After years of discussions, debates and gridlock, the Virginia General Assembly recently passed — unanimously — legislation that prohibits surprise billing of insured patients. This victory for Virginia patients provides an example of how Congress — which also has been deadlocked over surprise billing for years — should now move forward.
The answer is really rather simple: Put patients first.
Health insurance plans and medical providers have argued about the basic question for years: How much should a health plan have to pay when an insured patient gets out-of-network services? This often happens in emergency situations, when patients reasonably go to the closest medical facility, whether or not the facility or its emergency room providers are in their network. But, even for scheduled, elective procedures in an in-network facility, patients are regularly surprised by bills from an anesthesiologist, radiologist or hospitalist who does not contract with their health plans. Big bills follow — for services that all of us expect will be covered by our insurance.
The health plans don’t want to pay more than they would pay in-network providers. And the providers — who already have refused to contract with the health plan — want more money than is paid in-network. Hence the dilemma.
I believe the breakthrough in Virginia occurred for two reasons. First, several legislators were finally and sufficiently fed up with the impasse and the ongoing complaints from their constituents who had received outrageous bills for medical services that clearly should have been covered by their health insurance (for which they already pay substantial premiums). Frustrated legislators from both parties resisted the ongoing lobbying by the influential interests of insurance companies, doctors and hospitals. Knowing that neither side would be completely happy with the outcome — and one side would probably be more unhappy than the other — legislators were determined to find a solution for patients, regardless of the dissatisfaction expressed by the insurers, doctors or hospitals.
Second, there were enough examples from other states that already had adopted surprise billing protections to encourage Virginia legislators to move forward. In fact, the 2019 legislation in Washington state became the template for Virginia’s legislation, which incorporates many similar provisions.
The Virginia bill, now on Gov. Ralph Northam’s desk for final approval, is reasonable and workable. It includes many important elements, including the following significant consumer protections:
- It bans surprise billing in both emergency situations and when the consumer gets nonemergency, out-of-network services at an in-network facility.
- It uses the “prudent layperson protection” for emergency care, regardless of final diagnosis.
- It requires insurers to pay providers directly (i.e., no bills to the patient).
- It allows ERISA plans (self-insured employer group plans) to opt into the system to offer these protections to more Virginia consumers.
- It establishes a reasonable process to set payments and resolve disputes. The first payment to the out-of-network provider is a “commercially reasonable amount.” If the provider wants more money, and direct negotiations with the health plan fail, either party can request arbitration at the State Corporation Commission’s Bureau of Insurance. An impartial, trained arbitrator, using “baseball-style” arbitration, evaluates the positions of both parties and considers several factors before determining the payment owed. Both parties share the cost of arbitration.
This approach clearly accomplishes the primary goals of removing the patient from the middle of the payment dispute and protecting patients from additional financial responsibility for costs that should have been covered in the first place. Another important feature in the Virginia legislation (as in Washington state) directs the state to better monitor network adequacy, which is the best way to ensure that health plans have enough providers to deliver the services promised in the insurance contract.
It’s time for Congress to act. Members must do the right thing for patients covered by all health plans. The current health crisis demands action without delay. To fully address COVID-19, people must not be afraid to seek medical treatment because of potential costs. Put patients first and end surprise billing now.