By Christina Cousart
Updated June 24, 2019
During the 2019 legislative session, states have continued to advance protections for consumers against surprise medical balance bills – charges for unexpected, out-of-network medical care. To date, four new states have enacted multi-pronged policies that prohibit balance bills, institute a process for providers and carriers to resolve billing disputes, and foster pricing transparency between providers, carriers, and consumers to avoid situations that lead to balance bills. Texas also approved legislation strengthening its existing consumer protections. Here are highlights of the new legislation.
|Colorado (HB 1174)||Nevada (AB 469)||New Mexico (SB 337)||Texas (SB 1264; HB 2041)||Washington (HB 1065)|
|Balance billing protections|
|Holds consumers harmless||✓||✓||✓||✓*||✓|
Prohibition in case of emergencies
Prohibition in case of out-of-network (OON) services delivered at an in-network facility
Applicable providers/ facilities
|Person who is licensed or otherwise authorized in the state to furnish health care services including:
● LaboratoryExcludes ambulance providers, but charges the insurance commissioner with setting payment methods for ambulance services.
|Physician or other health care practitioner who is licensed or otherwise authorized in this state to furnish any health care service; and institutions providing health care services including:
● Surgical centers for ambulatory patients
● Skilled nursing facilities
● Residential facilities for groups
● LaboratoriesEmergency facilities include hospitals or independent centers for emergency medical care
|Licensed health care professionals, hospitals, or other facilities licensed to furnish health care.Facilities include entities providing health care services including:
● Ambulatory surgical centers;
● Birth centers;
● Drug and alcohol treatment centers;
● Laboratory, diagnostic, and testing centers;
● Health provider’s offices or clinics
● Urgent care centers
● Freestanding emergency rooms
● Therapeutic health care settings
|Individual licensed under the laws of this state to practice medicine or health care facilities.Facilities include:
● Licensed ambulatory surgical centers
● Licensed chemical dependency treatment facility
● Renal dialysis facilities
● Birthing centers;
● Rural health clinics;
● Federally qualified health centers
● Freestanding imaging centers;
● Freestanding emergency medical care facilities*
|Person licensed under state law to practice health or health-related services, or an employee or agent of such a person acting in the scope of their employment.Facilities include:
● Rural health care facilities
● Psychiatric hospitals
● Nursing homes
● Community mental health center
● Kidney disease treatment centers
● Ambulatory diagnostic treatment or surgical facilities
● Drug and alcohol treatment facilities;
● Home health agencies.Carriers may not balance bill in the case of emergency services delivered by out-of-state providers.
|Billing dispute and resolution procedures|
|Reimbursement standard||For emergency services the greater of:
● In non-Denver areas:
o 105% of carrier’s median in-network rate for services provided at a similar facility in the same geographic area; or
o Median in-network rate for the same service at a similar facility in the same geographic area based on all-payer claims database (APCD) data.
● In the Denver area:
o Carrier’s median in-network rate for the same service in a similar facility in the same geographic area;
o 250% Medicare rate for the same service in a similar facility in the same geographic area; or
o Median in-network rate for the same service in a similar facility in the same geographic area based on APCD data.
For OON services at an in-network facility, the greater of:
● 108% of the previously contracted rate if the facility had been in-network within the last 12 months.● 115% of the previously contracted rate if the facility had been in-network within the last 12-24 months.● If no such contract existed, an amount the carrier determines to be fair and reasonable.For providers:If a provider had been in-network within the past 12 months:
● The previously contracted rate, if the provider terminated the contract before it was set to expire without cause;
● 108% of the previously contracted rate if the provider terminated the contract for cause;
● A fair and reasonable amount, determined by the carrier, if the carrier terminated the contract for cause;
● The previously contracted rate adjusted by the Consumer Price Index, Medical Care Component for the prior year, if neither party terminated the contract.If a provider had not been in-network in the preceding 12 months, carrier may remit whatever payment it determines.
|A 60th percentile of the allowed commercial reimbursement rate for the service performed by a provider in a similar specialty in the same geographic area.
Should not be less than 150% of 2017 Medicare rate.
A stakeholder group will convene annually to review the reimbursement rate.
|The usual and customary rate or an agreed-to rate, meaning the allowable amount as described by the applicable master benefit plan document or policy.*||Commercially reasonable amount based on similar services provided in a similar geographic area.|
|Process for arbitration||Baseball arbitration (arbiter will pick the final payment offer submitted by either the health plan or the provider/facility), if carrier and provider do not agree to initial payment.
Arbiter will consider:
|Arbiter will either require the provider to accept the payment issued by the carrier as payment in full, or to demand that the carrier remit an additional amount requested by the provider.||Mediation may be requested through the Department of Insurance.
