New Law Prohibits Surprise Medical Billing

Life holds many wonderful surprises. Unexpected medical bills, however, are not one of them. 

In a new rule, legislators are banning "surprise medical bills," which can happen when a patient unexpectedly receives care from an out-of-network provider.

The law, also known as the No Surprises Act, will take full effect starting in January 2022. It requires hospitals and doctors’ offices to notify patients when they are receiving out-of-network care and only charge them for in-network costs. It also creates a complaint system so patients can report nonconsensual out-of-network charges. 

Health experts praise the law as a big step for protecting patients from unexpected and inflated medical bills. Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, tells Verywell that the new regulation is “one of the broadest consumer protection bills” passed since the Affordable Care Act (ACA). 

“If surprise bills are gone, or even have modestly lower premiums, I think that’s a pretty clear win compared to what the status quo was beforehand,” he says. “From the patient perspective, you will never again have to think about anything being out-of-network in an emergency situation.”

How the No Surprises Act Protects Patients

One in five emergency room visits and one in six people admitted to an in-network hospital had at least one surprise medical bill in 2017, according to a 2020 study. 

For non-emergency health care, patients may choose a hospital or specialist that is covered by insurance. But in cases of emergency, they may be treated by a specialist or physician who is most available, without knowing whether their services are covered. 

“It seems pretty ridiculous that you could get billed by some doctor's made-up list price for an emergency procedure when you had literally no way to choose who your doctor was,” Adler says. 

For instance, a man in Austin was charged $7,924 after receiving an emergency jaw surgery at an in-network hospital performed by an out-of-network oral surgeon. Such cases typically arise when someone is treated by specialists like anesthesiologists and pathologists.  

“From a patient perspective, that's exactly the kind of situation where they feel powerless to avoid surprise bills,” Krutika Amin, PhD, associate director at the Kaiser Family Foundation for the Program on the Affordable Care Act, tells Verywell. 

Previously, a healthcare provider could bill patients through “balance billing,” which charges the extra costs for a service that were not paid by insurance. Under the new rule, healthcare providers and insurance companies will have to settle the cost without involving the patient.  

The law will still protect the patient from surprise medical bills in non-emergency situations. But if a patient wants to receive care from an out-of-network practitioner—a renowned cardiologist, for instance—and is willing to pay a higher price, they may still do so. 

A Step Forward in Health Insurance Policy

Under the ACA, insurance providers are required to try and reduce medical costs to patients and provide some protection against surprise medical bills for emergency services. The new law goes further by regulating non-emergency services as well.

“No patient should forgo care for fear of surprise billing," Xavier Becerra, the Health and Human Services secretary, said in a statement. “Health insurance should offer patients peace of mind that they won't be saddled with unexpected costs.”

Although health providers poured millions of dollars into lobbying against the legislation, this bill received bipartisan support in Congress. 

Limitations of the No Surprises Act

For now, the new law excludes ground ambulances, which are responsible for a significant number of surprise bills. 

Half of emergency and 39% of non-emergency ground ambulance rides included an out-of-network charge, according to a recent study by the Kaiser Family Foundation.

Amin, who is an author on the study, says creating regulations for ambulances can be complex, as legislators must consider private and public emergency services as well as state regulations. The law calls for an advisory committee to resolve these issues and Amin says she expects that ground ambulances will be covered in future regulations. 

Some processes, like how insurance companies and healthcare providers will settle disputes about payments, are also yet to be fleshed out. 

“All eyes are still waiting on that piece of the regulations,” Amin says. “The first regulation seems to focus on getting the consumer protections clearly laid out.”