No Surprises Act: What it Means for Consumers

Medical care is expensive, and often the true cost of care isn’t realized until you receive a surprise bill in the mailbox.

A recent report from the U.S. Department of Health and Human Services found that nearly one in five patients who go to the emergency room, have an elective surgery, or give birth in a hospital receive surprise medical bills, with average costs ranging from $750 to $2,600 per episode.

And those bills can add up to serious medical debt for some consumers. According to a report from the Consumer Financial Protection Bureau, consumers held $88 billion in medical debt as of June 2021.

But for many, the frustration over costly, unexpected medical bills — and the cycle of debt they create — will lessen, thanks to the No Surprises Act.

The new rules, which went into effect on Jan. 1, 2022, give consumers billing protections when getting emergency care, non-emergency care from out-of-network providers at in-network facilities, and air ambulance services from out-of-network providers.

According to CMS, the new rules mean excessive out-of-pocket costs are restricted, and emergency services must continue to be covered without any prior authorization, and regardless of whether a provider or facility is in-network.

While these protections are a welcome measure, just how they will affect consumers depends on a few factors, including their insurance coverage status and the type of bill received.

What is a surprise medical bill?  

A surprise medical bill typically refers to an unexpected bill a consumer receives from an out-of-network provider or an out-of-network facility. These costly invoices often occur after an emergency, unexpected illness, or other situation in which the consumer is unable to choose their provider. However, in some cases, even if the consumer chooses to visit an in-network facility, the care they receive may be from an out-of-network provider who is not covered by their insurance.

A consumer’s health insurance may not cover the entire out-of-network cost, which leaves them owing the difference between the billed cost and the amount their health insurance paid, this is known as balance billing.

Who benefits from the No Surprises Act  

Though the No Surprises Act provides a wide array of protections for consumers, those protection differ depending on the type of insurance held.

For consumers with Medicare, Medicaid, Indian Health Services, Veterans Affairs Health Care, and TRICARE, robust protection from surprise medical bills already existed.

For consumers who have health coverage, either through their employer, a Health Insurance Marketplace, or an individual health insurance plan purchased through an insurance company, they will see the following protections from the No Surprises Act:

• A ban on surprise bills for most emergency services, even if they get them out-of-network and without prior authorization.
• A ban on out-of-network cost-sharing for most emergency and some non-emergency services. Consumers now can’t be charged more than in-network cost-sharing for these services.
• A ban on out-of-network charges and balance bills for certain additional services (like anesthesiology or radiology) furnished by out-of-network providers as part of a patient’s visit to an in-network facility.
• A requirement that health care providers and facilities give patients an easy-to-understand notice explaining the applicable billing protections, who to contact if you have concerns that a provider or facility has violated the protections, and that patient consent is required to waive billing protections.

Consumers who do not have insurance or who self-pay for care are also guaranteed some protections under the new law. For instance, the rules ensure that these patients can get a good-faith estimate on how much their care will cost before they receive it, according to CMS.

Just how consumers will receive this information is unclear. The Hospital Price Transparency rule went into effect in January 2021, mandating that hospitals around the country provide publicly accessible standard charge information online about the items and services. However, more than a year later, there have been several reports shining light on hospitals’ failure to comply with the rules.

Following the receipt of services, if a consumer without insurance receives a bill that is at least $400 more than their good-faith estimate, they can file a dispute claim within 120 days of the billing date.

If you believe a violation of the No Surprises Act, you can file a complaint or start a payment dispute through CMS. Complaints can also be filed with the AG’s Consumer Protection Division.  Additionally, the Iowa Insurance Division may assist consumers in better understanding the federal patient-provider dispute resolution process.

More changes coming   

The No Surprises Act does not eliminate past medical debt tied to surprise bills. However, there have been other changes related to this burdensome debt.

The CFPB recently addressed the issue of medical debt on consumer credit reports, noting that in some cases doctors, facilities, parent companies and others send the same bill to collectors, resulting in inaccurate credit reports.

This coupled with the arduous billing and credit reporting system can make it increasingly unmanageable for consumers to get errors on their reports fixed. To assist consumers, the CFPB created the below infographic with tips to navigate the billing and collection system.

As with the No Surprises Act, some relief may be on the way for consumers.

The three largest credit reporting firms — Experian, Equifax and TransUnion — recently announced they will soon remove about 70% of medical collection debt accounts from consumer credit reports. Under the plan, starting July 1, medical debts that were sent to debt collectors and eventually paid off will no longer be included on consumer credit reports. Additionally, consumers will now have a year before unpaid medical collection debt appears on credit reports after it has been sent to collections.

Finally, starting in early 2023, the credit reporting agencies say they will stop including medical debts in collection that are below $500 on credit reports.

In addition to the No Surprises Act and moves by credit reporting agencies, the Biden administration recently announced a four-step plan to further increase protection for consumers who receive healthcare bills, including forgiving medical debt for many low-income veterans.

File a complaint

If you have encountered an issue with medical billing, a possible violation of the No Surprises Act or other possible healthcare fraud, you can file a complaint or payment dispute with CMS.

If you believe you are the victim of healthcare fraud, please file a complaint with the Iowa Attorney General’s Consumer Protection Division online or by calling call 515-281-5926 (in the Des Moines area) or 888-777-4590 (outside the metro area).