Surprise billing describes a situation when an insured patient unknowingly receives care from an out-of-network provider and then is presented with a bill for services and payment obligation beyond what the patient’s insurer will cover. Surprise medical bills can arise in an emergency when the patient has no ability to select the facility or provider rendering services. Surprise bills can also arise when a patient receives planned care, such as when a patient receives care at an in-network facility but later finds out that a provider who treated the patient is out-of-network. This most often happens with providers with whom the patient does not interact prior to the service, such as pathologists and radiologists.
Surprise billing has been a priority issue for Congress for more than two years. In 2019, policymakers across five major healthcare committees (the US Senate Finance Committee; the Senate Health, Education, Labor, and Pensions (HELP) Committee; the US House of Representatives Education and Labor Committee; the House Energy and Commerce Committee; and the House Ways and Means Committee) and both chambers developed and considered multiple surprise billing proposals. Although the proposals overlapped in some areas and early 2020 saw momentum toward resolution, the outbreak of the COVID-19 pandemic shifted congressional focus.
Negotiations heated up again when lawmakers began working on an end-of-year legislative package for 2020. In the end, a compromise was reached and surprise billing provisions were included in the Consolidated Appropriations Act, 2021 (CAA) that was signed into law on December 27, 2020.
Under the new law, beginning January 1, 2022, plans and providers (including hospitals, facilities, individual practitioners and air ambulance providers) are prohibited from billing patients more than in-network cost-sharing amounts in certain circumstances. The prohibition applies to both emergency care and certain non-emergency situations where patients do not have the ability to choose an in-network provider.
To reconcile payment disputes between plans and providers, the legislation allows negotiation between the parties and enables a prescribed arbitration process if negotiations fail. The arbitration methodology is applicable to providers and payors and, notably, to air ambulances (inclusion of air ambulance-related disputes has been one of the more contentious issues). The new law does not include a minimum negotiated payment rate to trigger arbitration, although previous iterations of the bill had set a floor.
The arbitration process is baseball-style: each party submits an offer and basis for that offer, and the mediator selects one of the offers. The decision is final, and payment must be made within 30 days. Providers and payors cannot initiate a new arbitration process for 90 days for the same items or services.
The inclusion of the surprise billing provisions is a culmination of more than two years of congressional focus and intense lobbying. This article summarizes the surprise billing provisions included in the CAA.
The US Department of Health and Human Services (HHS) will need to develop regulations to implement many aspects of the final law. Given the January 1, 2022, effective date, those regulations are expected in 2021.
Also, here are helpful info-graphics that highlight prohibitions on surprise billing and the dispute resolution process.
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For more information, contact Rachel Stauffer or Katie Waldo