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Q&A

A Georgia Law to End Surprise Billing Offers a Roadmap for Congress to Accomplish the Same

As federal legislation to stop surprise out-of-network billing has stagnated in Congress, several states have pressed forward with laws to protect patients from the predatory practice. Georgia recently became the latest state to do so, joining a groundswell of support for ending surprise billing.

A hospital room

A rising trend of surprise medical bills has swept the nation in recent years, creating serious financial burdens for patients and families and spurring lawmakers to take action.

While federal protections against surprise billing have languished in Congress, several states across the country are pressing forward with regulations to stop the predatory practice. Georgia recently became the latest state to pass a law protecting people from surprise bills.

Research professor Kevin Lucia, J.D., M.H.P., and research professor emeritus Jack Hoadley, Ph.D. with Georgetown University’s Center on Health Insurance Reforms, sat down with Arnold Ventures to explain how Georgia got it done in a bipartisan fashion, and how the Georgia model could set the standard for a federal approach.

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Arnold Ventures

​The Georgia Legislature passed surprise billing protections last week. What was included in the final bill?

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Kevin Lucia & Jack Hoadley

The Surprise Billing Consumer Protection Act was passed with broad bipartisan support. In fact, the bill passed with unanimous support in the Senate (53-0) and near unanimous support in the House (164-4). Once signed by Gov. Kemp, Georgia will become the 16th state in the country to have adopted comprehensive protections against surprise medical bills, covering an estimated 2.5 million Georgia residents when the law goes into effect in 2021.

Patients will be protected from surprise medical bills in an emergency or when they receive care at an in-network health care facility but are treated by an out-of-network provider (such as by an anesthesiologist). Patients will pay no more than they would have if the care had been received in-network, and providers cannot bill a patient for any additional amount. Thus, patients are held harmless from bills they thought were covered or had no control over.

One important caveat: Georgia’s bill extends only to state-regulated health insurance plans and certain public plans (such as the state employee health plan). This is because states cannot regulate job-based coverage that falls under a federal law known as the Employee Retirement Income Security Act. States also cannot protect people from surprise bills from air ambulance companies, also regulated at the federal level. Addressing those issues will require action by Congress, which has been much quieter on surprise medical bills lately — leaving states to lead the way.

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Arnold Ventures

Speaking of Congress, how does Georgia’s bill compare to the approaches currently being considered by Congress?

Headshot of Kevin Lucia & Jack Hoadley
Kevin Lucia & Jack Hoadley

Everyone agrees that patients should be taken out of the middle of disputes between insurers and out-of-network providers. That protection is included in Georgia and all the bills pending in Congress. But not everyone agrees on how to resolve these payment disputes, especially when a lot of money is at stake. And that has been the hold-up in Congress.

Georgia — like most of the pending federal proposals and several recent state laws — developed a hybrid approach to resolve payment disputes. An insurer must first promptly pay a set amount to an out-of-network provider. In Georgia, this amount is the greater of 1) the most recent negotiated rate between that insurer and provider; or 2) the average median in-network rate paid by all insurers for that type of service. (To see how Georgia compares to other states, check out this deeper dive on state payment standards.) In most cases, that initial payment should be enough to resolve the dispute — end of story.

But, if the provider disagrees with the initial payment amount, they can initiate “baseball-style” arbitration where each side submits their best offer, and a neutral arbitrator picks one of the two amounts. To limit use of the arbitration process, Georgia’s law includes a series of “guardrails” — like requiring the parties to negotiate beforehand and requiring the losing party to pay arbitration costs. (We discuss these and other guardrails here.)

So far, most of the major federal proposals have taken a similar hybrid approach. Two proposals — one from the Senate HELP Committee and the House Energy and Commerce Committee and the other from the House Education and Labor Committee — would require an initial payment standard (an insurer’s median in-network rate) coupled with back-up baseball-style arbitration (with some guardrails). However, another bill from the House Ways and Means Committee would forego a payment standard altogether and let parties proceed directly to mediation.

Which approach to adopt continues to be a point of much debate in Congress, even though states like Georgia, Colorado, Virginia, and Washington have successfully made the hybrid approach work.

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Arnold Ventures

Georgia has been working on this legislation for several years. What was finally the breakthrough that helped them reach an agreement?​

Headshot of Kevin Lucia & Jack Hoadley
Kevin Lucia & Jack Hoadley

This win was a long time in the making, and a very committed group of state leaders worked tirelessly on surprise medical bill protections for many years. That includes the bill sponsors, Sen. Chuck Hufstetler and Rep. Lee Hawkins (and, before him, Rep. Richard Smith) as well as consumer advocacy organizations, Georgians for a Healthy Future and Georgia Watch. The bill also had support from Gov. Kemp, who mentioned it in his 2020 State of the State address.

Our team was fortunate to play a small role in helping state policymakers understand the national landscape and the latest information on state and federal proposals. Through our technical assistance, we were able to share how other states have tackled major issues, which helped bring a few fresh ideas to the table. Sen. Hufstetler and Reps. Hawkins and Smith — eager to break the stalemate that had stopped progress in past years — used that information to develop a solution that works for Georgia but that was informed by efforts in other states.

Georgia is not unique in needing a multi-year effort to advance surprise billing protections. But it is rare for a state to go from no protections to comprehensive protections in one fell swoop, especially with near unanimous support. We have seen that now in two states in 2020 — first Virginia and now Georgia. We think it underscores how fed up patients are with receiving surprise bills and the desire of policymakers to show that they can tackle major health care affordability issues.

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Arnold Ventures

What can Congress and other states learn from Georgia’s experience?

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Kevin Lucia & Jack Hoadley

From our work in Georgia and beyond, we know that successful legislation requires stakeholder compromise. That is one reason why we are seeing so many states adopt the hybrid approach that Georgia has taken.

Insurers quickly pay median in-network rates to providers (which insurers want) and providers can use dispute resolution as an “appeals” process (which providers want). So long as there are guardrails to prevent abuse, patients are protected while industry works out payment disputes through the arbitration process. Stakeholders get other wins in a well-designed compromise, such as ensuring that providers are paid promptly and that certain factors are addressed in arbitration.

There has been momentum for this approach in Congress, but lobbying efforts have been fierce, especially from private equity-backed firms opposed to changes that threaten their business model. As a result, Congress has taken little action on surprise medical bills.

In Georgia, state leaders showed courage and commitment by developing a compromise and sticking with it — even over industry objections. We think it is long past time for Congress to do the same and protect the millions of consumers that cannot be reached by state laws.

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Arnold Ventures

Do you expect additional state action this year?​

Headshot of Kevin Lucia & Jack Hoadley
Kevin Lucia & Jack Hoadley

We hope so — and we are keeping an eye on some bigger states like Ohio and Pennsylvania. Of course, COVID-19 has brought a lot of disruption, so some action that we might have expected has been delayed. That said, many state policymakers continue to prioritize surprise medical bill protections, perhaps because patients have even less control over the providers they see during a pandemic — making it even more likely that they will end up seeing an out-of-network provider and receive a surprise bill. Recognizing this risk, several states have taken emergency action on surprise medical bills (but these protections are temporary and generally limited to COVID-19 treatment).