Per a rule released last week, CMS will now require qualified health plans
to count the cost sharing paid by the enrollee for an essential health benefit provided by an out-of-network ancillary provider at an in-network setting towards the enrollee’s in-network annual limitation on cost sharing for QHPs in certain circumstances.
Let’s say you go to an emergency room at an in-network hospital, but the ER doctor who treats you isn’t part of your insurer’s network. Because she hasn’t agreed to the insurer’s negotiated rates, the doctor can send you a bill for an extravagant sum. These sorts of “surprise bills” have become common; one recent study estimated that one in five of all ER inpatient admissions involved a surprise bill.
CMS’s rule won’t end the unfair practice. Out-of-network doctors can still send you a huge bill. But, starting in 2018, you only have to pay up to the amount of your annual limit on cost sharing. For 2018, that’ll be $7,350 for an individual and $14,700 for a family. Your insurer has to cover the rest.
In other words, the rule will relieve you of the very harshest financial consequences associated with surprise bills. But it won’t stop ER doctors from charging exorbitant fees, which will drive up premiums for everyone. Some states—including California and New York—have limited surprise bills to a percentage of Medicare rates. CMS doesn’t go that far.
In addition, CMS’s rule applies only to qualified health plans, not to employer-based coverage. And, because of ERISA preemption, states that have adopted legislation to address surprise bills can’t apply those laws to employers that self-insure.
So what’s to be done about self-insured plans? Writing at Brookings, Mark Hall offers some suggestions to the Department of Labor, which is responsible for ERISA implementation. For one thing, he encourages Labor to adopt a rule that resembles CMS’s—a proposal that I first floated back in 2014 at the blog. But the cleanest approach would be for Labor to
issue a formal ruling or guidance that clarifies its interpretation of the extent of state authority to regulate out-of-network billing by providers who treat patients covered by employer-sponsored plans, including those that are self-funded. This should leave states free to establish maximum and minimum billing rates for providers in surprise billing situations and to establish dispute resolution mechanisms between patients and providers, as New York State has done, for instance.
As Mark rightly notes, the Supreme Court’s case law is clear that states remain free, under ERISA, to regulate the rates that providers charge. The trouble is that “few aspects of ERISA pre-emption are truly clear to many people.” A clarification could offer comfort to states that are looking for ways to address surprise bills.
Let’s hope it happens. The need to tackle surprise bills could be one of those rare areas of bipartisan consensus on health care. No one who’s got insurance should suffer bankruptcy for seeking care from an in-network hospital.
