When the second coronavirus relief package was signed into law at the end of 2020, many consumer health advocates rejoiced. The $900 billion law includes the No Surprises Act, a ban on most surprise medical bills — specifically unexpected charges from out-of-network health care providers. For instance, a patient who undergoes surgery may discover that the anesthesiologist in the operating room was “out-of-network” only after receiving an enormous, unexpected bill. Or a patient who needs to be transported to the hospital by helicopter later finds out the “life flight” will cost them tens of thousands of dollars out-of-pocket.
Once the law goes into effect in January 2022, out-of-network providers will not be allowed to send unexpected bills to consumers. The providers instead get 30 days to negotiate with consumers’ insurance companies to determine how much the insurance company will cover. If they cannot agree, an independent arbitrator will make the decision.
The law is important because few Americans can afford surprise medical bills. The Federal Reserve found that nearly 40 percent of adults could not cover a surprise expense in 2019 when the country was still at full employment. A survey by the American Heart Association found that almost half of U.S. adults did not seek medical care because they were concerned they would receive a surprise medical bill. Furthermore, nearly 70 percent of people struggling with unaffordable out-of-network medical bills did not know the healthcare provider was “out of network” when they received care, according to recent research by the Kaiser Family Foundation. Although many states have passed laws banning surprise medical bills, some of these laws are tougher than others — and many consumers still get hit with big, unexpected bills.
Some experts believe the new law could save insurance companies money and help keep a lid on premium increases. It may also save consumers from doing battle with providers and insurance companies to avoid paying inflated bills. Medical providers covered by the law can only bill for in-network cost-sharing, such as co-pays and charges allowed within out-of-pocket limits. On top of this, the law requires the government to create a process for consumers to resolve billing disputes.
But the new law is not a panacea. Not all medical providers and services are covered. For instance, ambulance companies are not subject to the law. And until it takes effect in 2022, consumers can still get walloped by surprise medical bills. Though it’s great that the government is cracking down on surprise medical bills, what hasn’t been resolved is the lack of transparency around how hospitals and other providers set prices. As most of us can attest, it is very difficult for us as consumers to find out what we will be paying, even for in-network care.
Needless to say, while the measure should reduce a major source of financial stress for the one in five Americans hit with surprise medical bills annually, it falls short of the transparency and real health care solutions American consumers need. It also underscores why I founded my company Sidecar Health, which offers “cash-price” health insurance and pre-negotiated rates with medical providers for consumers willing to pay cash at the time of service. I started Sidecar Health after I was charged $1,300 by my insurance company for an MRI that would have cost $300 had I paid in cash.
What’s been shocking to me is the difference between what providers charge insured patients and what they charge those who pay cash. Providers do this, in part, to offset claims denied by insurance companies. In the end, however, consumers with traditional health insurance get hurt. They get stuck with the bills that get denied by their insurers or must pay the balance if the insurance company only covers part of the bill. Sometimes these bills push them into bankruptcy. We would all benefit if we were able to turn patients into purchasers of care, allowing them to shop around for health care as they do for any other consumer good.
It’s good progress. But, for the time being, consumers need to continue to look out for themselves. The more we can all do to push our providers for more transparency — and our legislators to require it — the more equitable our health care system will be.
Patrick Quigley WG03 is CEO of Sidecar Health, an insurtech company founded in 2018 and built on a disruptive cash-price model to save members significant costs on medical services and procedures. Sidecar Health is currently available in 16 states. Prior to founding Sidecar Health, Patrick spearheaded the growth of Healthplans.com and served as CEO of Katch.