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While Medicare-for-All might be grabbing headlines, the healthcare policy debate that could have a bigger impact on consumers inthe near future could be surprise billing.

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State and federal lawmakers are looking at the issue, PresidentTrump has addressed it, a group of ER doctors released a proposalin D.C. and new legislative proposals are expected later thisyear.

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There is bipartisan support to address this issue, butefforts are hindered by how complicated it is. “Surprise billing”is an overly broad term that applies to a dozen scenarios,which makes it difficult for consumers and policymakers alike tounderstand what, exactly, new regulations might do.

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Related: Baseball-style arbitration to settle medicalbills?

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Arguably, the industry needs an agreed-upon set of terms toexplain surprise billing. Here are some proposed terms anddefinitions that might make creating, passing and implementing“surprise billing” legislation easier.

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Surprise bills

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This is the broadest, most general term — and one weshould stop using when talking about specific legislation. Asurprise bill is simply that — any bill you weren'texpecting to receive.

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If a patient doesn't understand that they are responsible for a$20 copay, that's a surprise bill. If an unconscious patient isunknowingly treated by an out-of-network radiologist at anin-network hospital and discovers it's not covered, that's asurprise bill. But these are two completely separate issues incause, cost and complexity.

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Saying that a new bill would address “surprise billing”is somewhat misleading; most likely, the legislation applies to avery specific circumstance, and many consumers' experiences withsurprise bills would not be affected.

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So what kind of surprise bills are there?

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Cost-sharing bills

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For benefits industry professionals, this one might seem like ano-brainer, but for many consumers, it's not. Especially with therise of high deductible health plans, many consumers are surprisedto find that care covered by their insurance plan can still resultin out-of-pocket costs, like copays and coinsurance.

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Both in-network and out-of-network care typically involvescost-sharing, until the patient meets their deductible. For someconsumers, this can result in a surprise bill.

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This is particularly important for brokers, because the mediaoften describes “balance billing” as the practice of chargingpatients for what insurance doesn't cover. But that definitionapplies to cost-sharing, too, which is not balance billing.

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Brokers should be careful to regularly explain this to employersand employees. If a broker says care at Acme Hospital is covered— in-network or out-of-network — some consumersmay incorrectly infer from that statement that they won't receiveany bills.

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Chargemaster bills

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Another kind of surprise bill is the chargemaster, or cash pay bill, received bypatients without out-of-network coverage and treated byout-of-network providers.

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Let's say the unconscious patient from our earlier example— we'll call him Joe — has an EPO plan, whichprovides zero coverage for out-of-network care. He's taken to anin-network hospital, but is treated by an out-of-networkradiologist.

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When his medical bills come, the radiologist's charge is $10,000— and insurance won't cover it at all. Technically, thisisn't a balance billing issue; Joe is effectivelyuninsured with that doctor, or any provider who doesn't contractwith his plan.

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Hospitals frame these types of surprise bills as coverage gapsor network adequacy issues, criticizing insurance plansthat don't cover out-of-network care. Insurers, on the other hand,take issue with hospitals that regularly align with out-of-networkdoctors, generally unbeknownst to patients.

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This type of surprise bill is particularly tricky to legislateagainst. Insurers aren't required to cover out-of-network care, andhospitals aren't prohibited from working with out-of-networkproviders.

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Balance billing

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So what is “real” balance billing?

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When a patient does have out-of-network coverage, insurance willreimburse providers for a percentage of out-of-network care.

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But a patient with out-of-network coverage is typically chargedthe “chargemaster” rate, because their insurer doesn't contractwith that radiologist, for example.

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Because there is no negotiated discount, and chargemaster prices are widely accepted to beinflated, insurers will typically contribute a percentage of whatthey consider to be the “usual and customary” rate for theservice.

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The difference in these sums — the out-of-network billand the insurer's portion of the “usual and customary rate”— is handed off to the patient. That is the truestdefinition of a “balance bill.”

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From the insurer's perspective, chargemaster prices areexaggerated and arbitrary, and hospitals are over-billing patientswith private insurance. From the hospital's perspective, “usual andcustomary” rates are too low, also arbitrary, and insurers areleaving patients high and dry.

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This is the very specific scenario most surprise billinglegislation is attempting to address.

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Multiple regulations have been proposed to protect patients fromthis scenario, including prohibiting providers from balancebilling, creating payment standards or instituting arbitrationprocesses between carriers and providers. Some states have alsopassed their own balance billing laws.

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But whether Congress takes up the issue on a federal level,brokers should be prepared to explain the various types of surprisebills to their clients and clients' employees. In the complicatedU.S. healthcare system, surprise bills are common — and nosingle piece of legislation will address the cause of them all.

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