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Frederick J. Pomerantz, Esq.
(516) 297-3101

The end of an era of nasty surprises for consumers of emergency medical care, and of surprise medical bills, is at hand. The terms “surprise medical bill” or “balance bill” describe charges arising when an insured patient receives care from an out-of-network provider. [1]

When I last surveyed the state of play in all fifty states in my article entitled Review of the States’ Surprise Billing Laws and Efforts to Find an End to Surprise Billing in New York and on the Federal Level, published in The FORC Summer Journal, August 2020[2], I noted that in 2017, researchers had found more than half the states did not have any laws in place protecting consumers from balance billing and only six states had comprehensive balance billing statutes. 18 months later, in February 2020, at the cusp of our national COVID-19 nightmare, the experts at the Georgetown University Center for Health Insurance Reform (CHIR) found that just nine states had comprehensive consumer protection laws against surprise billing: NY, CA, OR, FL, IL, NJ, VT, DE and CT.

Moreover, four states—Arizona, Maine, Minnesota and Oregon—had adopted their first-ever balance billing laws during the 2018 session.[3]

Until recently, no Federal law currently limited “balance bills” or “surprise bills” but just over half the states had enacted laws to protect enrollees from them, to some degree.[4]

Now, thanks to a new Federal bill, officially medical providers will be prohibited from charging out-of-network rates for emergency and ancillary services, such as anesthesiology, delivered during scheduled procedures at in-network facilities.

In the final days of the 116th Congress, legislation was passed containing COVID-19 relief and fiscal year 2021 government funding. The bill, officially titled as a bill “To amend title XXVII of the Public Health Service Act to protect health care consumers from surprise billing practices, and for other purposes” (hereafter referred to as the “No Surprises Act” or the Act”), is scheduled to take effect in 2022. The Act provides new guidelines for private insurers. The No Surprises Act was the result of months-long negotiations between House and Senate leadership. While 32 states already have legislation that deals with surprise billing practices, the new federal provisions apply to markets not controlled by the states. How states will be impacted continues to be evaluated.

Under the Act, health plans will be required to hold patients harmless from surprise medical bills, and patients will be required to pay only the “in network cost-sharing for out-of-network emergency care or certain services performed by out-of-network providers at in-network facilities. A patient’s in-network payments for out-of-network surprise bills will go toward the patient’s in-network deductible. Examples of cost-sharing can include copayments, coinsurance and deductibles.[5]

Although more than two dozen states have passed laws to regulate surprise medical billing, they exclude self-funded insurance plans favored by large employers.

Out of Network Rates

So, what will happen to claims with out-of-network rates and how will they be paid? Providers and payers will have a 30-day negotiation period to settle. If they cannot reach a negotiated agreement, the parties can use a binding arbitration process, also known as independent dispute resolution (IDR), where one offer prevails. Processes will be administered by independent, unbiased entities with no affiliation to the providers or payers. The administrators must consider the market-based median in-network rate, along with other relevant information provided by the parties. Following the IDR, the party who initiated the process may not take the same party or parties back to resolution for the same item or service for 90 days following a decision.[6]

When it comes to out-of-network providers and facilities, both will be prohibited from sending patients surprise medical bills for more than the in-network cost-sharing amount. Certain out-of-network providers will also be prohibited from surprise billing patients unless they give the patient notice of their network status. Providers will have to provide patients an estimate of the charges they will receive 72 hours prior to receiving out-of-network care. Patients will have to provide consent to receive the care, and if an appointment is made within a 72-hour window, a patient must receive the notice the day the appointment is made and be asked for consent to receive care.

In addition, a group or individual health plan will be required to include on their plan or insurance identification card issued to the enrollee the amount of the in-network and out-of-network deductibles and the in-network and out-of-network out-of-pocket maximum limitations.[7]

About 42% of inpatient admissions had at least one claim submitted by an out-of-network doctor in 2016, up from 26% in 2010, according to a study published in the medical journal JAMA Internal Medicine. Out-of-network costs also rose over that period, from an average of $804 to $2,040.[8] 

Air Ambulance Billing

Under the Act, patients are held harmless from surprise air ambulance medical bills. Patients are only required to pay the in-network cost-sharing amount for out-of-network air ambulances (including attributing the bill to the in-network deductible).

Air ambulances are barred from sending patients balance bills for more than the in-network cost-sharing amount.

  • The Act provides for a 30-day open negotiation period for air ambulance providers and issuers to settle out-of-network claims.
  • If the parties are unable to reach a negotiated agreement, they may access a baseball-style, binding arbitration – referred to as Independent Dispute Resolution (IDR).
  • If a bill goes to IDR, the IDR entity is required to consider the market-based median in-network rate, as well as information brought by the parties related to the training, experience, and quality of the provider, location where the patient was picked up and the population density of that location, the air ambulance vehicle type and medical capabilities, extenuating factors such as patient acuity and the complexity of furnishing the item or service, demonstrations of good faith efforts (or lack of good faith efforts) to enter into a network agreement, prior contracted rates during the previous four plan years, or other information submitted by the parties. [9]
  • Finally, providers of emergency air medical services are required to submit to a group health plan or health insurance issuer offering group or individual health insurance coverage, together with an electronic claims transaction with respect to an enrollee in such plan or coverage, a description of charges for such services that are separated by—

(1) the cost of air travel; and

(2) the cost of emergency medical services and supplies.

In Conclusion

Although more than two dozen states have passed laws to regulate surprise medical billing, they exclude self-funded insurance plans favored by large employers. Those plans, which are regulated by federal law, cover more than 60% of people with private insurance. 

When the new No Surprises Act takes effect, disputes over these bills will be settled between the insurer and medical provider, and if both parties can’t agree, the case will go to arbitration. How arbitrators rule will likely affect health insurance premiums. The Congressional Budget Office predicts that the new law could reduce premiums up to 1% as some not knowing whether the in-network surgeon selected for the procedure will be using an out--of -network anesthesiologist, as one example. Clearly, the new Federal law has potential to reduce the degree of anxiety experienced by patients scheduled to undergo surgery.


[1] Out-of-network billing appears to have become common for privately insured patients even when they seek treatment at in-network hospitals. The mean amounts billed appear to be sufficiently large that they may create financial strain for a substantial proportion of patients.





[6] Id.


[8] (sections 105-106 summarized)