Surprise medical bills have the potential to be financially devastating for patients. These extra costs occur when patients are unknowingly treated by hospitals or physicians that are out of network. Unfortunately, those surprise medical bills can end up being hundreds or even thousands of dollars. These extra costs occur when hospitals or physicians unknowingly treat patients out of network (OON). Unfortunately, those surprise medical bills can end up being hundreds or even thousands of dollars.
On January 1, a new law called the No Surprises Act is doing something about that. This law requires insurers and health care providers to come to a deal between themselves, generally keeping insurers from dropping those surprise bills on uninsured patients.
What some researchers worry about is whether this law will result in shifting costs that result in higher insurance premiums; other policy experts believe that the No Surprises Act could slow premium growth slightly.
This new rule, which was released by the Biden administration, may help discourage insurance settlements at higher amounts that are usually paid for in-network care.
Currently, the No Surprises Act has been drawing opposition from physician groups and hospitals. Some worry that the rule doesn’t reflect today’s real-world payment rates, and others think it could have the unintended result of reducing patient access to care.
How will it affect you? Here’s a closer look at how the No Surprises Act works and how it may affect the healthcare industry moving forward.
Unsettled Bills Will Head to Arbitration
The No Surprises Act works to protect patients from those unexpected, large bills that get sent to insured patients for medical services like emergency care at hospitals that are out of network. Sometimes patients even receive large, unexpected bills after being treated at an in-network facility after being seen by a physician that hadn’t signed with their insurer’s network.
This problem has left patients liable for the difference in the high charges they received and what was paid by the insurer. After the law goes into effect in January, patients will only need to pay what they would have for in-network care. The remaining balance will be settled by the out-of-network providers and insurers.
While providers and insurers have 30 days to deal with any billing discrepancies, then those bills can go into a “baseball-style” arbitration. Insurers and providers will both give their best offer and one is picked by the arbitrator. The loser then takes care of arbitration costs, which are set for $200-500 by the new rule for the coming year.
If either party objects to the chosen arbitrator, a new one can be selected. However, that arbitrator can’t be associated with the medical provider or insurer in any way.
The Effect of the No Surprises Act on Prices
So how will the new rule affect insurance premiums? When the arbitration process occurs, a decision will be made on price. According to the new rule, arbitrators should pick the amount that’s closest to the median cost of in-network care that’s been negotiated by insurers, although the complexity of treatment, provider, and hospital type can also be considered at times.
In contrast, multiple state laws dealing with surprise bills let arbitrators consider higher rates, such as the charges set by doctors or hospitals instead of insurer negotiated rates. This could have the potential to increase spending.
For example, one study found that in New Jersey, which has its own arbitration rules that differ from this new federal rule, these cases were settled at rates that were 5.7 times higher than the in-network rates for the same type of care.
The federal government, in contrast to New Jersey, is working to prevent the highest amounts from being used. Many believe that this could lower premiums for patients while also protecting them from surprise bills in the future. An estimate from the Congressional Budget Office estimated that the No Surprises Act could potentially reduce premium growth by between 0.5 and 1 percent.
Providers May Be Prompted to Join Networks
One likely consequence of the new rule is that providers may be prompted to join insurer networks. It’s common for providers like anesthesiologists, radiologists, and emergency room doctors to avoid joining insurance networks. Usually, they tend to set higher charges that are higher than insurers’ reimbursement. The new rule eliminates the incentive to go with this business model.
On the other hand, critics of the rule argue that insurers will try to drive down payments with disputes, making it less feasible for providers to take insurance. However, experts note that in states that currently have similar laws, the surprise billing debate has actually led more providers to join networks.
After this law goes into effect in January, it may be less relevant whether physicians are in-network or not. For situations where the rule applies, patients will pay in-network costs, and there will be an arbitrated cost that the insurer has to pay and the provider must accept.