New law protects consumers from surprise medical bills

Graphic from Centers for Medicare and Medicaid Services

By Melissa Patrick

Kentucky Health News

As of Jan. 1, Americans who get surprise medical bills have new federal consumer protections. 

"This new law will help make sure our people have protection against unexpected medical bills in an emergency," Gov. Andy Beshear said in a news release. Congress passed the law more than a year ago but delayed its effective date.

In 2018, the Altarum Healthcare Value Hub found that nearly a third of privately-insured Kentucky adults received an unexpected medical bill either in an amount that was higher than expected, from a doctor they didn't expect or from a doctor that they thought would be in-network, but wasn't. 

Surprise medical bills happen when an insured person inadvertently receives care from an out-of-network hospital, doctor or other provider that they did not choose and are then required to pay out-of-pocket for that out-of-network care. 

For example, before the new law, even if you used an in-network hospital for an elective procedure, you would be responsible for the balance of any medical bills that were charged by an out-of-network provider, which often showed up in services like anesthesia, imaging and laboratory work. 

The new law says patients cannot be asked to pay more than the in-network rate their insurer would typically charge them. 

It also addresses "balance billing," the practice of allowing an out-of-network provider or facility to bill you for the difference between the billed charge and the amount your health plan paid. 

The new rules ban four key things: surprise billing for emergency services; balance billing and out-of-network cost-sharing; out-of-network charges and balance billing for ancillary care; and certain out-of-network charges and balance billing without advance notice, says a Kentucky Voices for Health blog post.

There is at least one gap in the law. It applies to air ambulances, both emergency and non-emergency, but not to ground transportation.

The legislation covers people covered under employee-sponsored and individual/family health plans for plan years beginning on or after Jan. 1, 2022. If you have coverage through Medicare, Medicaid, Tricare, Veterans Affairs health care or Indian Health Services, you’re already protected against surprise medical billing, Kentucky Voices for Health says.

The federal government estimates that the law will apply to about 10 million out-of-network surprise medical bills each year.

Kaiser Family Foundation research found that about one out of five emergency room visits and between 9% and 16% of in-network hospitalizations involve a surprise medical bill. Another study, published in JAMA Network, found it happens to about one of five insured people, adding an average of $2,011 more to the bill.

Kentuckians with a complaint about a surprise bill can contact a new federal hotline, the "No Surprises Help Desk" at 800-985-3059 or visit the federal website at https://www.cms.gov/nosurprises for helpful resources. You can also contact the Kentucky Department of Insurance at 800-595-6053

Examples of how the new protections apply can be found on the DOI website at https://insurance.ky.gov/ppc/Documents/nsa%20-%20consumer%20bulletin%2012-2021.pdf.

In addition, the Kaiser Family Foundation offers a short video to describe how these new protections work for patients. It also offers a detailed summary of the Act.

Negotiators reach compromise on surprise medical billing, but fate of the legislation may rest with Senate Majority Leader McConnell

Will Mitch McConnell pass the bill as a going-away favor 
to Lamar Alexander? (Photo by Alex Wong, Getty Images)

Health insurance companies "are furiously lobbying Congress to tweak a last-minute deal on protecting Americans from surprise medical bills — one that is viewed as favoring doctors over them," The Washington Post reports. "But they’re up against a ticking clock, heavy influence from private-equity-backed physician groups — and the reality that the pandemic boosted their profits even as medical providers suffered."

The deal could be included in the must-pass measure to keep the government open, which could also include a massive pandemic relief bill. The fate of all could be in the hands of Senate Majority Leader Mitch McConnell, who "hasn't said anything about it," the Post reports. "His office didn't respond to a query yesterday."

Surprise billing is a problem in Kentucky. "A 2018 survey found that 32% of privately insured Kentucky adults reported receiving a medical bill that included an unexpected expense in the previous year," Butler County Republican Party Chair Matthew Embry wrote in a Dec. 2 piece for the Courier Journal. "To make matters worse, 70% of patients who were hit with surprise medical bills had no idea they were receiving treatment from a provider outside of their insurance network. . . . If the patient can’t afford to pay astronomical surprise bills, they can be harassed by collection agencies, threatened with legal action and even forced into bankruptcy."

McConnell "has not shown any particular interest in addressing surprise medical bills more generally, despite the national outcry over them," Jordan Weissman writes for liberal-leading Slate. "The man tends to take his cues from the insurance industry (Humana is based in Kentucky), which probably isn’t happy" about the latest plan. However, "The driving force for this deal in the Senate has been Tennessee’s Lamar Alexander, who is retiring this year, and who is extremely close with McConnell; the majority leader literally choked up while giving a goodbye speech to his friend from the chamber floor. People genuinely think there’s a chance McConnell might let this pass as a last hurrah for his buddy."

