An Illinois state law extending consumer protections created by the federal No Surprises Act will become fully effective on January 1, 2023.
The federal law protects consumers from surprise bills—also called balance billing—for emergency services delivered by out-of-network physicians or facilities, and for nonemergency services provided by out-of-network physicians in network facilities when patients do not consent. Costs for the insured are limited to cost-sharing amounts that apply to in-network services, and providers are banned from billing for any higher amounts. The federal law complements and defers to state laws that afford such protections.
Surprise medical bills often arise when the patient needs immediate care and can’t review the coverage status of every medical professional involved in their care but seeks an in-network medical facility with the expectation the medical providers at the facility will also be in-network.
Illinois’ Dispute Resolution Process
The Illinois law requires insurers to hold enrollees harmless for amounts beyond the in-network level of cost sharing and prohibits out-of-network providers from billing enrollees for any amount beyond the in-network level of cost sharing.
It also provides a dispute resolution process whereby the insurer can pay the billed amount or attempt to negotiate reimbursement with the out-of-network provider. If attempts to negotiate the amount are not resolved, the insurer or the physician may initiate binding arbitration by filing a request with the Illinois Department of Insurance.
The law does not cover ground ambulance services, services received at out-of-network facilities, enrollees who consent to non-emergency out-of-network services, or enrollees in employer self-funded health plans.
‘Prohibit False Advertising’
Most analysts agree reform was necessary to avoid excessive billing, but there is considerable disagreement on whether binding arbitration is the best approach to the problem.
A more nuanced approach to surprise billing is required, says John C. Goodman, president, and CEO of the Goodman Institute for Public Policy Research and co-publisher of Health Care News.
“This is a command-and-control approach which could lead to lack of access to care,” said Goodman. “The better approach is to prohibit false advertising. Insurers should not be allowed to advertise that a hospital is in their network if some medical services delivered there are by non-network doctors charging non-network fees. Similarly, hospitals should not be able to advertise they are in an insurer’s network if some services they provide are not in the network.”
Regulation vs. Free Market
Mandatory arbitration of billing disputes and rate benchmarking are problematic, says health economist Devon Herrick, Ph.D., a contributor to the Goodman Institute Health Blog and policy advisor to The Heartland Institute, co-publisher of Health Care News.
“Many states and the federal government have passed laws trying to reduce surprise medical bills,” said Herrick. “Some state laws are better than others, but none are perfect. The problem is that none really follow free market principles. States that use an arbitration board are not free market, as no other industry allows a vendor to supply a service and have a third party negotiate fee disputes after-the-fact.”
Surprise billing often occurs when patients go to hospitals in their insurer’s network but are treated by specialists who aren’t in the network, says Herrick.
“Benchmarking out-of-network fees to in-network rates is also problematic,” said Herrick. “Hospitals are the owner of the emergency room but make no effort to align those allowed to staff emergency rooms with the networks the hospital affiliates with.”
‘Massive Overregulation’
Past governmental intrusion into the health care market, and particularly the Affordable Care Act (ACA), may have contributed to the issues surprise billing laws seek to correct, says Matt Dean, a senior fellow for health care policy outreach at The Heartland Institute.
“First, the ACA made middle-income folks eligible for Medicaid who should have private health insurance,” said Dean. “Medicaid reimburses hospitals and physicians below cost, and many rural and big city hospitals see their patient mix changing so that the majority of patients are on Medicaid, Medicare, or both.”
As millions of people dropped their private insurance for Medicaid coverage, hospitals were forced to form billing alliances and narrow networks to stay in business, says Dean.
“It also drove insurance agents and plans out of business through massive overregulation of the private healthcare system, and its complicated publicly funded subsidies,” said Dean.
“Policyholders now pay more and get less, so that those on public programs can pay less and get more.”
‘More Choices’ Needed
Obamacare did not live up to its advocates’ claims, says Dean.
“The promise was, ‘If you like your plan, you can keep your plan, and if you like your doctor, you can keep your doctor,’ but what if your plan has been declared illegal, and your doctor is now out of network?” said Dean. “President Obama’s promise turned out to be a lie for most people on private health insurance.”
The ACA put doctors and hospitals in a vise, says Dean.
“While commonsense consumer protections like the No Surprises Act and complementary bills like Illinois’ make sense, it is simply treating a symptom,” said Dean. “Only more choices and a return to a freer market system will help alleviate the root cause of this problem.”
Kevin Stone (kevin.s.stone@gmail.com) writes from Arlington, Texas