As Congress and the Trump Administration propose strategies to address surprise balance billing – charges for unexpected, out-of-network medical care – states have significant experience in implementing surprise billing laws that can inform the discussion. Importantly, state authority cannot protect individuals covered by self-insured plans, which are pre-empted by Employee Retirement Income Security Act (ERISA,) from state oversight. To extend protections to consumers covered by these plans federal action is needed either through mandated protections or a change in law to enable states’ laws to apply toward ERISA plans.
States’ approaches to addressing surprise balance bills vary in how they:
- Define what services are covered by these protections;
- Address how reimbursement for services should be resolved; and
- Define provider and insurer transparency requirements.
Through National Academy for State Health Policy’s (NASHP) work with states, it has identified the following themes and lessons from state laws and experiences that could help inform future federal action on surprise balance bills.
Broadly define services covered by the law.
Balance billing protections are strongest when they extend to both all emergency circumstances and situations where the consumer does not have control over the out-of-network (OON) services provided. Such situations can occur without consent of the patient when an in-network physician is unavailable, because of an unforeseen medical situation, and/or because of a direct referral to an OON provider or facility rendered by an in-network provider. Surprise balance billing laws that include provisions to extend protections broadly across multiple provider and facility types, including specialists, labs, imaging centers, and air and land ambulance transport, offer the strongest consumer protections.
Consider multiple factors when determining the law’s dispute resolution process.
Essentially, state laws take two approaches to resolve billing disputes for surprise balance bills – setting a specific reimbursement rate for such bills and/or defining an arbitration process through which providers and insurers can resolve payment disputes. Because many state balance billing laws are nascent — and have been implemented during a time of considerable policy change affecting health care markets — there is a lack of evidence identifying the ultimate effects, either positive or negative, of either approach on state health insurance markets, including their impact on premium costs and provider network composition. Both approaches have challenges. Setting reimbursement rates for balance bills can be challenging given the multiple stakeholders involved and there is time and expense to consider in establishing fair mediation or arbitration systems. Whatever strategy Congress adopts, states’ experiences suggests the following factors for consideration:
- Remove consumers from billing disputes. To maximize consumer protection from surprise balance bills, the process for resolving reimbursements should be kept between the insurer, the provider, and any agency appointed to aid in resolution. To encourage this, additional requirements may be put in place to foster direct communication between providers and insurers, such as a requirement that insurers alert providers about what, if any, ability they will have to balance bill for services rendered to the insurer’s beneficiary. (For example, multiple states require insurers to include this information in their Explanation of Benefits sent to providers.)
- Use of data sources that leverage claims data. By using this data, such as that collected by all-payer claims databases (APCDs), reference price amounts for negotiations for medical bills will be based on actual paid amounts, rather than billed amounts. The latter may lead to inflated rates and higher health care spending. However, not all states have APCDs. Including funding to support state APCD programs could be an impetus to improve access to needed claims data in every state. To assure the most robust data collection, however, requires Congressional action to amend ERISA or provide other means for states to mandate the collection of claims data from self-funded plans. The Supreme Court’s ruling in Gobeille v. Liberty Mutual currently prohibits such requirements. While states do encourage voluntary reporting with some success, a mandate would assure more consistency in reporting. One of the issues identified in the Gobeille decision was the burden on self-funded plans created by different reporting requirements in different states. Including reference to the common data layout developed by states would resolve that reporting burden question.
- Inadvertent effects on provider networks and contracts. The ultimate reimbursement rates paid to resolve surprise balance bills should provide sufficient compensation to providers, without incentivizing providers to stay OON. For example, a benchmark that provides payments set too high may incent providers to remain OON. However, payments set too low may impose negative impacts on providers already operating on the margins. To protect against the latter, reimbursement calculations may consider a variety of factors, including average payment amounts for similar services, geographic cost variation, provider experience, or other factors unique to the situation of the service performed.
- Set a fixed amount for consumer cost sharing. This added protection will guard consumers from potentially exorbitant out-of-pocket costs in the case that final reimbursement rate decisions on a balance bill result in large out-of-pocket cost-sharing for services from deductibles, coinsurance, etc.
Include prohibitions on billing practice and hold harmless protections.
The most protective strategy would be an explicit prohibition on the part of providers or insurers from balance billing patients. While this should absolve consumers from the surprise billing burden, the law should also be clear in holding consumers harmless in situations where a balance bill is being negotiated between insurers and providers. This may take the form of specifying what form of contact, if any, insurers and providers may take with consumers regarding billing disputes and prohibiting certain actions, like credit reporting, against consumers.
Encourage enforcement through federal penalties.
Because of their limited jurisdiction over providers and certain health plans, enforcing surprise billing protections has been a challenge for some states. A successful federal law would include an enforcement mechanism that would support additional compliance with surprise balance billing laws.
Include deference to existing state laws.
States, including those with robust balance billing protections, have taken very different approaches to crafting their laws. This wide variation reflects states’ diligent and deliberate work to find solutions to surprise balance billing that work best for their markets.
States’ experiences can inform Congressional proposals and deliberations to address balance billing – from requiring transparency about networks and service costs to establishing the processes to determine the reimbursement rate for an OON provider. States have acted to protect consumers, experimenting with a variety of strategies to protect consumers from unexpected financial exposure. Federal action can extend the reach of those protections to include consumers covered by self-funded, employer-based insurance, but it should consider how any new federal law will impact state progress in this important arena of consumer protection.