How this law reshaped medical billing, and what challenges remain for patients

 One year ago, the United States marked a turning point for health care cost transparency with a new law aimed at helping Americans avoid unnecessary, unexpected medical debt. As of Jan. 1, 2022, health care providers and insurers are no longer allowed to sideswipe privately insured people with bills for out-of-network services.

Experts say the bipartisan No Surprises Act was a rare victory for patients and the public against exploitative health care costs, but that challenges remain.

In 2019, Republicans and Democrats in Congress worked together to craft legislation that ultimately became the No Surprises Act. The law protects people in group and individual health insurance plans from receiving unexpected bills from out-of-network providers who cared for them at in-network facilities – a system already in place for Medicaid and Medicare patients. An independent dispute resolution process now allows insurance companies and providers to figure out coverage and costs after a patient has been treated.

Prior to former President Donald Trump signing the bill into law in December 2020, a person could be treated for and recover from a catastrophic accident only to see their finances destroyed by the resulting medical debt. More than half of Americans in 2018 said they had encountered some version of this outcome when trying to get care, and research shows that fear of medical debt has historically discouraged people from getting the care they need.

Now, many types of surprise medical bills are illegal, conceivably easing a major concern burdening millions of Americans.

Even before the law went into effect, fewer Americans were starting to report that they were struggling to pay their medical bills, according to federal data released this week.

In 2021, nearly 11 percent of people in the U.S. said they lived in families that experienced problems paying medical bills over the last 12 months, according to analysis from the Centers for Disease Control and Prevention of the National Health Interview Survey. That’s down from 14 percent in 2019 and amounts to 10.5 million fewer people saying they wrestled with medical debt.

But the authors noted that medical debt remains “a major contributor to overall debt in the United States.”

Here’s what health policy experts and advocates told the PBS NewsHour the law has and hasn’t done so far.

‘It’s changing the business model’

Compared to other nations, rising U.S. health costs have left patients with diminished outcomes and mounting debt.

According to a 2018 analysis from a team of health economists at Yale University, the health care system held all the cards and patients had to essentially gamble when getting care at U.S. hospitals. A person with a broken arm and private health insurance may have entered an in-network hospital, but received treatment for their fracture from an out-of-network doctor. The patient was set up for “an impossible task” and would have had virtually no way of vetting their care team or preventing the lapse until they received their bill, said Loren Adler, who helps lead the USC-Brookings Schaeffer Initiative for Health Policy.

Nearly a decade ago, a woman shared her “typical American health care story” with Caitlin Donovan, spokesperson with the National Patient Advocacy Foundation. The woman had given birth to twins, who then received care in the NICU ward of her in-network hospital, Donovan told the PBS NewsHour. While pregnant, the woman had checked that her insurance covered delivery and labor in her hospital (it did), but she had no idea that administrators had contracted out staffing for the NICU ward. She didn’t find out until her insurance sent her a $30,000 bill for her children’s care.

Those kinds of stories embodied the concern found among two-thirds of Americans that they, too, might suddenly find themselves underneath crushing medical debt, according to a 2020 survey from the Kaiser Family Foundation.

Prior to more rigid regulation, multiple private equity firms spun off lucrative practices that took advantage of out-of-network services from tens of thousands of physicians to staff their hospitals, including emergency departments. As the 2018 Yale report noted, “in the aggregate, ED [emergency department] care is profitable for hospitals,” though profit margins varied depending on a range of factors. The end result of those private equity practices was patients with medical emergencies getting caught up in a system that Adler said was “ridiculously unfair.”

By making those practices illegal, the new law has been “a success at removing a large majority of unforeseen, out-of-network bills from patients,” Adler said. Now, consumers “don’t think twice about it because this is what you would have thought the natural order of events should have been.”

“It’s changing the business model,” he said.

Hospitals and health insurers dispute bills

Through the act, lawmakers established a new independent dispute resolution process where providers and insurers can appeal decisions about what is covered and what needs to be paid out of pocket.

But so far, providers have made “a lot more [appeal] submissions than expected,” Donovan said. In fact, they have disputed so many bills that they are clogging up the system, prompting the Biden administration to raise the administrative fee for the process.

In late December, the Treasury Department and the Department of Health and Human Services raised the dispute resolution fee from $50 to $350 per party for each disputed claim as an industry deterrent. The changes went into effect for issues initiated on Jan. 1, 2023 or later and were due in part to “increasing expenditures in carrying out” the federal dispute resolution process.

Ground ambulance service costs remain high

One area that still catches millions of Americans off guard each year – despite the law – is the soaring cost of ambulatory care. Advanced life support care delivered in a ground ambulance rose 56 percent in three years for privately insured patients, the nonprofit health care organization FAIR Health noted in February. According to their analysis, the average cost for some emergency ground ambulance care increased to nearly $1,300.

The No Surprises Act did not fix these problems in part because they raised “additional thorny political issues,” Adler said. In the U.S., ground ambulance services are highly decentralized. The local fire department is responsible for delivering this care in some communities; in others, local officials contract services out to a private company.

The patchwork nature of how services are provided often leaves patients stressed over bills while recovering from a health emergency. That compels people to make choices that might put themselves – and others – at risk, Donovan said.

“You’ve got patients calling Ubers to get to the hospital,” she said. “That’s not fair for anybody involved.”

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