5 Things About Surprise Medical Billing

Surprise medical billing has made headlines over the last year, detailing stories of patients left with thousands of dollars of medical costs after receiving medical care they thought was covered by their insurance. The impact of surprise medical billing, which occurs when a patient receives care from a doctor or hospital outside of their insurer's network and the doctor or hospital subsequently bills the patient for the amount their insurance didn't cover, has also garnered attention from healthcare stakeholders and the federal government. Here are 5 things to know:

1. Surprise medical bills impact a significant amount of emergency room visits

An analysis from Kaiser Family Foundation (KFF) found that patients came home with at least 1 out-of-network bill in approximately 1 out of every 6 emergency room visits in 2017. The analysis of large employer plans revealed that 18% of all emergency visits and 16% of in-network hospital stays resulted in at least 1 out-of-network bill.

However, the prevalence varies widely between states. For example, in states like Minnesota, South Dakota, Nebraska, Alabama, and Mississippi, 5% of emergency visits ended with an out-of-network bill. Meanwhile, in states like Texas, New Mexico, California and New York, at least 30% of visits resulted in an out-of-network charge. Polls from KFF have found that two-thirds of Americans are “very worried” (38%) or “somewhat worried” (29%) about being able to afford their own or a family member’s surprise medical bill.

2. The prevalence of surprise medical bills continues to increase

The prevalence of surprise medical bills is not just high; it continues to increase, according to a study published in JAMA Internal Medicine, which found that out-of-network billing continues to be more common for patients with private insurance even when visiting an in-network hospital.

Looking at health insurance claims for people with private insurance from a large commercial insurer between 2010 and 2016, the researchers saw that the percentage of emergency department visits resulting in an out-of-network bill increased from 32.3% to 42.8%. During the same period, the average potential cost for patients increased from $220 to $628. Meanwhile, the percentage of inpatient admissions that had an out-of-network bill increased from 26.3% to 42.0% and the average potential cost to the patient increased from $804 to $2040.

3. Some research says implementing payment standards to address the issue could have negative consequences

In 2017, California implemented a policy to address surprise medical billing for out-of-network nonemergency physician services at in-network hospitals, which includes a novel out-of-network payment standard. A case study appearing in the August issue of The American Journal of Managed Care^® found that while the law, AB-72, is effectively protecting patients from surprise medical bills, stakeholders report that the payment standard set at payer-specific local average commercial negotiated rates has changed the negotiation dynamics between hospital-based physicians and payers.

According to the 28 interviews with policy experts, representatives of advocacy organizations and state-level professional associations, and current executives of physician practice groups, the leverage has shifted in favor of payers, who have an incentive to lower or cancel contracts with rates higher than their average as a way to suppress out-of-network prices. The physicians interviewed in the case study said that their decreased leverage is exacerbating provider consolidation.

4. Other research says the policy is working and strengthening provider networks

One of the criticisms of AB-72 is that the law may have caused insurance providers to reduce the amount of specialty doctors in their networks; however, data from America’s Health Insurance Plans paints a picture of the opposite. According to their survey of 11 health insurance providers in California, representing 96% of covered lives in the commercial market, the number of in-network specialists has either grown or stayed stable.

Between July 2017 and July 2019, the total amount of in-network general surgeons and emergency medicine physicians increased by 10% each, the number of anesthesiologists increased by 18%, the number of diagnostic radiologists increased by 26%, and the number of pathologists increased by 1%.

5. The government is taking action to prevent surprise medical bills

In May, President Trump outlined the administration’s action plan to tackle surprise medical bills, which he said will hold insurance companies and hospitals accountable. Among others, the guiding principles include that in emergency care situations, patients should never be responsible for out-of-network costs they did not agree to pay; when receiving scheduled non-emergency care, patients should be given a clear and honest bill upfront with the prices of all services and costs they would be responsible for; and that patients should not receive surprise medical bills from out-of-network providers they did not choose themselves.

A month later, Senators Lamar Alexander, R-Tennessee, and Patty Murray, D-Washington, introduced a bill to protect patients from surprise medical bills by requiring charges for emergency care to count toward their deductible, requiring only the in-network cost-sharing amount, setting a regional benchmark, and holding people harmless from surprise air ambulance bills. However, the measure has received pushback from doctor and hospital groups, who argue that it would result in damaging cuts in payments to doctors, reported The Hill.