When state legislatures convened earlier this year, CO, NV, TX and WA had either enhanced existing laws or enacted new surprise billing laws in 2019. Yet approximately half the fifty states had not passed any laws on surprised billing at the end of 2019.
New York, the first state in the nation to pass legislation on surprise billing, in 2015, requires that plans must not only come up with a “reasonable” payment amount, but also show how the amount compares to ”usual and customary” rates. These rates are defined as the 80th percentile of all charges for a health care service. If any party is dissatisfied, they can appeal the amount through an independent dispute resolution process (IDR). 
In self-insured plans, the employer assumes the risk for providing health insurance benefits to all its employees. These plans are regulated under ERISA. Only federal action can protect employees whose health plans are regulated by ERISA.
No federal law currently limits “balance bills” or “surprise bills” but just over half the states have enacted laws to protect enrollees from it, to some degree.
NEW YORK LAW
Overview of NYS Surprise Billing Law
The law is especially effective for people being billed for emergency services.
Providers cannot bill patients for out-of-network emergency services that the patient could not avoid. Neither the provider nor the plan may charge patients for services in excess of the deductible, copay, or coinsurance amounts they owe according to their plan agreement. Patients are also protected in non-emergency situations 1) when they are at an in-network hospital or ambulatory center and there is no in-network physician available, 2) they are taken care of by an out-of-network provider without their knowledge, or 3) an unforeseen medical issue arose that required unplanned medical care.
The patients’ insurance company and the provider have to figure it out without involving the patient whatsoever. In New York they do that through a third-party process called independent dispute resolution ( “IDR”), which is similar to baseball arbitration.
The law not only helps patients avoid unfair bills, it helps keep insurance premiums down because the dispute resolution process prevents insurers from having to pay excessive charges. And now that this process is in place, providers working in hospitals have more incentive to join insurance networks and work out a system of payment through a regular network agreement. That means fewer surprise bills overall.
SUMMARY OF RECENT AMENDMENTS TO NY SURPRISE BILLING LAW eff. 1/1/20 
Section 1 amends section 605 of the financial services law by providing that once a hospital receives an assignment of benefits from the patient for a specific emergency service, and the health plan receives the assignment of benefits, then payment shall be made by the health plan to the hospital for the out of network emergency service.
This section also provides that the hospital will receive as an initial payment an amount equal to at least 25% above the in-network rate for the specific service provided. The payment of this amount will not prejudice either party and does not preclude either party from seeking a dispute resolution determination, including for any part of the initial payment deemed unreasonable.
Section 2 of the bill amends section 604 of the financial services law to clarify the criteria used for the IDR determination by allowing for the teaching status, scope of service, and case mix to be considered as factors in making a determination.
Sections 3, 4 and 5 of the bill establish a nonbinding mediation process to be utilized at least 60 days prior to termination of a contract between a hospital and an insurer.
New York’s surprise billing law is still missing some pieces. One of the most common types of surprise bills occurs after patients have been told by their plan and provider that the provider is in-network. If that information is wrong, the patient has no recourse. New York can and may correct that during this year’s legislative session.
AMENDMENTS TO NEW YORK FINANCIAL SERVICES REGULATION 23 NYCRR 400.5
The following are highlights to amendments to New York Financial Services Regulation 23NYCRR 400.5:
(l) If a health care plan determines that the services of a non-participating physician, or a non-participating referred health care provider at a participating hospital, are not emergency services and makes an adverse determination pursuant to Insurance Law or Public Health Law Article 49, the health care plan must include in the initial adverse determination and the final adverse determination, among others: (1) a notice that the services may be a surprise bill and could be eligible for the dispute resolution process; (2) the information in paragraphs (1) – (5) of subdivision (f) of this section; and (2) a statement that the insured should not delay filing an internal appeal or external appeal even if the insured believes the services denied by the health care plan involve a surprise bill.
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(m)(1) If a health care plan receives an assignment of benefits form for a surprise bill and determines that the services are not a surprise bill, the health care plan shall provide written notice of such determination.
