Healthcare Providers Will No Longer Be Allowed to Issue “Surprise” Bills
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On July 1, the Biden Administration announced the first of an expected series of healthcare regulations designed to decrease medical financial hardships for people who are covered by health insurance. To go into effect for healthcare providers and insurance companies January 1, 2022, full cost transparency for healthcare services will be required before a non-emergency service is provided.
Additionally, all emergency services must always be billed as in-network (i.e. insurance must cover the full cost of the emergency service except any previously stated in-network deductible or co-insurance). This aims to eliminate surprise medical bills after the fact, often delivered in the form of “the patient is responsible for this amount of money that the health insurance did not cover.” It does not, however, provide any cost regulation for people not covered by health insurance.
This surprise billing most often happens when a patient, covered by health insurance, receives care from a healthcare provider who is out-of-network for the patient’s insurance. This can happen with both emergency and non-emergency care and can be very confusing for the patient, as in-network versus out-of-network is often not clear and sometimes a particular doctor or provider can be out-of-network, even when they work at a facility that is in-network. This can also happen when a patient is in need of emergency care and must use whatever service or facility is closest or easiest to access. Bills in the tens or hundreds of thousands are not uncommon in these scenarios; two-thirds of American bankruptcies are driven by high medical bills.
Balance billing—where insurance pays a portion of a bill but the patient is responsible for the rest—is already prohibited under Medicare and Medicaid and is banned or regulated in some states, regardless of whether or not they are a surprise to the patient. Within the US healthcare system, private companies negotiate contracts between healthcare providers and insurance companies, also known as payers, to create competitive healthcare provider networks. Insurance companies will list a provider as in-network so that they may drive more patients to that provider, with the provider in turn offering lower prices to be billed to the insurance company. The practice is a symptom of a business-oriented healthcare system, rather than a public health-oriented one.
The Interim Final Rule, published on July 1, 2021 also requires that
- All emergency care must be billed as in-network without requirements for prior authorization.
- If a provider is out-of-network but works at an in-network facility (like an out-of-network surgeon at an in-network hospital), out-of-network charges are banned.
- In emergency care situations, co-insurance or deductibles owed by the patient cannot be higher than what a patient would pay for in-network care, effectively banning high out-of-network fees for emergency care. (Note: your fees may still be high depending on your health insurance coverage – take a close look at listed co-insurance or deductible amounts for in-network care.)
- Out-of-network charges without advance notice are banned. Health care providers and facilities must provide clear, plain-language explanations and get patient consent before billing at an out-of-network rate.
Starting January 1, 2022, here’s what this means for you:
- This regulation only applies to people who are covered by health insurance and does not regulate billing in any way for self-pay costs. If you don’t have health insurance coverage, you may qualify for financial assistance through Healthcare.gov.
- Get very acquainted with all of the potential in-network and out-of-network costs listed by your insurance plan. Know what your deductible is (the amount of money you will be required to pay out of pocket for pharmacy or medical benefits before insurance starts covering items or services), any co-insurance rates (the percentage of cost for a healthcare service you will be required to pay out of pocket), etc. These are the insurance plan’s negotiated prices at which you should get billed for most non-emergency healthcare.
- Get prepared to have potential cost conversations before non-emergency healthcare services are provided. Healthcare providers must be abundantly clear with you about whether they are in or out-of-network. Know that a healthcare provider will be required to clearly explain all potential costs for a healthcare service before you receive it, and you must consent to those costs. You may still end up being responsible for higher costs if you choose to go to an out-of-network provider, but these costs cannot be a surprise to you.
- Pay particular attention to any co-insurance or deductibles for emergency care, like calling an ambulance or going to the emergency room. A strong healthcare plan will ensure these services are covered at a reasonable cost, but sometimes healthcare plans offer a low monthly premium by not having low-cost emergency care coverage. Know potential rates from the start so you won’t get surprised, even by in-network costs, later.
- Once you know potential emergency care costs, know that they should legally never be higher than those in-network rates. Any emergency care—an ambulance (including air ambulance), emergency room, etc.—will never be allowed to bill you rates beyond your in-network deductible or co-insurance, no matter the company or provider and what agreements they have or have not made with your health insurance company.
The regulation is called “Requirements Related to Surprise Billing; Part I” and was issued by the U.S. Departments of Health and Human Services (HHS), Labor and Treasury and the Office of Personnel Management. This will be an interim rule, designed as a stop-gap to regulate exorbitant financial burdens faced by many Americans seeking healthcare, until more comprehensive healthcare regulation can be passed. Further regulation is needed for high, but known by the patient, costs. When regulations like this are presented, legal fights from the companies they regulate are common and to be expected. More information on the regulation can be found here and here.