Michigan Enacts Surprise Medical Billing Legislation
Effective October 22, 2020, the Michigan legislature enacted Enrolled House Bill No. 4459, which established legislation regarding so-called “surprise billing” meant to limit the amount that can be charged to patients by out-of-network providers (“Act”). “Surprise billing” (also referred to as “balance billing”) is the term frequently used when an out-of-network provider (either a professional or a facility) bills a patient for nonemergency services when the patient is unaware that the provider is out-of-network. For example, although a hospital treating a patient may be in-network, the radiology practice treating the patient in the hospital may be out-of-network. The patient is then “surprised” to receive a medical bill for the provider’s full charges or the charges that the patient’s health coverage denies.
Key Provisions under the Act
The Act is relatively complex and contains specific exceptions. While careful review and analysis of the Act is necessary to apply it to a specific situation, the following summarizes its key provisions.
- The Act applies to providers and facilities that do not have a contract with, and thus do not participate with, a health benefit plan.
- A nonparticipating provider or facility treating a patient in a nonemergency situation is required to accept as payment in full the greater of: (a) the median amount negotiated by the patient’s carrier for the region and provider specialty, excluding any in-network coinsurance, copayments, or deductibles, or (b) 150% of the Medicare fee-for-service fee schedule for the health care service provided, excluding any in-network coinsurance, copayments, or deductibles.
- The fee limitation noted above applies if the health care service is provided to a nonemergency patient, is covered by the patient’s health benefit plan, and is provided at a participating hospital facility and either: (a) the patient does not have the ability or opportunity to choose a participating provider, or (b) the nonemergency patient has not been provided the disclosure required under the Act (discussed below).
- The fee restriction noted above for nonemergency situations applies to health care services provided to an emergency patient if the service is covered by the patient’s health benefit plan and is provided to the patient by the nonparticipating provider at a participating health facility or nonparticipating health facility.
- Beginning July 1, 2021, a nonparticipating provider has the right to request that the Michigan Department of Insurance and Financial Services (“DIFS”) review the calculation of the fee allowed pursuant to the Act if the provider believes that it was incorrectly calculated. The request must be made on a form and in the manner required by DIFS.
- The Act contains a detailed provision giving a nonparticipating provider the right to file a claim with the insurance carrier for greater payment for furnishing “a health care service involving a complicating factor to an emergency patient.” The term “complicating factor” means a factor that is not normally incident to a health care service, including, but not limited to, the following: (a) increased intensity, time, or technical difficulty of the health care service, (b) the severity of the patient’s condition, or (c) the physical or mental effort required in providing the health care service. The request must be supported with clinical documentation demonstrating the complicating factor and the emergency patient’s medical record (highlighted to show the complicating factor).
If the request is approved by the insurance carrier, the provider will receive an additional 25% of the otherwise applicable payment. If the request is denied, the insurance carrier must issue a letter to the provider to that effect, and beginning July 1, 2021, the provider may request binding arbitration with DIFS on a form and in the manner required by DIFS.
- The Act does not prohibit a nonparticipating provider and a carrier from agreeing to a greater payment amount through private negotiations or an internal dispute resolution process, although a nonparticipating provider entering into this type of agreement is prohibited from seeking to collect from the patient any amount other than the applicable in-network coinsurance, copayment, or deductible.
- Although the Act is relatively complex, the statute limits the scope of regulations that can be promulgated under the Act to only regulations covering the right of a provider to request a review of a fee calculation or to claim greater payment is due because of a complicating factor as described above.
- The Act establishes a 60-day deadline for a carrier to pay a nonparticipating provider following submission of a claim, which is good news for nonparticipating providers.
New Disclosure Form Requirement
As provided by separate legislation, Enrolled House Bill 4460, a nonparticipating provider is required to make the following disclosure to the patient and obtain the patient’s signature, within the timeframes set out in the statute:
Your health benefit plan may or may not provide coverage for all of the health care services you are scheduled to receive or the providers providing those services. You may be responsible for the costs of the services that are not covered by your health benefit plan.
The nonparticipating provider must provide a good-faith estimate of the cost of the health care services to be provided. A good-faith estimate does not take into account unforeseen circumstances, which may affect the cost of the health care services provided.
You also have a right to request that the health care services be performed by a provider that participates with your health benefit plan, and may contact your carrier to arrange for those services to be provided at a lower cost and to receive information on in-network providers who can perform the health care services that you need.
The nonparticipating provider is then required to retain a copy of the disclosure for at least seven years and provide the patient a good-faith estimate of the cost of the health care services to be provided to the nonemergency patient.