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New State Laws Protect Patients from Surprise Hospital Bills

Many of our health care plans require different levels of payment for doctors and hospitals that are “in-network” versus “out-of-network”. Directing participant to in-network providers gives insurance plans the leverage to bargain better prices and are designed to help contain costs.

However, patients have increasingly been surprised to learn that they might be treated by an out-of-network doctor while admitted to an in-network hospital. Insurance plans often cap their payments for the out-of-network doctor and pass on the difference to the patient in a process called “balance billing”. Unaware patients are then hit with unexpectedly large bills when they come home from the hospital..

This issue is illustrated with the story of two women who delivered their first children at the same hospital a week apart:

When it came to paying the bill, our hospital experiences diverged in one key way. Layla received an unexpected bill for $1,600 for anesthesiology services and warned Erin to expect the same. Yet Erin’s bill never came. Layla happened to deliver on a day when an out-of-network anesthesiologist was on call, while Erin was seen by an in-network anesthesiologist. Purely by chance, one of us received an expensive physician bill and the other did not have to pay a dime.

California is now set to join a handful of other states - Florida, New York, Texas and Louisiana - in prohibiting this practice. The new legislation would limit the ability of out-of-network doctors to charge over and above the insurance company’s rate for in-network doctors. The bill has now passed the California Assembly and is expected to be signed by the Governor.

Unfortunately, large employer plans are often exempt from state insurance regulations. Federal legislation, such as the End Surprise Billing Act (HR 3770) introduced by Representative Lloyd Doggett (D-Texas), is required to protect many of our employees from these surprise medical bills. That bill would ban balance billing in all emergency situations and in non-emergency situations when patients weren't informed of excess costs or given sufficient notice.

Links:

A Tale Of Two Deliveries, Or An Out-Of-Network Problem (Health Affairs, November 3, 2015)

California Aims To Limit Surprise Medical Bills (Kaiser Health News, September 16, 2016)

Surprise Medical Bills: Rep. Doggett’s Bill Would Protect Consumers (FamilesUSA, October 21, 2015)