New Law Bans Surprise Billing

Part of the COVID-19 relief package that Congress passed in late December includes a notable provision that bans surprise medical bills when out-of-network doctors work on insureds at in-network hospitals.

This so-called “balance billing” occurs when an out-of-network provider is involved in a patient’s care at a hospital that accepts their insurance, often without the patient knowing about it. Patients can end up facing unexpected bills in the tens of thousands of dollars.

Specifically, the law bars out-of-network providers and air ambulance firms from billing patients for more than they would be charged by in-network providers (ground ambulance services are not covered under the law).

Additionally, health plans are barred from requiring patients to pay more for care they unknowingly receive from out-of-network providers at in-network facilities.

According to the Kaiser Foundation, 18% of emergency visits lead to at least one out-of-network charge for people covered by large group plans, as do 16% of in-network inpatient admissions.

Here are the main points of the legislation:

  • The law requires that patients be billed on their plan’s in-network rate for emergency medical care at an out-of-network facility, or if they are treated by an out-of-network clinician at an in-network hospital.
  • It protects patients admitted to an in-network hospital for a planned procedure when an out-of-network doctor works on the patient. Most often this happens when a doctor is called to provide assistance in the operating room, or if the anesthesiologist on duty is out of network.
  • Doctors and health plans are allowed to bill for out-of-network treatment in the above situations if the patient is informed of the estimated costs at least 72 before they receive care.
  • Whatever the patient pays for the above out-of-network services must be counted toward their in-network annual deductibles.

Billing disputes

For the health insurers and providers to agree on the cost of care, the new law sets up an arbitration process to settle payment disputes for out-of-network claims. The plan sponsor and the covered employee are not part of this dispute resolution process.

The law gives the insurer and provider 30 days to settle a dispute and if they can’t come to an agreement during that time, they can go to a binding arbitration process that the law creates. This “Independent Dispute Resolution” (IDR) will be administered by independent entities.

During IDR, both the insurance company and the provider submit what they want to pay to the dispute resolution arbiter, who will decide a fair amount based on what other providers charge for similar services.

The arbiter will not be allowed to consider rates paid by Medicare and Medicaid, which tend to be lower than what commercial insurers pay for services and what hospitals normally charge. 

The decisions are binding. after which the insurer has 90 days to pay the bill.

The new law takes effect in January 2021.

One more thing…

Besides banning surprise billing, the law also bars gag clauses. Many contracts between health insurers and providers include provisions that bar enrollees, plan sponsors or referring providers from seeing cost and quality data on providers. These provisions will now be prohibited.

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