When I was pregnant with my first child, I needed a prenatal test that could be performed only in a hospital. Unsure whether the procedure would be covered by insurance, I spent days calling area hospitals to inquire about costs. After all that effort, I received a list of billing codes from one hospital’s patient financial services department and instructions to call my insurance company to see how much it would pay so I could then calculate my out-of-pocket costs.
Exasperated, I gave up and decided to have the test at the hospital with the best reputation and closed my eyes, waiting for an exorbitant bill to arrive in the mail months later. Fortunately, my employer’s insurance plan did cover most of the cost.
Health care is one of the only purchases people make without knowing the cost up front. Until recently, as my own example illustrates, people needing care had virtually no way of knowing their expected out-of-pocket costs before deciding on care and often received unexpected expensive medical bills after the fact. With the No Surprises Act, which goes into effect Jan. 1, 2022, health care providers have an opportunity to fix this and build a closer, more trusting relationship with their patients in the process.
It’s not just the emergency department
Much of the discussion about the No Surprises Act focuses on people who go to an in-network hospital in an emergency and receive care from an out-of-network provider, such as a doctor or laboratory. While the hospital charges are covered by insurance, fees for the out-of-network services may not be covered and can result in high charges that people with health insurance don’t expect.
That was the plight of Phil Gaimon, an Olympic-hopeful cyclist who received a $200,000 bill for shoulder surgery following a cycling accident. Gaimon had two different insurance policies, neither of which agreed to pay the full cost of care because the providers were out of network.
The No Surprises Act prohibits such so-called surprise bills, but also reaches beyond the emergency department and opens the door for hospitals, physicians, laboratories, and others to engage patients as customers who can make choices based on what they can afford.
Beginning Jan. 1, the Act requires health care providers to notify patients of their right to receive up-front pricing in the form of a good-faith estimate of the expected charges for all services that would reasonably be expected to be delivered before services are scheduled. This includes the cost of services provided by all health care providers involved in the care, regardless of whether they are part of the same health system or practice.
The good-faith estimate must be provided to uninsured or self-pay patients upon request, and must include self-pay or cash pricing. Estimates for those with health insurance must include insurance plan pricing. And all estimates must include available discounts and be provided before services are scheduled.
For example, before someone has knee surgery, the health care provider who schedules the surgery must provide the patient with estimated charges for the hospital or surgery center, the anesthesiologist, imaging services, drugs, and any follow up visits. This allows patients to find the lowest cost by comparing estimates.
In its release of the No Surprise Act regulations, the government affirmed that the purpose of the act is to provide patients with “more choice, better service, and lower prices.” In other words, the government is telling health care providers that patients are consumers. Providers need to listen.
Seize the opportunity
Not only does this disrupt the paradigm in which patients buy health care services without being aware of the cost, but it forces communication about these costs among all parties that might be involved in a procedure: hospitals, community providers, pharmacies, laboratories, and the patient. Small providers, such as clinics or doctors’ offices, may not routinely serve self-pay patients, but will now need to develop cash pricing.
The No Surprises Act also requires good-faith estimates to include estimated drug costs, which is an entirely different — and more complex — discussion. But these challenges also create opportunities to better understand patients and their financial situations.
Addressing financial issues up front, before care is delivered, creates opportunities for providers to avoid unpaid medical bills, reduce bad debt, and improve revenue cycle performance. It can also improve patients’ experiences (and help develop more trusting relationships with their providers). Armed with knowledge of a patient’s financial situation at the outset of care, providers can identify lower-cost options, and offer payment plans or credit programs to help patients avoid unexpected financial disasters. In short, the challenges to implementing good-faith estimates as required by the No Surprises Act should be viewed as an opportunity to bring health care into the consumer age.
Stacy Bratcher is a vice president and general counsel at Cottage Health in Santa Barbara, Calif.
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