Providers and payers in the spotlight as HHS delivers report on surprise billing

Ingrid Stiver Senior Manager, Health Research Institute, PwC US September 17, 2020

A new report from HHS throws the spotlight once again on so-called surprise billing, a practice oft-highlighted by media reports of patients receiving unexpected bills for out-of-network care they believed had been delivered by in-network providers. The report concludes by urging Congress to pass surprise billing legislation in the next COVID-19 relief bill, though resolution of this issue, while enjoying bipartisan support, so far has proven difficult. (The report was issued in response to President Donald Trump’s executive order on price and quality transparency issued in June 2019.)

The report reiterates the four surprise billing principles the Trump administration published in May 2019: Patients receiving emergency care should not have to cover costs billed by a provider and not covered by their insurer; patients receiving scheduled care should be informed about in- and out-of-network costs they may face; patients should not receive bills from out-of-network providers they did not choose; and federal health expenditures should not increase. 

Research has shown repeatedly that significant percentages of Americans, including those with employer-sponsored insurance, have received a “surprise” bill. For example, a February report by the Peterson Center on Healthcare and the Kaiser Family Foundation found that 18% of emergency visits and 16% of in-network hospital stays in 2017 for individuals with large group, employer-sponsored insurance resulted in at least one out-of-network charge.

Separately, a study by researchers from Harvard University and the University of Michigan of commercial claims of seven types of elective surgeries from a large US health insurer between 2012 and 2017 found that 20% of patients who chose to have surgery with in-network primary surgeons and facilities received an out-of-network bill anyway. Thirty-seven percent of those out-of-network bills were from anesthesiologists. 

At the federal level, the Affordable Care Act (ACA) requires most health insurers (including most self-insured employer plans) to pay for emergency services at a hospital regardless of whether the provider is in-network for those services.

HRI impact analysis

The Trump administration has made some progress on surprise billing related to the pandemic. Providers receiving money from the CARES Act Provider Relief Fund are prohibited from balance billing patients. Under the funding terms and conditions, out-of-network providers treating COVID-19 patients cannot bill patients for out-of-pocket expenses above what the patients would have otherwise been required to pay if the care was provided in-network. This prohibition on balance billing applies only to providers receiving funds from the CARES Act Provider Relief Fund and only to presumptive or actual cases of COVID-19. 

Before the pandemic, Congress was considering legislation to end surprise medical billing. The HHS report urges Congress to include a permanent end to surprise billing in the next COVID-19 bill. The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act passed by the House in May includes a provision that would solidify the current terms and conditions imposed by HHS on provider relief funds—that any providers receiving those funds cannot balance bill patients for actual or presumptive COVID-19 treatment or testing—but would not comprehensively reform surprise billing. The Delivering Immediate Relief to America’s Families, Schools and Small Businesses Act introduced by Senate Republicans last week does not include any surprise billing provisions.

If Congress does not pass surprise billing legislation in 2020, the issue likely will remain a top concern for providers and payers heading into 2021. The Trump campaign lists ending surprise billing as one of the president’s second-term healthcare agenda items. Similarly, the 2020 Democratic Party platform lists outlawing surprise billing as a means to reducing healthcare costs and improving quality. The impact on consumers remains widespread.

Providers may stand to lose even more than payers from surprise billing legislation in the midst of the pandemic. Under normal circumstances, surprise billing legislation is a direct threat to higher rates typically paid by insurers and patients to out-of-network providers. In the midst of the pandemic, this threat could be heightened, with many providers facing a liquidity crisis as well as the loss of revenue as care was deferred early in the pandemic and has yet to fully return.

The failure of Congress to resolve the issue at the federal level has paved a path for state action. According to the HHS report, as of April, 29 states had taken action to address surprise billing, with 15 states passing legislation considered to be “comprehensive” in that it extends to emergency and nonemergency care, applies to all types of insurance, does not hold patients liable for extra provider charges beyond what their insurance pays, and includes a standard or process for determining how much health insurers should pay providers.

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Ingrid Stiver

Senior Manager, Health Research Institute, PwC US

Erin McCallister

Senior Manager, Health Research Institute, PwC US

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