Congress Moves Forward on Legislation to End Surprise Medical Bills

The Act is one of several bills introduced in the House and Senate (for example, S.B. 1531, the “STOP Surprise Medical Bills Act of 2019”) confronting this issue. However, it is the first to be approved and voted out of committee.

Surprise medical bills are bills patients receive from out-of-network providers where the patient did not realize the provider was out-of-network at the time of the treatment. Such bills typically occur when a patient seeks treatment from an in-network hospital, but also receives services from an out-of-network provider (such as a physician or a lab) as part of their treatment. Surprise medical bills result in significant increased costs to patients due to: (1) higher out-of-network patient responsibility amounts; and (2) balance billing by out-of-network providers. A recent Kaiser Family Foundation report illustrates the risks emergency room and hospital patients face from surprise medical billing, finding that in 2017, approximately 1 in 6 of these patients had at least one out-of-network bill associated with their care. In some states, the rate of surprise billing was closer to 1 in 3 patients.

The Act was introduced earlier this month by Senators Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash). Along with addressing surprise medical bills, the Act includes sections aimed at: (1) reducing prescription drug prices; (2) improving transparency in health care; (3) improving public health; and (4) improving the exchange of health information.

The Act’s surprise medical billing provisions would:

1. Hold patients harmless from surprise medical bills associated with emergency-related services.

Under the Act, patients are required to pay only the in-network patient responsibility amounts (such as co-payments, co-insurance, or deductibles) for out-of-network: (i) emergency care in a hospital or free-standing emergency room; (ii) care provided by ancillary practitioners, regardless of whether the emergency setting is in-network or out-of-network; (iii) diagnostic services provided at in-network facilities (for example, the hospital emergency room is in-network, while the laboratory services are not); and (iv) air ambulance services; (collectively, Out-of-Network Services). To the extent a patient is stabilized after being admitted to a facility through the emergency room, the patient must be given: (i) advance notice of subsequent out-of-network care and the option to affirmatively consent to the out-of-network services; (ii) an estimate of the patient’s cost for the out-of-network services; and (iii) referrals for alternative, in-network treatment options. If the required notice is not provided to the patients prior to the follow-up treatment, the patient would not be responsible for the out-of-network costs.

Providers who violate the surprise billing prohibition may be subject to civil monetary penalties of up to $10,000 for each violation.

2. Establish benchmark payment rates for Out-of-Network Services.

The Act requires health plans to pay providers the local median in-network rate for the provision of Out-of-Network Services, based on the types of services and providers providing the services. If the plan does not have sufficient information to establish the median in-network rate for the region or for a particular specialty, the plan will have the option of accessing external data sources, such as state all-payor databases, to determine the rate.

3. Require the Department of Health and Human Services (HHS) to conduct a follow-up study on the effects of the limitations on surprise medical billing.

Under the Act, the Secretary of HHS is required to study the effects of the surprise medical billing prohibitions on overall health care costs and competition in health care. HHS also is instructed to work with the FTC to assess whether requiring the payment of benchmark rates results in anti-competitive consolidation of health care facilities, providers, or payers.

The Act now moves to the full Senate for consideration, though there may be additional changes to the text of the Act before the full Senate votes, including adding an independent arbitration provision to address disputes between payers and providers. Senator Alexander, one of the Act’s sponsors, is hoping the Act is voted on before the Senate adjourns for the August recess.

While there seems to be bi-partisan consensus regarding the negative impact of surprise medical bills on patients, the details included in the Act, particularly with respect to reimbursements for Out-of-Network Services, remain controversial. Providers, particularly hospitals and physicians, are concerned that including the reimbursement benchmark provision in the Act could result in more limitations on patients’ access to care. This concern is premised on the idea that benchmarking may incentive insurers to refuse to contract with physicians, knowing that costly Out-of-Network Services will be reimbursed at the benchmark rate, resulting in fewer in-network physicians providing care to patients. As the Act is aimed at limiting surprise medical bills in the emergency-treatment context, fewer in-network physicians could result in an increase in medical costs associated with non-emergency treatment. Stakeholders who are concerned about the impact of the Act should consider contacting their representatives to ensure their views are heard during the legislative process.