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“Protecting Patients from Surprise Medical Bills” – a hearing held on May 21 by the House Ways and Means’ Subcommittee on Health – considered the bills for health care services that patients get after they received care from health care providers who were not in the patients’ health insurance network.[1] Typically, patients receive these bills for services that were provided either during an emergency department visit or from non-network providers who are working at in-network hospitals. For example, a patient may have surgery performed by an in-network physician at an in-network hospital, but then receive a bill from an out-of-network anesthesiologist that the patient did not have an opportunity to choose. Pathologists, emergency department physicians, anesthesiologists, and radiologists are the health care professionals who are most likely to send patients surprise medical bills. Ambulances and air ambulances also send surprise bills to patients.

In the hearing’s first panel, Representative Katie Porter (D-CA-45) described her personal experience last summer with a surprise medical bill and Representative Cathy McMorris Rodgers (R-WA-5) described another patient’s experience.  The second panel consisted of representatives from the American Medical Association (AMA), the American Hospital Association (AHA), America’s Health Insurance Plans (AHIP), and the ERISA Industry Committee (representing self-insured plans).

Although all of the witnesses supported protecting patients from surprise medical bills, they disagreed about how non-network providers would be paid – whether benchmark rates, negotiated rates, in-network rates, or rates based on Medicare rates should be used. They also discussed network adequacy, how disputes about rates would be resolved, the effectiveness and significance of state laws, and whether, and what type of, federal legislation is necessary.

Unfortunately, the hearing did not address one of the most significant and largest surprise medical bills that Medicare patients face: the full bill for a stay in a skilled nursing facility when the patient’s prior stay in the hospital was called observation or other outpatient designation, rather than inpatient. The surprise bill occurs because Medicare Part A limits coverage for a SNF stay to a patient who was hospitalized as an inpatient for at least three consecutive days, not counting the day of discharge.[2] At the Center’s National Voices of Medicare Summit last week, Congressman Joe Courtney (D-CT-2) described observation status as “surprise billing on steroids.” 

Although the Medicare program now requires hospitals to inform patients of their status as outpatients,[3] Medicare regulations expressly prohibit patients from appealing observation status.[4] A patient’s inability to protect himself or herself from the bill for the skilled nursing facility stay makes observation status another example of a surprise medical bill. 

The Center will submit a written statement for the hearing record, suggesting that the Improving Access to Medicare Coverage Act of 2019 (H.R. 1682/S. 753) could resolve this surprise medical bill issue for Medicare patients by counting all time in the hospital, whether called inpatient or outpatient or observation, as satisfying Medicare’s requirement for a three-day inpatient hospital stay. An ad hoc coalition of 33 health and advocacy national organizations that support the legislation, of which the Center is a member, will also submit a written statement for the record.

May 23, 2019 – T. Edelman

[1] The witnesses’ statements are available at
[2] 42 U.S.C. §1395x(i); 42 C.F.R. §409.30(a)(1).
[3] Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act), 42 U.S.C. §1395cc(a)(1)(Y).
[4] 42 C.F.R. §405.926(u).

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