State and federal legislators are shifting more attention to an issue known as surprise medical bills. A surprise medical bill occurs when a medical provider sends a patient a bill for services that the patient thought his or her insurer would cover. See Consumers’ Responses to Surprise Medical Bills in Elective Situations, B. Chartock et al. (Mar. 2019). Such bills can leave patients with significant amounts of medical debt. An often-cited example is when a patient goes to an in-network facility, such as a hospital, but receives services from an out-of-network provider, such as an anesthesiologist. If the out-of-network provider is unable to collect the full amount for his or her services from the patient’s insurer, then the provider may bill the patient directly. Surprise medical bills, which are also known as “balance bills,” are at the forefront of the debate regarding the United States healthcare system.
Many states have passed legislation that addresses surprise medical bills. For example, New York law provides patients with different protections depending on what insurance they have. See New York Department of Financial Services, Surprise Medical Bills, available at https://www.dfs.ny.gov/consumers/health_insurance/surprise_medical_bills. If a patient has insurance through an HMO, New York law may cap the patient’s financial responsibility for a surprise medical bill, and the bill may not exceed an in-network copayment, coinsurance, or deductible. A provider may not hold the patient liable for any additional amounts owed. If the patient signed a form known as an “assignment of benefits,” the provider may be entitled to seek reimbursement from the patient’s insurer. New York law has even established an independent dispute resolution process where a provider and insurer can argue about the reasonableness of the reimbursement. See New York Department of Financial Services, Surprise Medical Bills, available at https://www.dfs.ny.gov/consumers/health_insurance/surprise_medical_bills.
Although some states have similar laws, many do not. However, the federal government is considering passing its own surprise medical bill legislation. For example, in June 2019, the United States Senate introduced the “Lower Health Care Costs Act.” See GovTrack, S. 1895: Lower Health Care Costs Act, available at https://www.govtrack.us/congress/bills/116/s1895. The bill is one of many divisive federal efforts to reform the healthcare system. Unlike New York law, the bill uses a benchmark rate to resolve payment disputes between insurers and out-of-network providers. Specifically, insurers must pay providers the median contracted rate that they have negotiated with other providers in a certain geographic area. Supporters of the bill argue that the benchmark rate will help eliminate surprise medical bills. Critics argue that, like other government price controls, the benchmark rate will create more problems than it will solve. One such argument is that if the benchmark rates are too low, out-of-network providers will have to see more patients to cover their expenses, thereby reducing the amount of time and care they can provide.
The issue of surprise medical bills demonstrates how complicated the American healthcare system has become. Pantheon Global Holdings is committed to working with providers regarding such complexities as our teams of analysts and attorneys stay current on the status of federal and state surprise medical bill legislation.
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