EXECUTIVE SUMMARY

State and federal lawmakers are trying to enact laws to prevent surprise medical bills.

Congress is considering a bill called, “Protecting Patients from Surprise Medical Bills Act.”

A recent report shows that California’s surprise medical bill legislation has successfully stopped surprise bills and has not caused significant issues for physicians.

Californians in self-insured plans under the Employee Retirement Income Security Act of 1974 are exempt from state consumer protections and are not covered by the state’s surprise medical bills law.


There likely will not be a federal law preventing surprise medical bills anytime soon, but some states have moved ahead to protect patients, showing a possible path forward.

Consumer groups and legislators have targeted a common healthcare nightmare: Patients visit a hospital or provider within their insurance network, expecting they will pay a copay and deductible. After receiving treatment and returning home, patients receive an unexpected expensive bill from an out-of-network provider they did not even know had treated them. Since the patient’s insurer had not negotiated a set price with that out-of-network provider, the patient is stuck with the full cost of the service — sometimes thousands of dollars.

Surprise medical bills affect at least one out of five Americans, and the amount billed to patients often is not related to market rates or the actual cost of services, according to a report from America’s Health Insurance Plans (AHIP).1 Anesthesiologists and radiologists are two of the most common providers to send surprise medical bills, says Anthony Wright, executive director, Health Access California.

“One of the common stories we’ve heard over the years is the patient did the right thing and determined that the hospital or facility was in-network, but one of the doctors was out of network,” Wright reports. “For example, a patient goes to an imaging center and gets scanned, never meeting the radiologist who looks at the scan to see if it’s positive or negative, and then gets a bill because the radiologist is out of network.”

States have turned to legislative remedies to eliminate these surprises and cap what out-of-network providers can charge. The state of Washington recently passed “Out-of-Network Health Care Services — Billing,” which went into effect Jan. 1, 2020.2 “We think there’s a real urgency for this, so we continue to be very active in an effort to try to get federal legislation,” Wright says.

Throughout 2019, federal lawmakers introduced various legislation aimed at ending surprise billing.3 At first, it appeared Congress would move quickly on passing something, but disagreements among lawmakers and private groups about the right approach stalled that progress.4 “We do think Congress is coming around,” Wright offers. “Many people believe there needs to be action on this issue because surprise medical bills are such an untenable and unfair imposition on consumers.”

Meanwhile, in September 2019, Health Access California released a report about how California’s surprise medical bills law (AB 72) was working since it was signed into law in 2016. The report revealed that the law is working as intended, and that almost all physicians accepted the average contracted rate benchmark as payment in full, rather than appealing to make a case for higher reimbursement.5

Two months earlier, the California Medical Association (CMA) published its position on surprise medical bills that are like California’s law in a letter to Congress.6 The letter claims that California’s surprise medical bills legislation is a failure because physicians and insurers are not incentivized to contract and offer an appropriate network of physicians to ensure care access.

The CMA also wrote that insurers are terminating long-standing contracts with physicians or mandating steep rate cuts, diminishing access to care. The Health Access California report disputes that assessment, according to Wright. “We have actual data, not anecdotes,” he says.

Wright says his group’s report reveals insurers in California have broadened their networks, and that contracting continues to be widespread. Also, 80% to 100% of hospitals and other facilities have no out-of-network billing from the physicians who practice in these facilities.

“The California Medical Association says the bill creates an incentive for insurers to not contract with providers, but the data show that’s not the case,” Wright explains, adding that the data also show that insurance networks have increased the number of anesthesiology and radiology providers. Further, he argues legislation under consideration in Congress is similar to California’s law in how the law would protect patients.

“The bill California passed is specific about physician balance billing, but also includes imaging centers and others,” Wright adds. “There is a benchmark rate of 125% of Medicare. If a provider wishes to appeal it, there is a dispute resolution process.”

Out of hundreds of thousands of claims, there were 70 appeals, Wright notes. “The law has been working, but several million Californians in self-insured plans under ERISA [the Employee Retirement Income Security Act of 1974] are exempt from California consumer protections,” Wright says. “We still need federal action to address that gap.”

(Editor’s Note: For further analysis on California law, read this September 2019 report from the USC-Brookings Schaeffer Initiative for Health Policy, which considers data from CMA, Health Access California, and other groups: https://brook.gs/2s3ddQo.)

REFERENCES

  1. America’s Health Insurance Plans. Protecting Patients from Surprise Medical Bills. February 2019. Available at: http://bit.ly/2On40db. Accessed Nov. 20, 2019.
  2. State of Washington. Second Substitute House Bill 1065. Chapter 427, Laws of 2019. 66th Legislature, 2019 Regular Session. Available at: http://bit.ly/344tGBP. Accessed Nov. 20, 2019.
  3. Congress.gov. Current legislation search - “surprise medical.” Available at: http://bit.ly/2QBl6qr. Accessed Nov. 20, 2019.
  4. Springston J. Lawmakers, health groups diverge on surprise billing solutions. Relias Media, June 21, 2019. Available at: http://bit.ly/2raKd8O. Accessed Nov. 20, 2019.
  5. Health Access California. Patients Protected, Providers Paid: Data From Three Years of California’s Compromise to Stop Surprise Medical Bills. September 2019. Available at: http://bit.ly/335L1Js. Accessed Nov. 20, 2019.
  6. California Medical Association. CMA position: Support protecting patients from surprise medical bills but oppose the surprise medical billing framework. July 10, 2019. Available at: http://bit.ly/2O5YzjL. Accessed Nov. 20, 2019.