In the case of mediation of facilities, the mediator shall determine if the amount charged by provider is excessive, and if the amount paid by the insurer is unreasonably low or not the usual and customary rate.
In the case of mediation for other providers, the mediator shall take into account whether there is gross disparity between the amount charged by the provider and how much the provider or similarly qualified providers receive for similar services. Other factors may include:*
|Baseball arbitration (arbiter will pick the final payment offer submitted by either the health plan or the provider/facility), if carrier and provider do not agree to initial payment.
Arbiter may consider:
|Data collection and reporting tools||State APCD||Benchmarking database maintained by a nonprofit organization specified by the insurance commissioner.
Enables the commissioner to require carriers to report:
|The insurance commissioner is charged with selecting an organization to maintain a benchmarking database.||Requires state APCD to establish a dataset that provider, facilities, and carrier s may use to determine reasonable rates and to resolve payment disputes.
Carriers shall provide information concerning the utilization of OON providers and cost savings yielded from the law as part of their annual rate filing.
|Provider must refund excess payments made by consumers
|Penalty for violations||✓||✓||✓*||✓|
|Must provide disclosure of potential repercussions of OON services
|● Providers||● Carriers
|Requires cost estimates to consumers
|Additional requirements:||On carriers:
● Must arrange for patient transfer within 24 hours of receiving notice that person is stable and can be transferred.On providers:
● Must send notice to carrier, no later than eight hours after person presents at an OON facility
● Must send notice to carrier that the beneficiary has stabilized and may be transferred to an in-network facility within 24 hours of stabilization
● Must make claims status information available to providers.On providers:
● Must post in a publicly accessible manner and online information about which carriers it contracts with.
● Must notify the carrier of a beneficiary’s admission within a reasonable period after stabilization.
● Any communication regarding bills, shall clearly state that the beneficiary is responsible only for in-network cost sharing amounts.
● Explanation of benefits must include information about balance billing protections; the total amount the provider may bill the enrollee under the enrollee’s health benefit plan; and an itemization of cost-sharing included in that total.* 
● Facilities must post notice that
o it may charge a facility fee
o it may charge rates comparable to a hospital emergency room
o the facility or a physician at the facility may be OON and bill separately
o Lists all the carriers it contracts with
● Facilities must provide patients with a disclosure that:*
o Lists the facility fees that may result from the visit
o Lists the carriers the facility is in-network with
o Lists other cost information such as median facility fees and observation fees.
● Prohibits facilities from using logos or language to misrepresent that it might be in an insurers network.
● Must immediately arrange for an alternate plan of treatment if an agreement on post-stabilization services cannot be reached with the emergency provider.
● Must update provider directory within 30 days after the addition or termination of a provider.On providers:
● The provider must contact the carrier within 30 minutes of stabilization before rendering further services.
● Must post online information about which carriers it contracts with.
● Must provide carriers with updated lists of non-employed providers working at the facility
*Indicates changes made by the new Texas law.
 Texas’ 2019 law amends and enhances already existing protections in the state. Changes made by the new law are noted by asterisk.
 Does not apply when: 1) Services are received at a critical access hospital; 2) A person is covered by insurance sold outside of the state; 3) Services provided more than 24 hours after notification has been provided and a person has been stabilized.
 In the case of a beneficiary who cannot reasonably access a preferred provider, the protections extend to 1) medical screening and examinations require to determine if a medical emergency exists; 2) necessary emergency services to treat and stabilize; 3) services originating in an emergency facility following stabilization; and 4) supplies related to the services rendered by that facility.
 Does not apply if the consumer affirmatively consented to receive OON services.
 Only applies when; 1) A participating provider is unavailable; 2) Medically necessary care is unavailable in the beneficiary’s network (determined by the provider in conjunction with the health plan); or 3) the patient did not consent to receive services from the OON provider.
 Does not apply in the case of a beneficiary that elects, in writing and in advance, to receive services from the out-of-network provider, or in the case that the provider does provide the enrollee with a written disclosure that they are out-of-network and provides an estimate of the projected amount the enrollee will be responsible for. Explicitly includes protections for OON services delivered by diagnostic imaging or labs.
 Prior law allowed mediation requests only in the case of claims over $500 and that were for either emergency services, or services rendered by a provider or supplier at an in-network facility.
 Refund must be issued within 60 days, or interest will accrue.
 Refund must be issued within 45 days, or interest will accrue.
 Refund must be issued within 30 days, or interest will accrue.
 Punished by a fine of not more than one thousand dollars, or by imprisonment in the county jail for not more than one year, or both.
