No Surprise Act will save consumers and the Federal Government
On January 1, 2022 the No Surprise Act will go into effect, protecting patents across the United States from surprise medical bills. For background, the Act bans surprise out-of-networking billing that often occurs when a patient is in an emergency situation and does not have a choice as to who they see or where the ambulance takes them. If you’re one of the unlucky recipients of these surprise bills, they are truly shocking and happened enough that the government needed to step in.
The market failure that allowed this to occur is rooted in patients’ lack of autonomy in selecting where they receive treatment and what they have control over. Emergency situations will take the patient to the closest care, and when you schedule a surgery you can’t select your surgeon, or your anesthesiologist. These are often billed as independent contractors meaning they go through a separate billing process unattached to the hospital that might be in-network.
The rule makes astronomically bills illegal, saying that they would need to charge the same amount out-of-network as they would for someone with insurance in-network. If the provider is dissatisfied with the lower cost, they can initiate an arbitration process, where the arbiter will weigh the data and make a decision.
A recent Brookings study investigated the provider charges relative to Medicare rates from 2012-2018. The most common proponents of “surprise billing” are anesthesiology, emergency medicine, diagnostic radiology, and pathology. Based on Center for Medicare and Medicaid Services data of charges from providers, the data follows the exact trend of the most expensive costs to Medicare billing being anesthesiology, emergency medicine, diagnostic radiology, and pathology. What this means is that “surprise medical bills” harm the Federal Government too because Medicare, acting as the insurance provider, negotiates a payment on behalf of the patient. The cost sharing model is based on the type of plan an individual has, but ultimately Medicare negotiates the rates and pays a portion of the fee, with the individual needing to provide a fraction as well. The more an anesthesiologist charges, the more Medicare and the individual will need to pay. Surprise bills created a huge issue because although there is a convoluted adjudication process currently, often the prices even when reduced, were still higher than the in-network equivalent.
What this all means is that the new Act will save individuals and the CMMS money while increasing transparency in healthcare.
Sources:
Adler, L., Fiedler, M., Ginsburg, P., Hall, M., Ippolito, B., & Trish, E. (2021, February 09). Understanding the no surprises act. Retrieved May 03, 2021, from https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2021/02/04/understanding-the-no-surprises-act/