A New Bill Could Raise the Stakes for Self-Funded Insurers

A major and costly change could be coming for self-funded insurers, if a recently-proposed bill is passed into law. A bipartisan group of senators released a draft of the “Protecting Patients from Surprise Medical Bills Act” in September. Its goal is to keep Americans from being hit with unexpected medical bills and prevent medical bankruptcies.

On its surface, such legislation seems like a positive thing. The act would protect patients from “balance billing,” which happens when an insurer reimburses less than what a health care provider charges a patient, and the provider bills the patient for the balance. Balance billing is why insured patients are sometimes hit with unanticipated bills for thousands of dollars, weeks or months after receiving medical treatment. This practice can be financially devastating for patients.

This new act would make three major changes to the way insurers are allowed to handle billing.

  • When a patient receives out-of-network emergency services, under the act the insurer would be responsible for paying any balance that exceeds the cost sharing amount laid out by the patient’s insurance plan.
  • When a patient receives non-emergency services from an out-of-network provider at an in-network facility, the patient will only be responsible for the cost sharing amount that he or she would be charged for in-network services.
  • A patient who receives out-of-network emergency services must be given, in writing, the option to transfer to an in-network facility for any further treatment.

From a patient’s perspective, these changes sound wonderful. If passed into law, this act could take a lot of financial stress off the plate of anyone who ends up in an out-of-network ER. The potential problem with this act is that the money still has to come from somewhere. It doesn’t limit what health care providers can charge – it only limits how much of that bill the patient is required to pay. The insurer has to cover the difference.

For self-funded insurers and the employees covered by their plans, these changes might not represent any savings at all. As insurers’ costs go up, so must employee contributions. Insurers would lose some of their bargaining power with health care providers, which is a critically important tool for controlling costs and providing plan members with high-quality coverage. Lifting consequences for using out-of-network services may also encourage employees to choose those facilities over in-network ones, further adding to an insurer’s costs.

All that said, it’s too early to draw any concrete conclusions about the impact that this legislation would have on self-funded insurers and the patients covered by their plans. Senator Bill Cassidy, one of the bill’s sponsors, said that he won’t push for the bill to go in front of Congress until January at the earliest.

We’ll keep an eye on the bill’s progress and keep you updated as developments unfold. In the meantime, contact us with any questions or concerns about your stop loss insurance needs.


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