As a reflection of considerable public attention to patient experiences with receiving large surprise medical bills over the last few years, state legislatures have been considering and passing legislation to address the issue. As of January 2019, the Commonwealth Fund noted in an online report that nine states (California, Connecticut, Florida, Illinois, Maryland, New Hampshire, New Jersey, New York, and Oregon) had passed comprehensive surprise billing legislation, and 17 (Arizona, Colorado, Delaware, Indiana, Iowa, Maine, Massachusetts, Minnesota, Mississippi, Missouri, New Mexico, North Carolina, Pennsylvania, Rhode Island, Texas, Vermont, and West Virginia) had passed limited surprise billing legislation.*
When state legislatures convened earlier this year, 28 states considered surprise billing legislation, but only four successfully passed legislation.
Who made the cut?
Colorado, Nevada, Texas, and Washington State either enhanced existing laws or enacted new surprise billing laws in 2019. The following is a brief overview of the main components of each state’s unanticipated billing statutes.
Colorado (H.B. 19-1174)
Health care providers or facilities are not permitted to balance bill; however, in the case of nonemergency covered services, a balance bill may be sent when a covered person voluntarily uses an out-of-network provider. If a covered person receives covered services at an in-network facility from an out-of-network health care professional, the insurer will pay the out-of-network provider the greater of 110 percent of the insurer’s median in-network rate of reimbursement for that service in the same geographic area or the 60th percentile of the in-network rate of reimbursement for the same service in the same geographic area for the prior year, based on commercial claims data from the all-payor health claims database. For emergency services received at an out-of-network facility from an out-of-network health care professional, the insurer will reimburse the out-of-network provider 105 percent of the insurer’s median in-network rate for that service provided in a similar facility or setting in the same geographic area, or the median in-network rate for the same service provided in a similar facility or setting in the same geographic area for the prior year, based on claims data from the all-payor health claims database.
Providers who do not believe the reimbursement is acceptable may request arbitration. The arbitrator will consider final offers from both parties and will decide on one or the other. Arbitrator fees and expenses will be paid by the party whose offer was not accepted.
Nevada (A.B. 469)
Balance billing is not permitted for emergency services, and payment is based on when the out-of-network provider may have been in-network—that is, within 12 months or 24 months of the provision of the emergency service, and what the in-network rate may have been under the contract. It also takes into account whether the provider or the insurer canceled the contract with or without cause. Patients are responsible only for the in-network copayment, coinsurance, or deductible. Binding arbitration is available for providers to dispute the payment received, and arbitrator fees will be paid by the losing party.
The legislation replaces the state’s mediation process for physicians and insurance disputes with binding arbitration. Balance billing is not permitted; however, an exemption is provided for nonemergency care when the patient knowingly chooses an out-of-network provider(s) and is given required disclosures that include amounts for which the patient will be responsible. Outside of the exemption, patients are responsible for the applicable copayment, coinsurance, and/or deductible. An arbitration system is created to settle disputes over payment, and arbitrators have a wide-ranging list of criteria they may consider in reaching a decision. These factors include but are not limited to the 80th percentile of all billed charges for the service performed by a health care provider in the same or similar specialty and provided in the same geozip—a geographic area usually defined by the first three digits of U.S. zip codes—as reported in a benchmarking database, as well as the 50th percentile of rates for the service or supply paid to participating providers in the same or similar specialty and provided in the same geozip area as reported in a benchmarking database. The arbitrator’s expenses are evenly split between the two parties.
Washington (H.B. 1065)
The College has been very engaged on this issue, regularly meeting with committee staff and elected officials, and convening a coalition of specialty societies to further grassroots advocacy efforts.
Balance billing is prohibited for emergency services and nonemergency services provided by an out-of-network provider at an in-network hospital or ambulatory surgery center. Insurers must pay providers and facilities for out-of-network care at a commercially reasonable amount based on payments for the same or similar services provided in a similar geographic area, and patients are responsible for in-network cost-sharing amounts only. Providers and facilities may dispute payment through an arbitration process, and arbitrators may consider criteria, such as complexity of the case; evidence submitted by both parties; and the data set compiled by the Washington all-payor claims database, which includes claims for median in-network amounts, median out-of-network allowed amounts, and median billed charges for the same or similar services in a geographic area. Arbitration costs are evenly split among the two parties, although they are responsible for their respective legal fees.
Bills awaiting passage
Two other states, Michigan and Pennsylvania, have active surprise billing legislation, as their legislatures meet all year. Bills under consideration in these states at press time are as follows.
Michigan (H.B. 4459 and H.B. 4460)
For emergency or nonemergency covered services provided by a nonparticipating health care professional at a participating health facility, the nonparticipating provider would be expected to accept as payment in full 125 percent of the amount that Medicare would reimburse in that Medicare fee locality. Balance billing would be prohibited, except in nonemergency situations in which the patient provides written consent to receive services from the nonparticipating provider at least 24 hours in advance, and the patient is given a written estimate of the cost of the care to be provided.
Pennsylvania (S.B. 822)
Balance billing would not be permitted for the following: a covered emergency service provided to an insured patient by an out-of-network provider; a covered service provided to an insured patient by an out-of-network provider at an in-network facility; or a covered service provided to an insured patient by an out-of-network provider, in conjunction with a health care service for which the insured patient presented for care to an in-network provider. Balance billing would be permitted for a health care service rendered by an out-of-network provider when an in-network provider is available and the insured patient has elected to receive the service from an out-of-network provider instead of from an in-network provider. Patients are held harmless and are responsible for no more than the cost-sharing amounts that would have been due if the health care service had been rendered by an in-network provider. In instances where billing disputes arise between providers and insurers, a formal dispute resolution process is instituted, with the arbitrator authorized to consider a number of criteria, including the following:
- Level of training, education, and experience of the provider
- The provider’s usual charge for comparable health care services, both in and out of network
- The insurer’s usual payment for comparable services, both in and out of network
- Payment standards in the service area, such as Medicare payment or a median index
- Circumstances and complexity of the case
- Payments made in prior surprise bill disputes between the provider and the insurer
Federal efforts continue
In addition to state legislative activity related to surprise billing, Congress has taken up the surprise billing issue. Multiple congressional committees have held hearings on bills introduced by numerous members of Congress (as reported in various American College of Surgeons [ACS] publications, including the “Dateline DC” in the online Bulletin and the Advocacy page of the ACS website). The College has been very engaged on this issue, regularly meeting with committee staff and elected officials, and convening a coalition of specialty societies to further grassroots advocacy efforts. To view ACS policy statements, comment letters, and other documents on this issue, visit the ACS website.
Future state legislative activity
Even if the federal government enacts some type of surprise billing legislation in 2019, state legislatures may still move forward with their own surprise billing legislation or with legislation to harmonize their laws with federal statute. Surgeons and ACS chapters should be vigilant as to what their state legislatures may be doing to address surprise billing and engage in grassroots advocacy with their state legislators if bills are introduced. Collaboration with state specialty societies and state medical societies also is key in presenting a unified voice at the state capitol, particularly for an issue as complex as surprise billing.
*Hoadley J, Lucia K, Kona M. State efforts to protect patients from balance billing. The Commonwealth Fund. Available at: www.commonwealthfund.org/blog/2019/state-efforts-protect-consumers-balance-billing. Accessed August 26, 2019.