Surprising medical bills are the target of a new law. This is how it works: shots

The No Surprises Act aims to stop surprising medical bills. It could also slow the growth in health insurance premiums.

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J. Scott Applewhite / AP

The No Surprises Act aims to stop surprising medical bills. It could also slow the growth in health insurance premiums.

J. Scott Applewhite / AP

Patients are months away from worrying about most of the surprise medical bills – those added costs, which can be hundreds or thousands of dollars, when people are unknowingly treated by an off-network doctor or hospital.

The No Surprises Act – which comes into effect Jan. 1 – generally prohibits insurers from dropping such bills on patients and instead requires healthcare providers and insurers to negotiate a contract between them.

Some observers have speculated that the law will have the unintended consequence of cost shifts and higher insurance premiums.

Many policy experts told KHN that the opposite can actually happen: it could slightly slow premium growth.

The reason, said Katie Keith, a member of the research faculty at the Center on Health Insurance Reforms at Georgetown University, is that a new rule was published on September 30th from the Biden government appears to be “keeping a thumb on the scales” to discourage bills higher than most insurers generally pay for on-grid coverage.

This rule, which details how such network disputes will be resolved under the No Surprises Act, met with immediate opposition from hospital and medical groups. The American Medical Association called it “an undeserved gift to the insurance industry,” while the American College of Radiology said it “does not reflect real-world payment rates,” warning that such a strong reliance will “cause and reduce major cuts in imaging “. Patient access to care. “

Such harsh talk reflects the comments made during the drafting of the law by Congress.

How the law will work, and how it could affect insurance premiums and the healthcare industry.

Submit unpaid invoices to arbitration

The No Surprises Act targets a common practice: insured patients receive large, unexpected “balance bills” for services such as emergency treatment in off-grid hospitals or through air ambulance. Some patients also receive bills after using network-internal facilities because they are being cared for by a doctor who has not registered with an insurance network.

Patients were right in the middle of it all, liable for the difference between what their insurer paid for the bill and the often excessive fees they received from the provider.

When the law comes into force next year, patients only pay what they would have if they had been treated online, so that the remaining amount has to be settled between the insurers and the off-grid medical service providers. The law also gives insurers and providers 30 days to resolve disputes.

Thereafter, unpaid bills can participate in a “baseball-style” arbitration process in which both sides make their best offer and an arbitrator chooses one, with the loser paying the arbitration costs, which the rule for the next year is $ 200 to $ 500 specifies.

Uninsured patients who are billed for more than $ 400 for a treatment estimate can also initiate arbitration for an administration fee of $ 25.

Corporations such as government service providers or those investigating coverage disputes can apply for arbitration certification immediately. The new rule estimates that about 50 of the three agencies overseeing the program (the Health and Human Resources, Labor and Finance departments) will be selected for having “arbitration expertise, health claims experience, managed care, billing and coding “have proven health law.”

The rule also states that either party can object elected referee, and the selected one cannot be assigned to an insurer or medical service provider.

Driving prices in the middle

But this is how all of this could affect insurance premiums. As part of the arbitration process, it must be decided which price to choose.

The new rule states that the arbitrator should generally choose the amount that most closely approximates the median tariff negotiated by insurers for this type of supply on the network. Other factors, such as the experience of the service provider, the type of hospital, or the complexity of the treatment, may be taken into account but not equally weighted.

In contrast, some of the dozen or more federal laws aimed at surprising bills allow arbitrators to consider higher tariffs, such as fees charged by hospitals or doctors, rather than negotiated tariffs. potentially driving up spending.

A recent study, found, for example, that in New Jersey – which has different arbitration rules than what is being established for the federal program – cases were settled a median 5.7 times higher than on-line tariffs for the same services.

Unlike New Jersey, the federal government specifically prohibits the consideration of the highest amounts – fees billed – and the lowest amounts of payments, including those from Medicaid and Medicare programs.

“This seems likely to lower premiums and protect patients from unexpected bills,” said Loren Adler, associate director of the Schaeffer Health Policy Initiative at the University of Southern California-Brookings, which co-authored the New Jersey study.

However, the effects of the law on premiums are controversial. Keith doubts they’ll change either way, though Adler believes the slowdown in premium growth is minor.

Even the rule states that “there is uncertainty about how the premiums will ultimately be affected”, with a lot depending on how often disputed bills go to arbitration.

It quoted a budget office of the Congress estimate However, that the provisions of the No Surprises Act could reduce premium growth by 0.5% to 1% in most years, an estimate by the Centers for Medicare & Medicaid Services also found that premiums could rise slightly. None of the studies isolated the effect of the arbitration guidelines from the rest of the law.

Adler noted that a heavy reliance on the median in network price is likely to mean lower payments compared to other interventions, but still “by definition, a median is half what doctors receive, so theoretically this could increase that for the others”. half.”

Push providers to join insurance networks

Health policy experts said the new law is likely to encourage more providers to join insurance networks.

Some doctors – mostly emergency doctors, anesthetists, and radiologists – have avoided signing contracts with insurers. Instead, they have typically set fees above the insurers’ reimbursement levels and sent patients surprise bills for the difference.

The rule undermines the incentive to use this business model.

It “makes it pretty clear” that hospitals, doctors, ambulances and other health professionals “shouldn’t expect to stay out of the network and then try to use the federal process to get higher reimbursement,” Keith said.

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

Insurers will use the dispute to “push the down payment to the point where it is no longer possible for many providers to get this or any other insurance,” warned Katie Keysor, senior director of economic policy at the American College of Radiology an email statement.

Adler said arguments don’t fly when you look at the experiences of states with similar laws. (These state rules don’t apply to many types of workplace health insurance, but federal rules will.)

“Every single surprise billing debate has done the opposite, pushing more people into the network,” he said.

Whether a group signs a contract with an insurer may be less important going forward, he said.

Once the law comes into effect, “it is completely irrelevant whether or not an emergency doctor is on the network,” he said. “This doctor is in the network in every respect. The patient pays the cost sharing in the network and there is a price that the provider and the insurer have to accept.”

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health topics. It is an independent operating program from KFF (Kaiser Family Foundation).