 Insurance superintendent may impose a fine on any provider that offers an unlawful rebate or inducement to entice a person to seek OON services
 The Attorney General may bring civil action against entities that exhibit a pattern of repeatedly violating billing protections. Authorizes applicable agencies to take action against providers or facilities who violate billing protections. The Secretary of State may suspend or revoke a license, or bring civil action against entities who violate the disclosure requirements outlined under Texas law. The Department of Health may impose penalties up to $1,000 for certain violations.
 Authorizes the Department of Health or an appropriate authority to levy fines against providers or facilities who violate these policies. Commissioner may levy a fine against carriers who violate these policies. Repeated violation may constitute unprofessional conduct and risk licensure of a provider or facility.
 If an OON provider has advanced notice that the beneficiary is OON, they must notice the beneficiary of their OON status and recommend the beneficiary contact their carrier to discuss options.
 A provider must issue a cost estimate within three days if requested by a patient.
 Carrier must provide an estimate of out-of-pocket costs for OON services upon request.
 Applicable to Health Maintenance Organizations.
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.
Surprise medical balance bills – charges for unexpected, out-of-network medical care – affect thousands of consumers each year. These bills can leave consumers stuck with hundreds, if not thousands, of dollars in unexpected medical expenses.
States are taking the lead in cracking down on surprise balance bills, passing consumer protection laws that range from strict requirements for network service disclosures to outright bans on balance billing in certain circumstances. These resources highlight state and recent federal initiatives to address surprise medical balance billing:
- NASHP Blog and Chart: States Lead on Surprise Medical Billing Protections, Congress Poised to Follow, April 9, 2019. This blog and chart summarize three bills proposed in the US Senate to provide federal protection to curb surprise balance bills, and how they would impact states.
- NASHP Blog and Chart: More States Implement Surprise Medical Billing Protections, June 18, 2019. Four new states have enact multi-pronged policies to prohibit balance bills, institute a process for providers and carriers to resolve billing disputes, and foster pricing transparency to avoid surprise bills. A chart shows these legislative highlights.
- Chart: Highlights of States’ Surprise Medical Balance Billing Laws, March 18, 2019. This chart provides a side-by-side comparison of states that have taken comprehensive approaches to address surprise balance bills.
- Blog: State Legislators Take Action to Protect Consumers from Surprise Billing, Sept. 18, 2018. Summary of state laws enacted in 2018 to address surprise balance bills.
- Chart: Surprise Billing Legislation Passed in 2016, July 20, 2016. This chart summarizes state laws enacted in 2016 to address surprise balance bills.
- Research Brief: Answering the Thousand-Dollar Debt Question: An Update on State Legislative Activity to Address Surprise Balance Billing, April 11, 2016. This issue brief describes the rise of surprise medical balance bills and state and federal efforts to curtail the practice in their states.
Information below references federal bills developed prior to January 2019. For an updated version of this chart, click here.
Surprise balance bills occur when patients receive unanticipated charges for health care services because they were unaware that care was delivered by an out-of-network provider or facility. In some cases, surprise balance bills can amount to hundreds if not thousands of dollars in medical expenses.
A growing number of states have passed or are proposing laws to protect consumers with one or more of these safeguards:
- They prohibit balance billing in certain circumstances — usually when a consumer had no other provider choice;
- They hold consumers harmless when insurance carriers and providers dispute a balance bill;
- They set reimbursement standards for providers in the case of balance bills;
- They require providers and carriers to provide accurate and updated information about the provision of in- and out-of-network services; and
- They establish a balance billing dispute resolution process, facilitated by the state or an independent entity.
This chart highlights multiple safeguards that seven states have enacted to create a comprehensive strategy to regulate surprise balance billing. To date, at least 22 states have introduced legislation during this session to establish or strengthen surprise balance billing protections. NASHP will continue to monitor and report on new legislative developments.
Consumer out-of-pocket spending on health care costs, including “surprise” medical bills – often incurred for costly, out-of-network care — is on the rise and state lawmakers are responding with legislation to protect consumers.
Surprise bills happen when consumers receive unexpected charges for medical care that they assumed would be comprehensively covered by their insurance plans. This often occurs when consumers unknowingly receive services from providers or facilities that are not covered within their insurance network, such as a specialist who contracts to work in a hospital, but does not participate in that hospital’s network.
Surprise bills can leave consumers on the hook for up to thousands of dollars in unexpected medical costs. This issue is pervasive throughout the health care system and affects consumers regardless of whether they are covered through individual insurance markets, such as an Affordable Care Act marketplace, or their employer. (For background on surprise billing, read NASHP’s report Answering the Thousand-Dollar Debt Question.)
