What is Surprise Medical Billing and Who Does It Hurt?

You know the feeling. You’re back from the doctor’s office, or even worse—a trip to the Emergency Room—when a bill arrives in your mailbox. As you open the envelope and fold back the papers, you’re shocked when you see the amount due at the bottom of the page.

If it’s any solace, you’re not alone. According to a Kaiser Family Foundation survey, one in three insured Americans aged 18 to 64 reported receiving an surprise medical bill in the last two years. Surprise medical bills are a growing problem in this country.

But what causes them, and more importantly, what are some solutions to fix this problem?

Let’s take a look.

What is surprise medical billing?

Surprise medical bills occur when you unknowingly receive healthcare outside of your insurance plan’s network. Say you go to a doctor that’s in-network, but other providers or specialists are brought in that are not in your insurance’s network. These specialists might be anesthesiologists, radiologists, pathologists, surgical assistants, and others. You unknowingly receive care from these out-of-network experts and have to pay for the increased cost.

While surprise medical billing can occur for both emergency and non-emergency care, it’s especially prevalent in emergency room visits. One in six emergency room visits result in a surprise medical bill.

Who does surprise medical billing hurt?

Healthcare prices have been increasing over the years, which impacts and hurts all American families—but especially those with low-incomes. The Oklahoma Council of Public Affairs notes the average annual premium for families enrolled in an employer sponsored insurance plans has increased 54 percent over the last decade, while the average cost to visit the ER rose 176 percent from 2008 to 2017.

In addition, two-thirds of all bankruptcies in the United States are from medical expenses. Surprise medical bills, with the average surprise medical bill costing more than $600, can play a big role in these bankruptcies. These bills are keeping Americans up at night too. In fact, 65 percent of people worry that they won’t be able to afford a surprise medical bill.

What’s more, some individuals, aware of the high costs associated with surprise billing, may even delay or put off needed care.

How many Americans deal with surprise medical bills?

The prevalence of surprise medical billing has been on the rise in recent years, and it varies by state. In Texas, for example, 30 percent of emergency room visits result in a surprise medical bill. In Mississippi, that number is only five percent.

As mentioned above, one in three insured Americans aged 18 to 64 reported receiving an unexpected medical bill in the last two years. Another study found that among 350,000 insured patients, more than 20 percent received a bill with an out-of-network charge.

What are some solutions to fix surprise medical billing?

Many healthcare policy experts note surprise medical billing underscores the need for true transparency in healthcare pricing. Kaitlyn Finley, Policy Research Fellow at the Oklahoma Council of Public Affairs, added: “When consumers are kept in the dark regarding cost, many providers and insurance carriers may be able to drive up costs just because they can. To address the ever-rising costs of healthcare, we must encourage true price transparency in healthcare. For far too long, policymakers have focused on expanding ‘coverage’ while ignoring the true culprit—healthcare’s opaque pricing system.”

Policymakers at the state level, with encouragement from think tanks across the country, are working to enact policies that promote price transparency in healthcare.

There’s also been movement at the federal level to address surprise medical billing. In December 2020, Congress passed “The No Surprises Act,” legislation that would end surprise medical bills for people receiving emergency care and other health services in the United States. In July 2021, the Biden Administration issued a rule on this legislation, the first step towards putting it into law—which is supposed to take effect in January 2022. The rule will restrict excessive out of pocket costs to consumers from surprise billing and balance billing—when patients have to pay the remainder of what their insurance does not pay.

Some healthcare experts, such as Christopher Garmon, assistant professor of health administration at the Henry W. Bloch School of Management at the University of Missouri–Kansas City, are optimistic the new law will address the growing problem of surprise medical bills. In an interview with Healthline, Garmon noted: “The law itself and the regulations that are being written to implement the law, as far as I’ve seen so far, seem to be set up really well to protect the patients so that they will not receive a balance bill, and if they do, they have rights and ways of protesting that balance bill.”

However, Garmon did note it’s unclear how this new law will impact other aspects of the healthcare system, including premiums and prices.