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July 7, 2021

New Federal Rule Offers Patients Protection Against Surprise Medical Bills

Author Affiliations
  • 1Consulting Editor, JAMA Health Forum and JAMA
JAMA Health Forum. 2021;2(7):e212347. doi:10.1001/jamahealthforum.2021.2347

A new rule issued last week by the Biden administration bans clinicians and health care facilities from surprise billing and balance billing for emergency medical care provided to patients outside the latter’s insurance network.

The 411-page interim final rule, which will undergo 60 days of public comment, will take effect on January 1, 2022. It implements the first of several measures in legislation addressing surprise billing—the No Surprises Act—that Congress passed in December 2020 as part of the year-end pandemic relief package.

Surprise billing occurs when patients receive services from an out-of-network clinician or health care entity and can arise during an emergency visit or in a nonemergency situation when patients go to an in-network hospital or physician and receive health care services—often unknowingly—from an out-of-network source, such as an anesthesiologist or an out-of-network laboratory. In many cases, the out-of-network provider can charge the patient for the difference between the billed charge and the amount paid by their plan or insurance, unless such balance billing is prohibited by state law.

Balance billing is already prohibited by programs such as Medicare, Medicaid, the Indian Health Service, Veterans Affairs health care, and TRICARE.

Despite bipartisan support in Congress for finding a solution to surprise billing, as well as considerable awareness and support from the public, federal efforts to address surprise billing stalled for years, noted Carrie Colla, PhD, of the Dartmouth Institute for Health Policy and Clinical Practice in Lebanon, New Hampshire, in a JAMA Viewpoint in February. “Surprise billing is a result of, and illustrates, many potentially troubling trends in medicine: rapid vertical and horizontal consolidation on the part of health care clinicians and systems, accompanying varied and high prices in commercial insurance markets, and private investment in physician groups (physician staffing companies in particular), emergency transportation companies, and hospitals,” she wrote.

According to a Kaiser Family Foundation analysis in 2020, 19% of insured adults had received a surprise bill in the previous 2 years. Such bills occur in a variety of circumstances, such as use of an air ambulance to transport critically ill patients. A 2019 report from the US Government Accountability Office found that 69% of air ambulance transports of critically ill patients in 2017 involved out-of-network billing; the median price charged in 2017 was about $36 400 for helicopter transport and $40 600 for plane transport.

Although costs for ground ambulance transport are less stratospheric than those incurred by air ambulance services, 51% of emergency and 39% of nonemergency ground ambulance rides included an out-of-network charge for ambulance-related services “that may put privately insured patients at risk of getting a surprise bill,” according to an analysis last month by the Kaiser Family Foundation.

Hospitalizations for childbirth are likely one of the most frequent sources of surprise bills in the US, given that childbirth is the most common reason for hospitalization, suggest findings published last month in JAMA Health Forum. The authors found that nearly 1 in 5 privately insured families with in-network deliveries in 2019 received surprise bills for maternal care, newborn care, or both—costs averaging $744 and totaling more than $2000 for one-third of these families.

Even for elective surgeries, a service for which patients have the ability to choose an in-network provider in advance, a 2020 study in JAMA found that about 20% of surgeries with in-network primary surgeons at in-network facilities resulted in patients receiving an out-of-network bill averaging thousands of dollars, most often for an anesthesiologist or an assistant at surgery.

The final interim rule has several provisions, in addition to banning surprise billing for emergency services regardless of where they are provided. Emergency care will be treated as in-network services, without the need for prior authorization.

Another provision bans patients from being subject to higher cost-sharing—out-of-pocket expenses such as coinsurance or a deductible—for either emergency or nonemergency services by an out-of-network clinician or entity, as well as for air ambulance services from out-of-network providers. That means that any cost-sharing will be based on the in-network provider rates.

Also banned are higher out-of-network charges for ancillary care, such as that provided by an anesthesiologist or assistant surgeon at an in-network facility, and other out-of-network charges without advance notice. In addition, the rule requires “certain health care providers and facilities” to provide a 1-page notice to patients (and also make the information publicly available) explaining the requirements and prohibitions on balance billing, any applicable state balance billing prohibitions or limitations, and information on how to contact appropriate state and federal agencies if the patient believes the requirements described in the notice were violated.

“No patient should forgo care for fear of surprise billing,” Xavier Becerra, JD, secretary of the Department of Health and Human Services, said in a statement announcing the rule. “Health insurance should offer patients peace of mind that they won't be saddled with unexpected costs.”

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Article Information

Published: July 7, 2021. doi:10.1001/jamahealthforum.2021.2347

Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2021 Stephenson J. JAMA Health Forum.

Corresponding Author: Joan Stephenson, PhD, Consulting Editor, JAMA Health Forum (Joan.Stephenson@jamanetwork.org).

Conflict of Interest Disclosures: None reported.

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