Federal Plan to End Surprise Medical Bills Draws Mixed Reactions

Kerry Dooley Young

July 07, 2021

A federal rule spelling out how insurers must cover emergency services drew mixed initial reactions from organizations that have long been at odds about so-called surprise medical bills.

The Department of Health and Human Services (HHS), along with the Labor Department, the Treasury, and the Office of Personnel Management, on July 1 released the first regulation intended to carry out a federal law mandating an end to surprise billing. In December, Congress tucked new legislation on surprise billing into a broad spending bill. That law left to agencies, including the Centers for Medicare & Medicaid Services (CMS), the task of implementing this mandate.

The rule is intended to curb cases of surprise billing by requiring clear notification to patients when they may face costs for out-of-network care. Clinicians and hospitals will need to give patients a "plain-language consumer notice" explaining that their consent is required to receive care on an out-of-network basis before that clinician can bill at the higher out-of-network rate, CMS said in a press release.

"These provisions will provide patients with financial peace of mind while seeking emergency care as well as safeguard them from unknowingly accepting out-of-network care and subsequently incurring surprise billing expenses," CMS said.

In statements, medical and consumer groups noted that they were reviewing the regulations, which were released as an interim final rule of more than 400 pages. America's Health Insurance Plans, for example, told Medscape Medical News in an email exchange that the officials for this trade group are still analyzing the regulation.

The American Hospital Association (AHA) has said it is concerned that some aspects of the rule "could create a financial windfall for insurers while financially destabilizing providers and thus removing access points for patients without any guarantee that the savings are passed on to consumers."

In contrast, Jen Taylor, senior director of federal relations for the consumer group Families USA, said in a statement, "the rule underscores the importance of setting up a system for resolving billing disputes that not only protects patients, but also prevents overall health system costs from inflating over time."

Four in 10 ED Visits Result in Surprise Bills

CMS and other federal agencies are working to create a system to prevent cases in which people with medical insurance face potentially financially devastating bills. The practice of surprise billing has been used as leverage in some cases to obtain higher in-network payments, driving up expenses for consumers, said HHS and the other federal agencies in the rule.

Research has shown that between 2010 and 2016, more than 39% of emergency department visits to in-network hospitals resulted in an out-of-network bill. The percentage increased to 42.8% in 2016, CMS said in a statement. During this period, the average amount of a surprise medical bill rose from $220 to $628.

In the rule itself, federal officials noted a project carried out by Vox, a news and opinion website, in which emergency department medical bills were collected. Investigators found instances of accident victims receiving surprise medical bills of more than $20,000.

The rule also cites a 2020 report in JAMA in which researchers from the nonprofit Kaiser Family Foundation reported that 1 in 5 insured adults received an unexpected medical bill from an out-of-network provider in recent years. "Overall, two-thirds of adults are worried about affording unexpected medical bills for themselves and their family," the Kaiser Family Foundation researchers wrote in their report.

James Gelfand, senior vice president of health policy for the ERISA Industry Committee (ERIC), which aids large employers, said in a July 1 statement that, owing to "the strong regulations released today, January of 2022 will mark the end, once and for all, of these predatory billing practices ― and will do so without burdening patients with higher health insurance premiums."

On a call with reporters on Tuesday, Gelfand said that hedge funds involved with medical practices have to date banked on being able to generate many out-of-network bills for care provided by their clinicians. The new federal regulations' detailed requirements for notice forms included in the rule should make it more difficult to do this, Gelfand said.

"Patients are going to understand the rights that they are signing away," Gelfand said. These notices will be "straight up saying, 'You are going to have to pay more if you sign this paper.' That's important."

There likely will be calls from many groups for revisions to the rule released on July 1, as well as the ones that are expected to follow it.

"We, as ERIC and as an employer community writ large, plan to be very involved in that process," Gelfand said on the call. "We spent two and a half years lobbying to outlaw surprise medical bills. Now we need to make sure that the law that was passed will actually make that happen."

A Long Road to Greater Patient Protections

Lawmakers wrestled for several years with how to address surprise billing, which occurs most often in cases of emergency care and in specialties such as radiology and anesthesiology. These medical specialties tended to favor an approach that relied on arbitration, whereas insurers, large employers, and consumer groups preferred approaches that peg payments to prevailing established rates.

Among the issues not addressed in the first rule is the format for creating an option for independent dispute resolution in cases in which other approaches to resolve billing disputes fall short.

In a special bulletin, AHA noted that further regulation will have to be proposed to address other aspects of the surprise billing mandate, such as how to set the good-faith estimates, provide advanced explanation of benefits, and maintain provider directories.

AHA also noted that the rule contained provisions its members would support.

"Notably, the regulations contain a strong rebuke of health plan actions to deny coverage of emergency services," the AHA said.

As reported by Medscape Medical News, physician and hospital associations have been challenging United Healthcare's controversial emergency department visit review policy.

In a statement, the American College of Emergency Physicians (ACEP) said it was "pleased" by how federal policymakers recognized "ongoing attempts by insurers to retroactively deny coverage of emergency care and that this rule would add additional patient protections.

"This reaffirmation of the prudent layperson standard helps ensure that patients no longer need to hesitate or delay seeking emergency care over uncertainty about their insurance coverage," ACEP said in a statement emailed to Medscape.

Kerry Dooley Young is a freelance journalist based in Washington, DC. She is the core topic leader on patient safety issues for the Association of Health Care Journalists. Young earlier covered health policy and the federal budget for Congressional Quarterly/CQ Roll Call and the pharmaceutical industry and the Food and Drug Administration for Bloomberg. Follow her on Twitter at @kdooleyyoung.

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