Generally, state laws that address surprise billing fall into four categories:
- Laws that cap or limit charges for services that are delivered out-of-network, especially for emergency care;
- Laws designed to improve cost transparency in service costs and/or provider networks;
- Laws that set up an arbitration process to resolve surprise bills that focus on achieving a resolution between providers and insurers without burdening consumers); and
- State investments in committees to study the impact of surprise billing on state consumers.
Several states took action during the 2018 legislative session to address surprise billing, ranging from New Jersey, whose new law captures most of the above strategies, to California, New Hampshire, and New York, which passed laws to restrict “balance billing” (when providers charge patients for the difference between for what they charge and the insurer’s allowed amount.)
Below is a summary of new state laws designed to protect consumers from surprise bills.
- California AB 2593: California took aggressive action in 2017 to curb surprise billing in the state and its newest law adds to those protections by prohibiting air ambulance providers from charging consumers more than in-network costs, even if the consumer receives services from an out-of-network air ambulance provider. (It is currently awaiting governor’s signature)
- Missouri SB 982: The law requires insurers to pay providers for all emergency services “necessary to screen and stabilize an enrollee” and any additional services authorized by the insurer. Consumers cannot be held liable for cost-sharing for these services, beyond what is allowed under their insurance plans, even if the provider is out-of-network. The law also outlines a specific process for arbitration between insurers and providers to settle costs owed in cases where out-of-network care is provided to consumers.
- New Hampshire HB 1809: This law prohibits specific providers (those performing anesthesiology, radiology, emergency medicine, or pathology services) from balance billing a consumer for services in cases where the provider is out of the consumer’s network but delivers services at a hospital or ambulatory surgical center that is in the consumer’s network. New Hampshire also passed a law to establish a committee to study the balance billing practices of ambulance providers in the state. A report on the committee’s findings is due Nov. 1, 2018.
- New Jersey Chapter 32: This is of the most comprehensive surprise billing laws drafted to date. It requires:
- Health care facilities to provide clear and public information regarding the insurance plans it contracts with, the network status of providers who provide services in that facility, and the costs of services in that facility;
- Providers to share information about the insurance plans they participate in and the health care facilities they are affiliated with;
- Insurers to update and maintain accurate information about their provider networks; and
- Insurers to provide consumers with clear information regarding out-of-network health care benefits.
The law also prohibits out-of-network balance billing in the case of emergency services and sets up a process of arbitration for insurers and providers to resolve billing disputes. Notably, the law includes provisions that attempt to guarantee similar protections for consumers covered by self-insured plans, over which the state has limited authority.
- New York Chapter 57: The state’s Health and Mental Hygiene Budget includes a provision to protect survivors of sexual assault from being balance billed by a hospital, a sexual assault examiner, or a licensed health care provider.
- Oregon Chapter 43: By July 2020, Oregon’s Department of Consumer and Business Services will provide a report to the state legislature on all consumer complaints received by the state related to out-of-network providers working at in-network facilities.
Other states have actively considered bills to outlaw surprise bills and additional legislation is expected during the 2019 legislative sessions. The National Academy for State Health Policy (NASHP) will continue to monitor these bills and other efforts to address surprise billing.
On the federal level, in mid-September a group of nonpartisan US senators unveiled a draft bill that also tackles surprise billing. It adds a cap on out-of-network billing rates, prohibits surprise billing in emergency situations, and requires patients to receive notice before they receive out-of-network medical care.
As the newly insured use their coverage, increased scrutiny is being drawn toward the experiences of consumers who are receiving care. One issue of growing concern is the accumulation of medical debt, even among the insured. According to a recent study from the Kaiser Family Foundation, more than a quarter of adults in the United States report that, within the past year, they or someone in their household have had issues with medical debt. This includes 20 percent of individuals under the age of 65 who have insurance. Also striking, 51 percent of insured individuals noting medical debt report owing sums of over $5,000, a significant sum for many households.
The issue is especially complicated as recent fluxes in the health care industry triggered by growth and shifts in coverage are occurring in tandem with experimentation by providers and insurers to reduce costs. As the industry stabilizes, it is yet to be seen what methods of controlling costs may prove most effective at lowering those costs and improving affordability for consumers.
One factor under scrutiny is the occurrence of balance or “surprise” billing which happens when patients receive a higher than expected bill from providers, even after factoring for the amount paid by a consumer’s insurer to the provider. States are also taking action to examine the issue, managing the interests of carriers, providers, and consumers to address them. This brief examines this issue, as well as state actions and legislation currently in the queue.