An Act to Follow: Michigan’s Surprise Billing Law

Surprise medical billing, also known as balance billing, allows doctors, specialists, and healthcare facilities to bill patients for any outstanding balance remaining after the health insurance provider’s portion is paid. The issue is when patients see a doctor or use a service that is deemed out-of-network by the health insurance provider. Many times, patients are unaware the services or doctor is not part of their coverage plan and are “surprised” when a larger than normal medical bill arrives in the mail.

Michigan’s surprise billing law was enacted in October 2020 and providers could start filing arbitration claims on July 1, 2021, for claims dating back to October 2020. As of late August 2021, not a single claim has been filed and patients are not complaining of receiving surprise medical bills.

“The success of Michigan’s surprise billing law is due to the cooperation between corporations, labor unions, health insurance companies and organizations, like the EAM, steering Michigan on a path of stability that protects patients and health plans,” said Bret Jackson, president, Economic Alliance for Michigan (EAM).

In contrast to Texas, who passed a surprise billing law in 2019, there were over 50,000 eligible cases in the first six months of 2021 that went through arbitration or mediation. Of those 50,000 cases, over 35,000 were for emergency room physician services and more than 10,000 were for anesthesia services.

Arbitrators collected over $30 million in fees, not including what purchasers and health plans paid in administration expenses to fight the claims. The Texan process only created $30 million in additional healthcare costs that didn’t help one patient.

Why is this happening in Texas? The average award decide by Texan arbitrators is 324 percent higher than the original payment by the insurance company. Why should healthcare providers stay in contract with insurance companies when arbitration results in a significantly higher reimbursement?

Now attention focuses on the federal agenda for surprise billing. Pending Federal Surprise Billing rules include arbitration/mediation much like the Texas plan. Groups, such as the EAM and the National Alliance of Healthcare Purchaser Coalitions, are strongly urging Congress to take action to prevent costly arbitration process as becoming the norm for determining payment for out-of-network services, especially when the out-of-network service is performed within an in-network facility.

“Congress needs to save Americans from the costly surprise billing process that is happening in Texas,” stated Jackson. “If Congress is set on including arbitration, then they need to set payment parameters that filter out excessive charges, set a minimum dollar amount to file a claim and include pricing transparency; or simply just use the Michigan rules as a model.”

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