Congress has been working for months to pass legislation protecting patients from surprise medical bills that arise when insured patients unknowingly receive out-of-network (OON) care, usually when receiving emergency medical services or being treated by an OON physician at an in-network hospital. In these situations, the OON provider may bill the patient for the difference between billed charges and the reimbursement paid by the insurance company, a practice known as balance billing.

More than 20 states have passed some form of legislation protecting patients against surprise balance billing, and there are currently three proposals being considered by Congress. Generally, the state laws and federal bills all prohibit balance billing of patients in certain situations. They differ, however, in two major respects: what situations are covered and how payment disputes between the provider and the insurer are resolved.

State Statutes

For example, Delaware originally passed a statute that prohibited balance billing for emergency care. In 2020, it is considering a new law that expands protection to OON care inadvertently received at in-network facilities.

In 2018, New Jersey passed the Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act, which prohibits medical providers from billing an insured for “inadvertent,” “emergency” or “urgent” OON care in excess of the deductible or copay amount that would have been applicable to in-network services. The provider then bills the insurer, which may elect to pay the billed amount or negotiate with the provider. If the parties are unable to negotiate a settlement, they must submit to a binding arbitration process with arbitrators chosen by the NJ Department of Health.

Similarly, in 2016, Florida passed a law shielding patients from surprise medical bills. The Florida statute differs from the NJ Act in that the arbitration process is voluntary, not mandatory. In addition, the Florida statute requires negotiations to be based on the usual and customary rate for the area, whereas the NJ Act does not use a benchmark for determining the reimbursement rate to be paid.

The following states also have passed some form of surprise billing legislation: Arizona, California, Colorado, Connecticut, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Texas, Vermont, Washington and West Virginia.

The reach of the state statutes is limited, however, because many Americans receive their health insurance through self-funded employer plans, which are governed typically by federal law under ERISA. In addition, federal law prohibits states from regulating air ambulance service. These limitations have led to bipartisan support for federal legislation tackling surprise billing.

Federal Proposals

In December 2019, the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor and Pensions proposed a compromise of their respective committee’s bills under the Senate’s Lower Health Care Costs Act (S. 1895), which includes the following key provisions:

• Sets payment rates for OON care based on a benchmark of the median in-network rate in a given area.
• Establishes an independent dispute resolution process for insurers and providers for payments above $750.
• Provides a similar process for air ambulance bills, requiring insurers to pay air ambulance carriers the median in-network negotiated rate and allowing arbitration for payments if the median in-network rate is more than $25,000.
• The Act does not prevent a state from establishing, or continuing in effect, an alternative method under state law for determining compensation for the OON services covered by the Act.
• The Act applies to self-insured group health plans not subject to state insurance regulations.
• The Act also applies to health plans subject to state insurance regulations to the extent the state has not established a method for determining the appropriate compensation for OON services covered by the Act and to the extent the applicable state law does not cover the OON services covered by the Act.

This bill had bipartisan support in Congress, as well as support from the White House. Indeed, President Trump held a ceremony in May 2019 with victims of surprise medical billing to highlight his support for the legislation. Despite this, the bill faced opposition from industry stakeholders. For example, the American Medical Association urged Congress to improve the legislation and include a balanced approach that treats all stakeholders equally, while protecting access to care. Congressional leaders delayed action to give legislators more time to refine the bill’s provisions.

In February 2020, two House committees approved competing proposals.

The House Committee on Education and Labor approved the Ban Surprise Billing Act (H.R. 5800), which has the following key provisions:

• For amounts less than $750, it establishes a benchmark payment for OON care that is based on the median in-network payment rate in a given market.
• For amounts above $750, it allows providers and insurers to use independent dispute resolution (IDR). The IDR process, which will be established by the Departments of Health and Human Services, Labor and the Treasury, will use the median in-network payment rate as a benchmark. The parties may request that this benchmark payment be either increased or decreased. The arbitrator may take into account additional circumstances, such as the level of training, education and experience of the provider, but may not consider the provider’s billed charges for the services.
• The proposal protects patients whose insurance covers air ambulance services when provided by a participating provider by limiting the cost-sharing requirement to the in-network amount, and requires the insurer to pay the provider the median in-network payment rate.
• The proposal does not prohibit surprise billing for ground ambulance services, but does establish an advisory committee to address the issue.
• The bill provides that it “shall not be construed to supersede any provision of State law . . . except to the extent that” the state law “prevents the application of a requirement or prohibition” of the bill.
• To the extent a state has a law in place establishing a method for determining benchmark rates for OON services, the bill provides that the state’s process will be used for determining the amount.

The House Committee on Ways and Means approved the Consumer Protections Against Surprise Medical Bills Act (H.B. 5826) in mid-February 2020. This bill has the following key provisions:

• It establishes an arbitration process for insurers and providers to resolve billing disputes.
• It does not set benchmark payment rates for OON care.
• To the extent a state has a law in place establishing a method for determining OON rates, it provides that the OON rate will be determined in accordance with that state law.

The Congressional Budget Office (CBO) estimates that the Ways and Means Committee bill will save the federal government nearly $18 billion over the next decade. Specifically, it expects that in facilities where surprise bills are likely, average payment rates for OON care will move toward the in-network rate. Or, stated another way, fewer OON claims will be paid at the full rate charged by providers. This reduction will lower medical costs and lead to a reduction in premiums with private insurers. The CBO estimates this reduction will be between 0.5 percent and 1 percent. This reduction will lead to the expected government savings of $18 billion because the federal government subsidizes certain commercial health insurance plans through tax preferences and through the Affordable Care Act health insurance marketplaces.

The CBO has not yet evaluated the Education and Labor Committee bill, but the committee estimates that its bill will save almost $24 billion over the next decade.

Congress is hoping to pass surprise billing legislation by May 22, 2020 as part of a larger package of bills extending funding for community health centers and certain public health programs. The expected savings from the surprise billing provisions will be used as an offset for the appropriations needed for the public health programs. However, it is not clear whether any of the bills has the support of House Speaker Nancy Pelosi (D-Calif.) or Senate Majority Leader Mitch McConnell (R-Ky).