Embry concluded, "It is critical that Sen. McConnell focus his attention on passing fair, reasonable legislation to protect patients from surprise medical bills in the coming weeks. The financial future of hundreds of thousands of Kentucky residents depends on it."

Dylan Scott of Vox explains the issue: "One side of the debate (roughly represented by the first three committees to reach a deal, and the health-insurance lobby) wanted to default to something close to the average in-network price that is paid for the billed services in the area. The other side (represented by . . . the hospitals) wanted to use a third-party arbitration process to come up with a fair payment. The final deal, helpfully laid out by the Brookings Institution’s Loren Adler on Twitter, is a compromise between the two. Read Loren’s thread if you want to get into all the wonky bits, but in brief:

• Surprise billing would be barred for out-of-network emergency care, for most out-of-network care at in-network facilities, and for air ambulances. The patients would be asked to pay only their in-network obligations for the care they received, and that is the end of it for them. The question then becomes what the insurer will pay the provider.
• There would initially be a 30-day period during which the insurance plan and the health care providers could try to negotiate a payment for the out-of-network claims. If they don’t reach an agreement, then arbitration would be the next step.
• The independent arbiters would primarily consider the average in-network charge for the services in question, as well as other information provider by the insurer and provider. Both sides would make an offer, and the arbiter would pick one based on the guidance stipulated in the bill.

"Nobody would call it a perfect plan — ground ambulances are notably excluded from the prohibition on surprise billing — but most health-policy experts seem to see it as a marked improvement over the status quo," Scott writes, concluding that the bill's touted $18 billion in savings could help make it part of a spending package that would add hundreds of billions to the national debt. 

In another close look at the issue, the Post's Paige Winfield Cunningham writes, "Ensuring Americans don’t have to pay for out-of-network medical bills incurred through no fault of their own was expected to be a top priority for 2020. . . .The pandemic overtook most priorities on Capitol Hill, reshaping the legislative to-do list."

Senate bill to address surprise medical billing now in House

By Jim Hannah
Legislative Research Commission

FRANKFORT, Ky. – Legislation to offer patients some protection from surprise medical bills passed the state Senate Friday.

“There are many factors that contribute to surprise billing,” said Sen. Ralph Alvarado, R-Winchester. “Some will place the blame on insurance companies. Some will place the blame on providers. It all depends on whom you ask. But while we are trying to figure out who to blame, patients are stuck in the middle of the problem – often with large medical bills.”

Alvarado's Senate Bill 150 seeks to stop the practice by requiring insurers to cover surprise billing, sometimes called balanced billing. It happens when a patient receives medical care – often unwittingly – outside of their insurer's network. Subsequently, the doctor or hospital bills the patient for the amount insurance didn't cover.

Alvarado characterized SB 150 as a consumer protection bill. He said surprise billing was a dubious exercise of cost shifting from insurers to patients.

A second provision of SB 150 would require the state insurance commissioner to establish a database of billed health-care service charges. A final provision would provide a dispute resolution program for medical insurers and providers to work out their differences over these out-of-network charges.

Sen. Rick Girdler, R-Somerset, spoke against the bill. He cited a fiscal impact estimate that SB 150 would increase individual premiums for health benefit plans by up to $9 per month.

Sen. Tom Buford, R-Nicholasville, said he voted for the bill because the He noted the self-funded Kentucky Employees’ Health Plan already covers surprise billing for its nearly 265,000 members.

“If we are going to enjoy that benefit, the citizens of Kentucky should share the same,” he said.

Sen. Wil Schroder, R-Wilder, who voted no, said what is needed more is broader reform to empower health-care consumers through such measures as transparent pricing of procedures and drugs.

“Today I filed Senate Bill 265 that I believe offers a better solution in the context mentioned,” Schroder said. The bill has been assigned to the Senate Banking and Insurance committee.

Alvarado said SB 150 wasn’t a hastily drafted bill, but the result of three years of investigation.

“I wish to remind the members of the Senate that a successful bill for surprise billing should only make one group happy – and that is the patients we are trying to protect,” he said. “If other stakeholders are a bit uncomfortable, then we have a good compromise on this issue.”

SB 150 went to the House on a vote of 30-3. Sen. John Schickel, R-Union, cast the only other "no" vote.

McConnell throws cold water on bills to control drug prices, rein in surprise medical billing

Senate Majority Leader Mitch McConnell says divisions within his Republican caucus are keeping the Senate from taking up bills to control drug prices and surprise medical billing.

