June 28, 2016

After thousands of consumer complaints and years of advocacy, the Surprise Bills Law went into effect in 2015. The new law addresses consumer complaints about receiving inadequate reimbursement from insurers for medical services that consumers received from an out-of-network provider whose network status is often unbeknownst to them. First and foremost, the Surprise Bills Law protects consumers from surprise bills for emergency medical services. Consumers who receive emergency services will not have to pay more than their usual in-network cost sharing and/or co-payments, regardless of the network status of the providers. Consumers are similarly protected in other medical settings if they are surprised by medical bills because they have not received required disclosures regarding cost or network status. Disputes between providers and health plans over the fees charged for out-of-network services will go through an independent review process, so the consumer isn’t held responsible for costs. The Surprise Bills Law also imposes new network adequacy rules and requires new disclosures to patients.

Mr. Oeschner and Mr. Scherzer discussed the law’s impact since it was implemented, including how well it is working; its effects on and benefits to consumers; and processes for payment dispute resolution, disclosure, and monitoring.

Mr. Scherzer noted that the law represented the collaboration of all stakeholders—patients, plans, and providers—who saw the prior means to resolving out-of-network bills as dysfunctional. He described how an attempted solution in 2009, the result of a settlement with the New York Attorney General, led to fewer New York insurance plans offering out-of-network coverage and continued problems for patients left with high bills. Mr. Scherzer said that the landmark 2015 bill reframed the issue in terms of consumers’ due process rights: Do consumers know when they will be subject to a surprise bill? Do they have adequate information to judge their choices and make decisions? Do they have any control over their options? He shared the story of his client, Claudia Knafo, and emphasized that more work remains to close loopholes and ensure that consumers are aware of their new rights before they receive a bill.

Mr. Oeschner’s agency issued a report on the topic in 2012, titled An Unwelcome Surprise, which attracted the attention of state insurance commissioners across the country, many of whom suggested that there was no clear solution available to them to address the issue—that is, until DFS rolled out New York’s landmark Surprise Bills Law. Before the law, DFS was finding that consumers were making great effort to follow the rules and stay in network, but were still being charged by out-of-network doctors. According to Mr. Oeschner, when a patient does everything that he/she can, or doesn’t have either knowledge or choice, he/she should be insulated from costs and not held liable. Mr. Oeschner noted that since implementation the incidence of surprise bill-related complaints has decreased, but that few consumers have used the alternative dispute resolution option. He notes that other states are modeling efforts after New York’s law and highlighted a Consumers Union guide to advance surprise bill laws in other states. Mr. Oeschner shared that the next opportunity on the horizon is improving network adequacy in New York State, including strong transparency measures so that consumers understand their choices before they buy a plan.

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