The notice shall include the procedures for filing a grievance under Insurance Law section 4802 or Public Health Law section 4408-a and information on how to file a complaint with the superintendent. (2) If a health care plan makes a determination on a grievance disputing that a bill is a surprise bill, the health care plan must provide written notice of such determination. The notice shall include the procedures for filing an appeal under Insurance Law section 4802 or Public Health Law section 4408-a, if applicable, and information on how to file a complaint with the superintendent.
ANALYSIS OF NYS SURPRISE BILLING LAW
According to an analysis of recently released data from New York's Department of Financial Services, the New York model is making health care substantially more expensive in the state. In fact, arbiters are typically deciding on dollar amounts above the 80th percentile of typical costs.
According to Loren Adler, author of the analysis, and associate director of the USC-Brookings Schaeffer Initiative for Health Policy, "This is an extremely high and extremely inflationary rule of thumb".
DFS reported that the law has saved consumers $400 million, but Adler challenged the claim, saying the state's experience has shown limited relief for patients.
A recent study from the USC-Brookings Schaeffer Initiative for Health Policy also showed that New York’s solution for surprise billing increased what payers and patients pay for out-of-network care.
Arbitration — or, as New York calls it, "independent dispute resolution" — works like this: A patient gets into an accident and goes to a hospital in her insurance network. While there, she sees a physician — perhaps an emergency room doctor or anesthesiologist — who isn't covered by her insurance company.
The insurance company pays a small part of the bill, and the doctor sends the patient a bill for the rest (often called a balance bill). Under New York's law, the patient is held harmless, meaning she only has to pay as much of her deductible, copay or coinsurance as she would if the doctor were in-network. If the insurance company and the physician can't agree on how much of the rest of the bill to pay, they can take the issue to arbitration.
The compromise approach tracks closely with legislation advanced by the House Energy and Commerce Committee (HELP Committee): a median in-network benchmark with an arbitration "safety valve" where either side can bring a bill to arbitration if it's more than $750. Previous versions allowed arbitration only for charges over $1,250.
This proposal is viewed as more favorable to providers than earlier HELP Committee drafts because it allows them to go to arbitration for more bills, but many providers question this premise.
A FLURRY OF NEW FEDERAL PROPOSALS
Hospitals and physician groups are each waging war on the issue, but they are not necessarily on the same page about what a policy fix should look like-other than they oppose the proposals that set a benchmark rate cap of charges for all out-of-network treatment proposed by Senate and House health committee leaders.
On December 8, 2019, Sen. Lamar Alexander, Chair of the Senate HELP Committee, Rep. Frank Pallone, chair of the House (Energy & Commerce) E&C Committee, and Rep. Greg Walden, ranking member on E&C, announced a compromise package that builds on the bills already approved by their respective committees. The original bills were similar, but the new HELP/E&C proposal resolved differences between them.
The initial bill proposed by the HELP Committee (The “Lower Health Costs Act”) would bar health insurers from charging enrollees higher copays for services at out-of-network emergency facilities. The bill ensures that patients pay the in-network rate for any out-of-network specialists at in-network facilities. Specialist billing often results in the highest rates of surprise bills.
It also requires out-of-network notification and consent standards once a patient is admitted on an emergency basis. Finally, the bill requires health insurers to pay the in-network median rate for any services when they cannot bill patients for the balance and defines the in-network median rate as the median contracted rate under the plan for similar services in the same geographic area.
Passage of the HELP Committee bill sparked strong lobbying, particularly by representatives of physician staffing firms that were concerned.
The House E&C Committee followed by passing the No Surprises Act, which is similar to the HELP Committee proposal but, in addition, allows third party arbitration for bills where the in-network median rate exceeds $1250.
The agreement, or compromise bill, was announced in early December 2019 and combined many of the provisions of the two bills including requiring out-of-network notification from emergency facilities/providers and limiting patient costs to the in-network cost sharing amount for all services, including specialized services.
The House-Senate package distinguished itself by allowing third-party arbitration for bills when the in-network median rate exceeds $750.
Finally, under the compromise bill, following any arbitration decision, the initiating party cannot take the opposing party to future arbitration for the same service for at least 90 days.
