Are Out-of-Network Billing Problems About to be a Thing of the Past?


MployerAdvisor had planned to launch a new monthly series covering out-of-network billing issues, specifically highlighting some case studies as well as any proposed legislation on the matter – whether state or federal –  and how that legislation may affect both employers and employees alike.


Given the scope (over $40 billion annually), the breadth (affecting over 150 million Americans), and the urgency of the problem (in the next 2 years nearly 40% of employees who get insurance through work will receive an out-of-network bill over $800), our goal was to collaborate with stakeholders and strategic partners including you to address out-of-network billing problems directly through a coordinated campaign designed to both educate and affect actionable change in policy.


As of this morning, however, it looks like our planned call for attention and action on these issues thankfully may be moot since committees from both houses of Congress have reached bipartisan agreement on a solution that legislators hope to include in the last-minute year-end spending packages.


While there are several crucial steps that remain before the proposed solution could be enacted into law, reaching bipartisan agreement on the framework for such legislation had been the greatest remaining obstacle to be cleared. In short, prospects look pretty good that the end to the out-of-network billing problems that have plagued our healthcare system could finally be within reach.

As a result - if all goes well - this post may in fact be both the first and last installment of our planned out-of-network billing series, in which case we’ll shift gears next month to provide more information about how the policy is being implemented as well as any room for improvement we see in the policy itself that may become clearer once its put into practice. Alternatively, if the current agreement fails to become enacted this legislative session for whatever reason despite all the momentum and support that has gathered behind it, then we will pick the series back up in the new year to continue the mission until the job is done.



What Is Out-of-Network Billing or Balance Billing and Why Is It an Issue?


Out of Network Billing (aka Balance Billing) occurs when a patient receives care from a physician or healthcare provider that does not have a contract in place with their insurance company. In such cases, patients are typically billed more than twice what they would have been charged for the same services if there had been a contract between provider and insurer in place.

When out-of-network charges are incurred, insurance companies generally refuse to pay for the upcharge and so physicians and/or healthcare providers bill patients directly for the balance due. As a result, insurance companies save on the bills they would have otherwise had to pay (if the services had been performed in-network) and the physicians/providers maximize their revenue by charging two times more than they would have charged the insurance companies. Worst of all, patients are often left with no effective recourse whatsoever.


Even from this brief description, it is clear that both healthcare providers and insurance companies have strong financial incentives to make sure the system that enables them to exploit out-of-network billing practices and profit remains in place. This dynamic is why both providers and insurers hire lobbyists to muddy the waters with unworkable solutions while endlessly calling for further debate with the unstated goal of never reaching any resolution.



How Did We Get Here? –  Recent History of Out-of-Network Billing Reform at the Federal Level


Despite the efforts of lobbyists and promoters of the status quo within the industry, 2020 started out as a year with great promise that a solution to the out-of-network medical billing issues could be at hand.


Just a few weeks from now, it will have been two years since the White House hosted a roundtable discussion which focused the spotlight on patients who had been saddled with absurdly large, surprise medical bills as a result of inadvertently receiving treatment from doctors who were not in their insurance network.


Patients often have little or no control over the specific doctors that may attend to them during the course of a hospital stay or trip to the emergency room. In fact, they may not even have control over which hospital or emergency room they visit, especially in cases when ambulance or airlift transport is required.


In response to some of the stories recounted by the roundtable’s participants, President Trump publicly called upon all of Congress – both Republicans and Democrats - to work together and fix what had clearly become an issue in need of reform on a system-wide level. In what has become somewhat of a rarity these days, this call to action inspired bipartisan momentum in both houses of Congress that made real progress seem possible, with Energy and Commerce Committee Chairman Rep. Frank Pallone Jr. of New Jersey leading the way for the Democrats in the House while Sen. Lamar Alexander of Tennessee championing the cause as Chair of the Senate HELP Committee.


Throughout the course of last year much progress was made on the issue, but with few concrete results to show for the bipartisan effort - that is, until this morning when it was announced that an agreement had in fact been reached with only a few days left in the legislative session.


To be clear, meaningful action now – this year – is especially important, because there are no guarantees that the opportunity to enact these much-needed reforms will continue into the next legislative session. With control of the Senate still up in the air until the new year and Sen. Lamar Alexander retiring at the end of this term with no obvious successor committed to getting this legislation across the finish line in the upper chamber, the future of out-of-network billing reform remains very uncertain if it does not pass in the days to come before Congress breaks for the holidays. Time is very much of the essence.


What Is Covered in The Proposed Agreement?


  1. Prevents patients from being on the hook for surprise medical bills that result from out-of-network emergency care or certain other medical services where patients don’t have the opportunity to choose an in-network health care provider
  2. Requires out-of-network providers to give patients 72 hours notice, including notification of that provider’s out-of-network status as well as an estimate of charges before allowing for any balance billing to take place
  3. Establishes a structure that enables providers and insurers to negotiate some payment issues without having to involve the patients in the middle
  4. Allows for any payments not specifically contracted between providers and insurers to be settled through an independent dispute resolution (IDR) process, which allows for claims bundling to limit the administrative burden and has no minimum payment threshold before the IDR process can be initiated
  5. Sets the parameters to be considered when the IDR process is initiated to include the median in-network rate for the area, the training and experience of the provider and the complexity of the service provided, the market share of each party as well as the parties’ previous contracting history, and any other relevant information submitted by the parties
  6. Prevents the party that initialed the IDR process from taking the same opposing party to arbitration for the same service or item for 90s following the conclusion of the IDR process
  7. Provides appeal rights and further consumer protection for patients – especially those with complex care needs – when insurance companies change networks
  8. Gives patients access to more accurate information about the estimated costs for their medical services so that they can make an informed choice about what’s best for them


What Happens Next?


With very little time left before the current legislative session expires and with several issues that could potentially still arise as the end-of-year spending packages are being finalized, even a solution with seemingly broad bipartisan support is far from guaranteed to ultimately pass. Further, with the unpredictability of lame-duck priorities in the executive branch, it is not a foregone conclusion that any legislation that does successfully pass through congress will then ultimately be signed into law.


Caveats aside, however, the prospect for out-of-network medical billing reform remains closer than ever, and we at MployerAdvisor will be back in January 2021 (if not before) in order to assess the situation and evaluate the implications, whatever the situation may be.