Taking the Patient Out of the Middle
To help inform policymakers as they debate a range of patient protection options, we have identified key considerations for addressing surprise medical bills. These considerations are informed by policies already adopted in more than half of states. One key consideration is ensuring that patients are taken out of the middle of disputes between insurers and health care providers.
NOTE: Congress recently enacted the federal No Surprises Act, a new federal law that protects patients from surprise medical bills in all states. These comprehensive new protections went into effect in 2022 and protects patients from surprise medical bills for emergency services (including air ambulances) and non-emergency services provided at an in-network facility. Patients’ out-of-pocket costs will be limited to the costs they would have paid if they had received services from an in-network doctor, hospital, or other health care provider. The considerations here may continue to be relevant (especially for state policymakers interested in pursuing separate protections) but we recommend that readers learn more about the No Surprises Act here.
Taking the Patient Out of the Middle
Negotiations over network participation are complex for both insurance companies and health care providers. These entities have significant market power and information to negotiate with one another over reimbursement issues. Patients, on the other hand, do not have these resources and no one would expect them to participate in such negotiations. Yet, too often, patients are pulled into the middle when there is a dispute over payment for an out-of-network service.
There are many reasons to encourage patients to receive in-network health care. In-network care can help hold down health care costs through discounted reimbursement and better coordination of care for people with chronic conditions. At times, patients may make an informed decision to use an out-of-network provider. In those circumstances, the patient may be exposed to a “balance bill” from the provider.
But many patients across the country are receiving surprise medical bills from out-of-network providers without the ability to make an informed, advance decision to use that provider. Many of these bills come from providers the patient could not have reasonably chosen at the time they were treated (such as in an emergency or at an in-network facility that contracts with certain out-of-network clinicians). These medical bills—whether small or large—can be financially devastating for families. This is one reason why unexpected medical bills top the list of health care costs that Americans are afraid they will not be able to afford.
Stakeholders generally agree that patients with insurance should not have to pay additional costs or even receive a bill when treated by an out-of-network provider for reasons outside their control. To hold patients harmless, out-of-network bills must essentially be treated as in-network bills. This means that a patient would be subject only to in-network out-of-pocket costs (like their deductible and any copay or coinsurance).
Policymakers can, however, accomplish this goal differently. Here are some options for holding patients harmless while dividing payment responsibility between the insurance company and the provider.
Policymakers can require an insurance company to “hold the patient harmless” from paying a surprise medical bill. This type of “hold harmless” requirement generally applies to insurance companies, but not medical providers. The insurer is typically required to limit the policyholder’s out-of-pocket costs to their in-network cost sharing for the service. However, these provisions may not fully protect consumers from a surprise bill if medical providers are not prohibited from billing patients when they are unhappy with the insurer’s payment. Often, however, a hold harmless provision without limits on providers’ billing practices forces insurance companies to pay very high bills—also known as billed charges—in order to limit the patient’s charges to in-network cost-sharing. This can result in higher health insurance premiums for all consumers while new data suggests policies to address surprise medical bills could reduce premiums by 1 to 5%.
Policymakers can prohibit out-of-network providers from sending a bill to patients for additional charges beyond what the health insurer pays. This is an important protection because many patients pay a surprise bill in full even if they are not required to do so. To protect against inadvertent payment, policymakers can require providers to refund money to patients if they pay more than what they should have paid for an in-network service. However, a prohibition on surprise billing without regulation of what the health plan pays is likely to raise concerns among provider stakeholders.
We Are Here to Help
Our goal is to help policymakers adopt comprehensive surprise billing protections for patients. Policymakers and staff can contact our team about a specific question or with a broader request for technical assistance. Our experts are available to review materials and consult on policy solutions.