Medical bills are an ongoing issue in the U.S., and surprise charges will be an issue at least until 2022.

One of the many ways that Americans are financially vulnerable to the U.S. health care system is through "surprise billing," a type of balance billing where a patient receives in-network care that is provided by an out-of-network health care provider without the patient knowing. (Balance billing occurs any time a patient's insurance doesn't cover the full cost of care.)

“You go to an emergency room that’s in your health plan’s network, but you’re treated by a physician there that’s not in your network, or you schedule a surgery and your surgeon’s in network but then it turns out the anesthesiologist is out of network,” Christopher Garmon, assistant professor of health administration at University of Missouri — Kansas City, told Yahoo Finance. “Those are the situations they’re usually attributing to surprise medical billing, and then balanced billing occurs when that out-of-network physician does not accept the payment from the insurance company as payment in full.”

There are only 18 states that offer comprehensive protections against balance billing and 15 states that offer partial protections, according to research from The Commonwealth Fund/Georgetown University Center on Health Insurance Reforms.

Consequently, millions of Americans in the remaining 17 states are particularly vulnerable to receiving these types of bills.

The states with no protections include Alaska, Hawaii, Utah, North and South Dakota, and Alabama. States considered to have "comprehensive balance billing protections" include New York, New Jersey, California, Texas, and Florida — indicating that these protections cross partisan lines.

“The problems bubbled up differently in different parts of the country,” Loren Adler, associate director at the USC-Brookings Schaffer Initiative for Health Policy, told Yahoo Finance. “This issue of folks getting surprise out-of-network bills from an emergency doctor or anesthesiologist has existed as at least an occasional phenomenon for decades.”

The trend, Adler added, "does seem to have hastened in the last decade or so, presumably in tandem with the very big growth of private equity firms and staffing companies in these specialties.”

No Surprises Act should help

In December 2020, then-President Trump signed the No Surprises Act, which offers comprehensive consumer protections against surprise out-of-network bills.

Some key provisions of the bill include requiring health plans to cover surprise bills at in-network rates, banning balance billing, and prohibiting out-of-network providers from billing patients for excess charges.

But the law doesn’t go into effect until January 1, 2022, meaning that many Americans are still on the hook at least until then.

Balanced billing happens with people getting surgical procedures — a study from the Journal of the American Medical Association (JAMA) found that 20.5% of privately insured patients getting elective surgery received some kind of out-of-network charge. Most of these charges were associated with either anesthesiologists or surgical assistants.

Additionally, ground ambulances were omitted from the No Surprises Act, even though they have the highest out-of-network billing rate due to the fact that more than half of all ambulance services are out of network. According to Health Affairs, between 2013 and 2017, 71% of all ambulance rides involved "potential surprise bills." The median bill was $450 for ground transportation and $21,698 for air transportation.

"Even if you call 911 and you need an ambulance and the ambulance shows up and it’s out of network, and then you get a balanced bill afterwards, there’s nothing in the federal legislation to protect you from that," Garmon said. "In an emergency situation, you’re not going to shop around for an ambulance.”

In 2019, officials in Mecklenburg County, North Carolina, proposed garnishing wages and bank accounts to collect on unpaid ambulance bills more than 120 days overdue, with the local emergency agency stating that unpaid bills were costing its system millions of dollars. (The proposal was later put on hold following public backlash.)

“Ambulance is almost even crazier because you literally have no way to plausibly choose your call,” Adler said. “Generally that’s only one who has a monopoly contract for the region you live in. There’s literally no choice. Not that you really have a choice of emergency physicians, barely have any choice over an anesthesiologist, but it’s even more extreme. We think of ground ambulance services as if it should be like a municipal fire department type of service.”

“Ground ambulances are also weird because there’s a good amount of local regulation around the country,” he added. “It’s just so mixed and so scattershot."

'I don’t think anyone is blameless'

Insurance companies and health care providers often cast the blame onto each other when it comes to who is responsible for these surprise bills to begin with.

“I don’t think anyone is blameless,” Adler said. “There’s certainly the occasional circumstance where this is more the insurer’s fault, but by and large this is a provider-driven issue. And it’s more to the point that providers are the ones profiting off of it. A blame is a little difficult to some degree because it takes two to tango, and they’re both making some decision at some level.”

In the case of anesthesiologists, the American Society of Anesthesiologists (ASA) attributed some of it to “insurers using aggressive negotiating tactics that force physicians out of network.”

According to a small ASA survey conducted in February 2021, 54% of respondents saw significant pay cuts from insurers, while 70% “faced a payor giving an ultimatum” of either being forced out of contract or accepting a reduced rate.

“That’s one of the protections you get in a contract when an insurance company and a provider sign a contract,” Garmon said. “Patients are protected that way. This ultimately is because there’s no contract signed between the out-of-network provider and the insurance company. It’s basically a fight between them and the patients get stuck in the middle of this fight. That’s the benefit of these laws that basically takes the patient out of the middle.”

He continued: “Insurance companies and providers, they're going to disagree in certain cases about what’s fair and reasonable. That’s fine. These laws usually have a structure to figure out what’s fair and reasonable and solve that problem. But patients should be taken out of the middle.”

Adriana Belmonte is a reporter and editor covering politics and health care policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at [email protected].

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