On December 11, 2019, Reps. Richard Neal and Kevin Brady, Chair and ranking member on the House Ways and Means (W&M) Committee, announced their agreement on an approach that differs considerably from the HELP/E&C proposal.
Both the HELP/E&C compromise package and the W&M proposal are alike in assuring consumers that they will face no costs in surprise billing situations beyond those associated with in-network cost-sharing. The proposals differ in how to establish what insurers will pay out-of-network providers.
The W&M proposal looks to voluntary negotiation, backed up by independent dispute resolution (IDR), to set rates, and thus aligns more closely with the approach advocated by hospital and physician groups.
The HELP/E&C proposal creates a payment standard with a backup IDR process and represents an attempt to bridge the gap between provider and insurer positions.
DIFFERENCES ACROSS THE FEDERAL PROPOSALS
Finding An Adequate Payment Standard
The HELP/E&C compromise bases payment on the median amounts paid by a health plan to its in-network providers. It uses the in-network rate for 2019 and inflates it forward to the year of the service, thus guaranteeing that rates negotiated after the bill’s passage would not influence the standard.
The W&M proposal does not include a payment standard, preferring voluntary negotiations backed up by IDR.
Independent Dispute Resolution
The HELP/E&C compromise has a backup IDR process, the approach preferred by providers, because it avoids a government-set rate. It calls for an independent arbitrator to determine payment in cases where providers are not satisfied with the amount paid under the payment standard. The bill lowers the threshold bill amount for eligible cases from $1,250 (in the E&C bill) to $750, so that it will be available in more cases.
Because it has no payment standard, the W&M proposal makes IDR the means of settling payment disputes, although it calls for voluntary negotiations to precede use of IDR and looks for parties “to work out differences without interference.”
Both proposals include a set of guardrails to reduce the potential for misuse of the IDR process. Fewer cases going to IDR reduces the cost of operating the system and should mitigate potential inflationary effects.
None of the proposals offers protections for users of ground ambulance services, in part because these services are often delivered by public-sector providers.
However, the HELP/E&C compromise package extends protections to people using air ambulance services, which pose greater consumer risk for significant surprise bills. This package includes an IDR option for cases above $25,000.
The W&M proposal (as reported in the committee's summary), like the original E&C proposal, does not address air ambulance services.
As recently as late 2019, there were several bipartisan proposals. One of them, titled the “Protecting Patients from Surprise Medical Bills Act”, would protect those in the ERISA-protected population.
Until recently, both the Senate Finance, the Senate HELP Committee and the House Ways and Means Committee, were all investigating the issues and several pieces of competing legislation were introduced.
Over the past few months, the biggest debate around remedies for surprise bills has centered on how to determine payment for out-of-network doctors and hospitals. One group wanted an arbitration process while the other sought a benchmark system.
Under benchmarking, the government would set a compensation rate for providers when they see out-of-network patients. The most popular proposition was one that paid a "median in-network" rate, where doctors are paid in the middle of the range of what others in the area are paid by insurance companies for the same service.
The other idea was independent dispute resolution, or arbitration. The provider and insurer bring their best offer to a third party, who chooses between the two.
Generally, employers and consumer advocates favor benchmarking. Hospitals and doctors' groups — especially those backed by private equity firms — push for arbitration.
The issue continues to split Members of Congress by political party and by Congressional committee and instead hinges on home-state industries and interests: Members of Congress with large numbers of hospitals in their states/districts have thrown their support behind legislation from the House Ways & Means Committee that favors arbitration, while Members of Congress representing large health insurers have backed bills that favor benchmarked median rates from the House Energy & Commerce Committee and the Senate HELP Committee. The lack of clear political lines defining support for benchmarks or arbitration, hospitals or health care insurers, patients or providers has made it extremely difficult for Congressional leadership from both parties to track the positions of various Members – much less schedule a politicized vote that could fracture their respective caucuses during an election year. Congress has promised to pass legislation ending the problem of surprise medical bills for patients; however, the roadmap for achieving success remains filled with many obstacles.