A new law requires private health plans to cover surprise bills at in-network rates based on the median cost of care for similar services. (iStock)
A new surprise billing law aimed at increasing protections for patients and reducing out-of-pocket costs went into effect on January 1.
The No Surprises Act requires private health plans to cover surprise bills at in-network rates, prevents out-of-network providers from billing patients for excess charges and prohibits balance billing in certain circumstances for emergency and non-emergency services. These protections were already in effect for patients with Medicaid and Medicare.
“No one should have to worry about going bankrupt after falling ill or seeking critical care.”
A recent report from the Department of Health and Human Services (HHS) found that surprise medical bills are common among patients with private health insurance. They can average more than $1,200 for out-of-network anesthesiology services, $2,600 for surgical assistants and $750 for childbirth-related care.
While the new hospital billing rule will offer protections for patients in many circumstances, there are still coverage gaps that may result in higher-than-expected medical bills for patients at some types of providers. Keep reading to learn more about the No Surprises Act, as well as how to manage surprise medical bills. You can compare a variety of financial products, such as debt consolidation loans, on Credible.
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What patients should know about the No Surprises Act
The No Surprises Act bans most unexpected medical charges for patients who receive emergency care or planned treatment from healthcare facilities that are not in their insurance networks — and that they didn’t choose. For example, a woman who gives birth may have chosen an in-network doctor but receives treatment from an out-of-network anesthesiologist, resulting in a surprise bill.
In these cases, consumers will be required to pay for in-network cost sharing that’s based on the median in-network payment amount under the plan for similar services. But there are exceptions to the rule that patients should know about, according to Bill Kampine, co-founder of Healthcare Bluebook, a price transparency tool.
“The one thing to keep in mind is that the new requirement applies to hospitals, in-patient, out-patient settings, ambulatory surgery settings, independent emergency rooms,” Kampine said. “It does not specifically apply to urgent care centers or care in a clinic setting.”
The legislation also requires out-of-network providers to tell you that they’re out-of-network and provide a good faith estimate ahead of time, Kampine said. If you choose to use that provider, you have to give your written consent allowing them to balance bill you.
“Once they’ve signed that consent, they’ve in essence waived their right to those protections,” Kampine said. “Consumers should be very careful and very aware of before they agree to that and do their homework and use the transparency tools available to them.”
One way to prepare for surprise hospital bills is to build a robust emergency fund that covers about 3 to 6 months’ worth of expenses. This can help consumers avoid taking on high-interest credit card debt to pay for unexpected expenses, including medical bills. You can start your emergency fund in a high-yield savings account that will grow your savings balance with interest over time. Compare high-yield savings accounts rates for free without impacting your credit score on Credible.
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3 ways to manage surprise medical bills
Unexpected medical bills are a concern for about two-thirds of American adults, according to the Kaiser Family Foundation (KFF). About 1 in 5 emergency room visits and 1 in 6 in-network hospitalizations result in at least one out-of-network charge, the KFF reports.
If you’ve received an unexpected medical bill, consider these strategies to manage the balance and repay your debt:
- Know your rights under federal law
- Negotiate with your health care provider
- Find ways to pay off medical debt
Read more about each tip in the sections below.
1. Know your rights under federal law
The No Surprises Act isn’t the only federal government legislation aimed at protecting patients against unaffordable medical bills. Federal law requires nonprofit hospitals to offer financial assistance to low-income patients, according to the National Consumer Law Center (NCLC), although these rules are implemented on the state level.
Research the laws in your state to determine if you qualify for discounted care or interest-free payment plans based on your household income. Keep in mind that this only applies to nonprofit hospitals, so these laws don’t apply to select types of care provided at independent medical centers like a dental practice or dermatology office.
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2. Negotiate with your health care provider
Depending on your health care provider and the type of care you received, it may be possible to negotiate a lower payment amount or enroll in an interest-free payment plan. A 2018 study by Consumer Reports found that more than half of patients who tried to negotiate a medical bill were successful.
- Ask for an Explanation of Benefits (EOB) and Summary of Benefits and Coverage (SBC) from your insurance company to see if a service was supposed to be covered.
- Check your bill for errors, such as incorrect coding or double-billing. Some medical billing advocates estimate that up to 80% of medical bills contain errors, according to Kaiser Health News (KHN).
- Reach out to the health care provider’s billing office. You may qualify for a discount on your bill if you are able to pay it all off at once rather than enrolling in a payment plan.
You should also do your research if you plan on negotiating a medical bill. Use a cost comparison tool like Healthcare Bluebook to estimate the average cost of care for medical services in your area.
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3. Find ways to pay off medical debt
Medical debt is the leading cause of bankruptcy, according to the NCLC, which means that many patients are unable to lower the cost of care through negotiations or payment plans. Unpaid medical bills can result in wage garnishment and negative credit impacts, so it’s important to find ways to avoid delinquency.
If you’re struggling with overwhelming medical bills, consider speaking with a credit counselor. Nonprofit credit counseling agencies help debtors with free or low-cost debt management services, and they may be able to help you enroll in a debt management plan (DMP) to pay off your debt on fair terms without impacting your credit score. A credit counselor may also be able to negotiate with creditors, such as medical providers, on your behalf.
Select patients may also benefit from using a debt consolidation loan to keep their medical bills out of collections. One thing to keep in mind is that these loans do accrue interest, which will add to the overall cost of paying off medical debt. Since interest rates for these types of loans are now near all-time lows, it may be possible for borrowers with good credit to qualify for favorable terms.
You can compare debt consolidation loan interest rates across multiple lenders without impacting your credit score on Credible, so you can decide if this option is right for you.
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