What Congress’ Potential “Surprise Billing” Legislation Could Mean for Physician Practices

In an effort to address high out-of-pocket healthcare costs for patients, Congress may soon take action to change the way healthcare organizations and insurance companies process surprise medical bills. Physicians and practice leaders should prepare their organizations for potential “surprise billing” legislation, as it may alter the way they bill patients, particularly following emergency procedures. As congress continues to explore various options to determine standard payment rates, physicians also have the opportunity to have their voices heard by getting involved in their communities.

What is “Surprise Billing” and Why Does it Occur?

“Surprise billing” refers to unplanned medical bills that weren’t paid by the patient’s insurance company. Under the American health insurance system, individuals with health insurance are often required to see in-network medical providers if they want the cost to be covered.

In some cases, patients will visit a particular physician that is out-of-network, understanding that they will be charged the full, non-discounted payment rate. In cases of pre-planned appointments and elective surgeries, the patient willingly chooses to make higher payments in exchange for seeing the out-of-network provider. However, in some cases, such as when a patient receives emergency services at an out-of-network hospital or is unknowingly treated by an out-of-network physician practicing at an in-network hospital, they simply weren’t given a choice.

Public Desire for Action

Patients with surprise medical bills often can end up owing large amounts of money, as non-discounted rates are often much higher than those offered to insurance companies. The simple fact that so many surprise bills occur in situations where patients were not given a choice to go to an in-network provider has convinced the general public that patients should receive greater protections. In fact, one Kaiser Family Foundation survey revealed that 75% of Americans believe the government should take action to protect patients from surprise medical bills.

Responding to this public passed bills that address surprise billing, and another 20 states are currently considering legislation. These laws, however, do not apply to self-insured employer-sponsored health plans, which are regulated by the Federal government and cover more than 60% of privately insured employees.

What is the Current Status of Potential Federal Legislation?

Democrats and Republicans in Congress have been notoriously unable to agree on how to move forward on most healthcare issues. However, members of both parties recognized the issue of surprise billing as an opportunity to pass bipartisan legislation that shows they are committed to addressing public concerns.

Multiple Senators and Representatives have crafted competing versions of surprise billing legislation, and committee hearings are already underway. President Trump has also spoken in favor of legislation to curb surprise billing.

As the legislation has been crafted, all sides, including provider and insurance company representatives, have agreed that patients with insurance should be held harmless and should not be required to pay more than typical in-network costs.  But significant differences remain over how the actual payment rate should be calculated, with three main options being debated:

• In-Network Guarantee. Hospitals would be required to ensure that physicians providing services to their patients are in-network with the same insurance companies as the hospital.  If a physician is not in-network, the hospital (instead of the patient) would need to pay the difference between the amount charged by the physician and paid by the insurance company. Both hospital and physician groups have opposed this proposal.
• Benchmark Rate. Insurance companies would be required to pay an amount specified by the legislation. The benchmark rate normally is tied to Medicare rates, but also could be tied to local payment rates (e.g., an insurer’s typical negotiated rate in the region, etc.) or other rates. Insurance companies have been supporting this option, while provider groups have been opposed, as the proposed benchmark rates are more favorable to the insurance companies.
• Arbitration. Providers and insurance companies would each propose a payment rate for the services provided, and an independent third-party would decide which of the rates is more appropriate. Many specialty physician groups are supporting this option, viewing it as the most palatable decision.

While the process for determining the final payment amount is still being negotiated, we think it is likely that Congress will pass some version of the surprise billing legislation later this year. Physicians interested in influencing the final legislation should contact their professional organizations and medical societies to find out how to get involved in ongoing advocacy.

We also encourage physicians and their practices to continue to check our News & Knowledge content for updates on these proposals. Members with specific questions can reach out for additional assistance by emailing sam.cohen@curi.com.

Sam Cohen is Curi’s Senior Vice President of Health Policy. Curi members may contact him directly at sam.cohen@curi.com and 919.878.7602. Readers also can follow him on Twitter @samuel_c_cohen.