The Kentuckian spoke "hours after Sen. Chuck Grassley (R-Iowa) said he is gathering GOP support for his bill (S. 2543), and Senate Minority Leader Chuck Schumer (D-N.Y.) insisted that senators also get a chance to vote on House Democrats’ Medicare drug-price negotiation plan if the Senate takes up-drug pricing legislation," John Wilkerson reports for Inside Health Policy.

McConnell said, “We have internal divisions within my party in the Senate on both the Grassley bill and the bill that came out of the HELP committee on surprise billing,” referring to the Health, Education, Labor and Pensions Committee.

Wilkerson reports, "Legislation to control drug prices and curb surprise billing are supposed to help pay for renewing a group of popular health care programs called the 'extenders,' and McConnell said the Memorial Day deadline for funding those programs will 'generate another discussion' on both policies. However, he said the division within the Republican party and between the two parties makes it difficult to get a deal on drug pricing."

The House has passed a bill to let Medicare negotiate drug prices using international prices as a reference, and Senate Democrats support it. "The House bill is more aggressive than the Senate Finance bill, which would let drug companies continue setting launch prices but would make companies pay the government back when prices rise faster than inflation," Wilkerson reports.

“We’ve also told Leader McConnell that if he wants to bring any drug pricing proposal to the floor for a vote, we will demand a vote on H.R. 3,” Schumer said.

During the markup of the Senate drug pricing bill (S. 2543), Finance Committee Ranking Democrat Ron Wyden (OR) said Democrats planned to tie a vote on drug pricing legislation to a vote on letting Medicare negotiate drug prices. Democrats also insisted Senate Majority Leader Mitch McConnell (R-KY) allow a vote on preexisting conditions legislation prior to a floor debate on drug pricing. -- John Wilkerson

Ads touting McConnell's record on surprise billing, Medicare for All could be a surprise of their own, since they confuse the issues

This ad promoting Sen. Mitch McConnell conflates the issues of surprise billing and Medicare for All.

Analysis by Al Cross
Kentucky Health News

A conservative group has started television and radio commercials in Kentucky and other states thanking Senate Majority Leader Mitch McConnell and others in Congress for blocking legislation that would offer consumers some protection from surprise medical bills.

While that may not sound politically advantageous to the senator's re-election campaign, the ads conflate and confuse the surprise-billing issue with the much more prominent "Medicare for All" proposal, which is favored by the most liberal Democratic presidential candidates.

The TV ad says, "Some politicians are too scared to stand up to the special interests. But not Mitch McConnell. He fights for us, like on health care and surprise medical billing. Special-interest groups have tried to use the issue to implement a government-run Medicare for All scheme, putting our hospitals and care at risk. But Mitch said NO, because he knows how devastating that would be, for us and our children. So, thank you, Mitch McConnell, for putting patients first."

The Taxpayers Protection Alliance said that in December, McConnell "and legislative allies halted attempts by members of Congress such as Sen. Lamar Alexander (R-Tenn.) and Rep. Frank Pallone (D-N.J.) to have the government impose rate-setting in cases of surprise medical billing. Surprise bills occur when patients receive unwanted and unexpected healthcare bills in the mail days or even weeks after a hospital room visit."

Yes, but the surprise-billing issue has little if anything to do with "Medicare for All," one possible exception being that proponents of the latter cite the former as one problem it would solve. TPA says the two are related this way: "Surprise medical billing is only an issue because of rampant government intervention in the medical sector due to Obamacare and Medicare’s disastrous rural price controls. This is a problem that was specifically caused by misguided government intervention. In fact, three-quarters of Obamacare networks are now considered ‘narrow’ with few choices for patients, leading to many patients receiving ‘surprise bills.’"

TPA says its campaign in Kentucky, Kansas, Texas, and New York is intended to thank McConnell "and like-minded lawmakers for standing up for patients and opposing the federal government dictating health-care prices across the country."

The proposed legislation "doesn’t set actually set rates for out-of-network procedures, but instead sets benchmarks for how much out-of-network providers can collect if a surprise bill shows up," health journalist Trudy Lieberman notes. "But in a TV ad that lasts a few seconds, how would the viewer be able to make that distinction?"

This isn't the first time that a group with undisclosed sources of money has tried to mischaracterize the issue of surprise billing. Last summer, a "dark money" group called Doctor Patient Unity ran an ad campaign in Kentucky and other states saying that Alexander's bill would hurt patients and help insurance companies. The campaign targeted McConnell, Sen. Rand Paul and six other senators.