unintended consequences of changing costs and generating higher insurance premiums.

Probably not, many policy experts told KHN. Some predict that it may reduce premium growth slightly.

According to Katie Keith, a member of the research faculty of the Center on Health Insurance Reforms at Georgetown University, the reason is that a rule published Sept. 30 by the Biden administration appears to “put a thumb on the scale” to discourage quantity settlements. higher than most in-network insurers generally pay for care.

That rule generated immediate opposition from medical groups and hospitals, with the American Medical Association calling it “an undeserved gift to the insurance industry,” while the American College of Radiology says it “does not reflect the world’s pay rates. real ”and warned that relying on it“ will cause large cutouts in images and reduce patient access to care ”.

Those expressions echo comments made while Congress was drafting the law.

The most recent guidance is the third issued to implement the law, which was passed in late 2020 after a years-long battle. It was signed by then-President Donald Trump.

The No Surprises Act targets a common practice: sending large and unexpected “account balance bills” to insured patients for services such as emergency treatment at out-of-network hospitals or through air ambulance companies. Some patients are billed even after using in-network facilities because they receive care from a physician who has not enrolled in an insurer’s network.

Patients were caught in the middle and responsible for the difference between what their insurer paid for the bill and the often exorbitant charges they received from the provider.

Once the law takes effect next year, patients will pay only what they would have if their care had been provided in-network, leaving any balances to settle between insurers and out-of-network medical providers. The law also gives insurers and providers 30 days to resolve discrepancies.

After that, outstanding bills can go into a “baseball style” arbitration, in which both parties present their best offer and an arbitrator chooses one, and the loser pays the cost of arbitration, which the rule establishes for the next year between $ 200 and $ 500.

Uninsured patients who are billed more than $ 400 over an initial estimate of the cost of their care can also take cases to arbitration for a $ 25 administrative fee.

Businesses, such as government services or those that review coverage disputes, can now begin applying for certification as arbitrators. The rule estimates that about 50 will be selected by the three agencies that oversee the program, Departments of Health and Human Services, Labor and Treasury, after demonstrating “experience in arbitration, experience in health care claims, managed care, billing and coding. , and health care law. The rule also states that either party can challenge an arbitrator chosen, and the one selected cannot partner with an insurer or medical provider.

And what price to choose in arbitration?

The new rule specifies that the arbitrator must generally choose the amount closest to the median rate negotiated within the network by insurers for that type of care. Other factors, such as the provider’s experience, type of hospital, or complexity of treatment, can be considered in some circumstances, but are not given equal weight.

In contrast, some of the more than a dozen state laws targeting surprise bills allow arbitrators to consider higher fees, such as billed charges set by hospitals or doctors, rather than negotiated fees, which potentially increase the spending.

For example, a recent study found that in New Jersey, which has different arbitration rules than those being established for the federal program, cases were resolved at a median 5.7 times higher than in-network rates for same services.

Unlike New Jersey, the federal government specifically prohibits consideration of the highest amounts (billed charges) and the lowest payment amounts, including those from the Medicaid and Medicare programs.

“This seems likely to lower premiums as well as protect patients from surprise bills,” says Loren Adler, associate director of the Brookings Schaeffer Initiative for Health Policy at the University of Southern California at Brookings, a co-author of the New Jersey study. .

Still, the law’s impact on premiums is open to debate. Keith doubts they will change either way, although Adler believes the slowdown in premium growth would be small.

Even the final rule says that “there is uncertainty about how premiums will ultimately be affected” and much depends on how often disputed invoices are submitted to arbitration.

The latest rule cited an estimate from the Congressional Budget Office that the No Surprises Act provisions could reduce premium growth by five to one percent in most years, but it also noted an estimate. from the Centers for Medicare & Medicaid Services that premiums could increase slightly. None of the studies isolated the effect of the arbitration guidelines from the rest of the statute.

Adler noted that relying heavily on in-network median price probably means lower payments compared to other measures, but even so, “by definition, a median is what half of doctors are paid, so that, in theory, this could increase that for the other half ”.

What’s likely, health policy experts said, is that the new law will prompt more providers to join insurance networks.

Some physicians, primarily emergency room physicians, anesthesiologists, and radiologists, have avoided signing contracts with insurance companies. Instead, they typically set charges above the insurers’ reimbursement level and send surprise bills to patients for the difference.

The rule undermines the incentive to use this business model.

It makes it “pretty clear” that hospitals, doctors, air ambulances and other medical professionals “shouldn’t count on staying out of the network and then trying to use the federal process to get a higher reimbursement,” says Keith.

Some medical societies and advocacy groups predicted that the law could have the opposite effect.

Insurers will use the disputes to “reduce the down payment to the point where it is no longer feasible for many providers to take that or any insurance,” Katie Keysor, senior director of economic policy at the American College of Radiology, warned in a statement.

Adler says that the argument does not advance when the experience of states with similar laws is analyzed. (Those state rules don’t apply to many types of work-based health insurance, but the federal rule will.)

“Every surprise billing debate has done the opposite and pushed more people online,” he says.

Whether a group signs a contract with an insurer may be less important in the future, he says.

Once the law takes effect, “it is completely irrelevant whether an emergency room doctor is in the network or not,” he explains. “For all intents and purposes, that doctor is on the network. The patient will pay the cost sharing within the network and there is a price that the provider must accept and the insurer must pay ”.

KHN (Kaiser Health News) is the newsroom of KFF (Kaiser Family Foundation), which produces in-depth journalism on health issues. Along with Policy Analysis and Surveys, KHN is one of KFF’s top three programs. KFF is a nonprofit organization that provides health information to the nation.

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