A year ago, the United States marked a watershed moment for healthcare cost transparency with a new law designed to help Americans avoid unnecessary, unexpected medical debt. From 1 January 2022, healthcare providers and insurers may no longer push privately insured people aside with bills for services outside the network.
Experts say the bipartisan No Surprises Act was a rare victory for patients and the public against exploitative healthcare costs, but challenges remain.
In 2019, Republicans and Democrats in Congress teamed up to draft legislation that eventually became the No Surprises Act. The the law protects people in group and individual health plans against receiving unexpected bills from out-of-network providers who took care of them at in-network facilities — a system that already exists for Medicaid and Medicare patients. Thanks to an independent dispute resolution process, insurance companies and providers can now determine coverage and costs after a patient has been treated.
Before former President Donald Trump signed the bill into law in December 2020, a person could be treated for and recover from a catastrophic accident, only to have their finances destroyed by the resulting medical debt. More than half of Americans in 2018 said they encountered a version of this outcome when trying to get care, and research shows that fear of medical debt has historically discouraged people from getting the care they need.
Now many types of surprise medical bills are illegal, potentially alleviating a major concern that burdens millions of Americans.
Even before the law went into effect, fewer Americans began to report struggling to pay their medical bills, according to federal data released this week.
By 2021, nearly 11 percent of people in the U.S. said they lived in families who had problems paying medical bills in the past 12 months, according to analysis from the Centers for Disease Control and Prevention of the National Health Interview Survey. That’s down from 14 percent in 2019 and equates to 10.5 million fewer people who said they struggled with medical debt.
But the authors noted that medical debt “continues to be a significant contributor to total debt in the United States.”
Here’s what health policy experts and advocates told PBS NewsHour that the law has and hasn’t done so far.
‘It changes the business model’
Compared to other nations, rising US healthcare costs have left patients with reduced results and increasing debts.
According to a 2018 analysis by a team of health economists from Yale university, the health care system held all the cards and patients essentially had to gamble when receiving care in US hospitals. A person with a broken arm and private health insurance may have entered an in-network hospital but was treated for their fracture by an out-of-network doctor. The patient was set up for “an impossible task” and would have had virtually no way to vet their healthcare team or prevent the lapse until they received their bill, said Loren Adler, who helps direct the USC-Brookings Schaeffer Initiative for Health Policy.
Nearly a decade ago, a woman shared her “quintessential American healthcare story” with Caitlin Donovan, spokesperson for the National Patient Advocacy Foundation. The woman gave birth to twins, who were then cared for in the NICU ward of her network hospital, Donovan told PBS NewsHour. While pregnant, the woman had checked that her insurance covered childbirth and labor at her hospital (it did), but she had no idea that the administrators had outsourced staffing for the NICU. She only found out when her insurance billed her for $30,000 for the care of her children.
Stories like that epitomized the concern of two-thirds of Americans that they, too, would suddenly find themselves under a crushing medical debt, according to a 2020 research from the Kaiser Family Foundation.
Prior to more rigid regulation, several private equity firms spun off lucrative practices who took advantage of services outside the network of tens of thousands of doctors to staff their hospitals, including emergency departments. As the 2018 Yale report noted, “in all, ED [emergency department] care is profitable for hospitals,” although profit margins varied depending on a number of factors. The end result of those private equity practices was that patients with medical emergencies got caught up in a system that Adler said was “ridiculously unfair.”
By making these practices illegal, the new law “has been successful in removing a large majority of out-of-network contingency bills from patients,” Adler said. Now, consumers “don’t think twice about it because this is what you would have thought the natural order of events should be.”
“It changes the business model,” he said.
Hospitals and health insurance companies are contesting bills
By law, legislators established a new one independent dispute resolution process where providers and insurers can appeal decisions about what is covered and what must be paid out of pocket.
But so far, providers “have made a lot more [appeal] entries than expected,” said Donovan. In fact, they have contested so many bills that they clog up the system, prompting the Biden administration to raise the administrative fee for the process.
In late December, the Treasury Department and the Department of Health and Human Services increased the dispute resolution fee from $50 to $350 per party for each disputed claim as a deterrent to the industry. The changes took effect for issues initiated on January 1, 2023 or later, and were due in part to “increasing expenditures on running” the federal dispute resolution process.
The cost of ground ambulance services remains high
One area that continues to baffle millions of Americans each year — despite the law — is the skyrocketing cost of outpatient care. Advanced life support care delivered in a ground ambulance rose 56 percent in three years for privately insured patients, the nonprofit health care organization FAIR health noticed in February. According to their analysis, the average cost for some ground ambulance services has risen to nearly $1,300.
The No Surprises Act failed to solve these problems in part because they raised “extra thorny political issues,” Adler said. In the US, ground ambulance services are highly decentralized. In some communities, the local fire department is responsible for providing this care; in others, local officials outsource services to a private company.
The patchwork of how services are provided often leaves patients stressed about bills as they recover from a health emergency. That forces people to make choices that could put themselves — and others — at risk, Donovan said.
“You have patients calling Ubers to go to the hospital,” she said. “That’s not fair to everyone involved.”