By Matthew Albright, Chief Legislative Affairs Officer, Zelis
On September 17, a bipartisan group of Senators released a discussion draft of a bill that would implement a national solution to the problem of “surprise” balance billing. The bill comes after legislation intended to mitigate surprise balance bills has been passed in almost half the states. However, in a departure from previous state surprise balance billing laws, the current bill being proposed by Senators is continuing a trend seen in more recent state laws of putting more billing prohibitions and transparency requirements on providers.
Surprise balance billing is when an out-of-network provider − that a patient did not actively choose to see or was not aware was outside their network − bills a patient for services rendered.
Twenty-six states now have laws that do not hold the member responsible for surprise balance bills from emergency care given by out-of-network providers. Sixteen states do not hold the member responsible for non-emergency surprise bills, usually defined as when a patient unknowingly receives treatment from an out-of-network provider in an in-network hospital or facility. The draft Senate bill addresses both the emergency and non-emergency context of surprise balance bills.
The Senate bill and the increasing number of states prohibiting surprise balance billing are good news for patients, but what do they mean for providers and insurers? If the member is not responsible, does the insurer have to pay the “balance” of the bill, or does the provider have to accept whatever the insurer wants to pay?
Recent laws prohibit providers from balance billing
Before 2017, it was common to see state surprise balance billing laws that made the insurer responsible for making sure the member was not balance billed with no similar prohibition on the provider. In the 19 states with surprise balance billing laws on their books before 2017, 40% required the insurer to reimburse providers adequately enough so that the provider would not go to the member for the balance of the bill.
Surprise balance billing laws in Pennsylvania, Colorado and New York, passed before 2017, are examples: Insurers and providers can negotiate the reimbursement, but, ultimately, it is up to the insurer to make a payment substantial enough that it would keep the provider from balance billing the member. Other laws, such as those in Massachusetts, are less clear. In Massachusetts, a provider is not technically prohibited from sending a balance bill for out-of-network emergency services, but the law states that the member does not have to pay it. The threat of balance billing the member is good leverage for out-of-network providers to get paid what they think their services are worth, and a state’s codification of that threat benefits the providers in any negotiation.
In 2017 and the first half of 2018, surprise balance billing laws were passed in Maine, Missouri, New Hampshire, New Jersey, Oregon, and Tennessee. In contrast to earlier state laws, none of the six states put the onus of keeping the member from receiving balance bills on the insurer; all of them specifically prohibit the provider from balance billing.
An example of this trend of shifting responsibility is most clearly illustrated in New Jersey’s broad balance billing legislation passed into law in early June of this year. In New Jersey A2039, while the insurer is required to ensure that the member is not balance billed by an out-of-network provider that provided emergency healthcare, the provider is specifically prohibited from attempting to bill the member for anything beyond the member cost-sharing that would be expected when provided with services by an in-network provider. In New Jersey, the insurer and provider can negotiate but, ultimately, the insurer can pay what it thinks is reasonable. If the provider disagrees with the amount, it can initiate arbitration proceedings.
While the discussion draft of the Senate bill clearly prohibits the provider from balance billing, it also sets up reimbursement requirements for the payer.
This trend of shifting responsibilities does not necessarily mean that the provider is on the losing end of surprise balance bill laws. Rather, the responsibility has shifted such that the insurer and the provider together must find a reasonable reimbursement. Except for normal cost-sharing, the member has been taken completely out of the billing and payment negotiations and transaction.
Recent laws require provider transparency and reimbursement benchmarks
Another recent trend is the increase in laws that require more transparency from providers, specifically regarding informing patients of the possibility that they may receive services from out-of-network providers and the costs associated with those services. Three of the six states that passed surprise balance billing laws in 2017-2018 included provider transparency rules, while, before 2017, only two of 19 state laws included such requirements. Further, Louisiana (2017, 2018), while not prohibiting surprise balance billing, adopted provider transparency rules intended to mitigate the issue, while Indiana (2017) and Texas (2017) recently added transparency rules to their existing surprise balance billing statutes. The discussion draft of the Senate bill also includes transparency requirements.
In addition, over half of the states that prohibit surprise balance billing laws restrict the insurer and provider to certain reimbursement benchmarks. The discussion draft of the Senate bill allows those states to keep their reimbursement benchmarks, and sets up new benchmarks for states that have not adopted benchmarks. It’s debatable whether any a potential federal or any particular state’s benchmarks are more beneficial to either the insurer or the provider.
Each surprise balance billing law has its own unique combination of hold harmless language, reimbursement benchmarks, arbitration/mediation processes, transparency provisions, and definitions of the circumstances in which their rules can be applied – and most laws, including the proposed Senate bill, are missing one or more of these elements. It is therefore difficult to draw conclusions, in general or at the state level, on whether the recent trends in these laws negatively impact either the provider or the payer.
What is clear, and perhaps most important, is that these trends benefit the healthcare consumer.