Published July 1, 2021 Updated July 20, 2021

Surprise billing has been widely seen as one of the most exasperating practices in medicine. Emergency room visits are one common source of such bills.
Surprise billing has been widely seen as one of the most exasperating practices in medicine. Emergency room visits are one common source of such bills.Credit…Kai Pfaffenbach/Reuters

The Biden administration took its first steps Thursday toward finalizing the details of a ban on surprise medical bills that Congress passed and President Trump signed into law last winter. Some experts see the policy as the most important consumer protection in health care to come out of Washington in more than a decade.

Surprise medical bills happen when a doctor or other provider who isn’t in a patient’s insurance network is unexpectedly involved in a patient’s care. Patients may go to a hospital that accepts their insurance, for example, but get treatment from emergency room physicians or anesthesiologists who don’t — and who then send patients big bills directly.

Surprise billing had been widely seen, by academics and legislators, as one of the most exasperating common practices in medicine. Millions of Americans receive these type of bills each year, with as many as one in five emergency room visits resulting in such a charge. The new law effectively bans the practice.

“The A.C.A. took us a long way; expanded Medicaid took us a long way — but there was still this black hole,” said Xavier Becerra, the Health and Human Services secretary. “Getting rid of surprise billing is like removing the boogeyman from your nighttime sleep.”

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Adam Buckalew, who worked as a Republican staffer on the committees that wrote the bill, described it as “the single greatest patient protection since Obamacare, and it’s solidly bipartisan.” Mr. Buckalew, now a consultant, is advising some health insurance groups that care about the details of the regulation.

Outlawing surprise medical bills was the rare health policy that garnered widespread and bipartisan support on Capitol Hill. Legislators were spurred on by numerous stories of patients who faced thousands of dollars in debt for bills they never could have prevented. A Texas man, for example, received a $7,924 bill from an out-of-network oral surgeon who performed an emergency operation at an in-network hospital.

Even so, it took years to pass legislation, as well-funded interests lobbied intensely against the reforms — including millions of dollars spent on television advertising. Some private-equity-owned physician groups came to rely on surprise billing as a business model, and they generally opposed congressional reform efforts.Sign up for The Upshot Newsletter  Analysis that explains politics, policy and everyday life, with an emphasis on data and charts. Get it sent to your inbox.

Congress passed the surprise billing ban in a December 2020 legislative package, which requires out-of-network hospitals and doctors as well as insurers to sort out a fair price for medical care instead of charging patients. The law covers hospitals, doctors and nearly all health care providers except for ground ambulances, which were left out of the legislation and are likely to remain a major source of surprise bills.

Passage of the ban set off another aggressive lobbying effort over how exactly billing conflicts between providers and insurers will be resolved when the law takes effect in 2022. The same actors that made their case to Congress are now equally engaged in a behind-the-scenes effort to nudge the regulations in a more favorable direction.

“The lobbying is very much still going on,” said Loren Adler, an associate director of the U.S.C.-Brookings Schaeffer Initiative for Health Policy, whose research on the issue was influential among lawmakers.

On Thursday, federal officials began completing the particulars of how that legislative plan will translate to action, by publishing the first major regulation interpreting it. The law establishes a system for calculating a benchmark payment and a way for insurers and health providers to appeal to a neutral arbiter when they feel that amount is not appropriate.

The rule released Thursday is not the last that will need to be published before the end of the year, but it does settle several contentious issues. And it was published as a so-called interim final rule, meaning its details are unlikely to change in the coming months. There will still be a comment period when interested parties can submit feedback.

The three main issues addressed are:

How the federal government will define a standard price for out-of-network care. Among the more important and contested provisions in this rule is a detailed definition of the “fair” price that arbiters should consider as a baseline for deciding how much the insurance plan typically owes the hospital or doctor. This will be a key figure because it will determine how much the patients owe — they are still responsible for paying the out-of-network doctor their normal co-payment or deductible amount — and what reimbursement the provider will net.

What hospitals and doctors will need to do to notify patients they are not in their insurance network. The federal law requires providers to inform patients that they do not participate in their insurance network, in situations that are not a medical emergency, and gain their consent before treating them or sending a bill. The regulation provides a template for a notice that providers can use to fulfill the requirement. It tells patients, “If you sign this form, you may pay more because you are giving up your protections under federal law.”

The notification rules in the law represent a new form of transparency — doctors and hospitals will need to warn patients if any of their care isn’t covered by insurance.

A complaint system for consumers who believe they were illegally billed. The government expects to handle 3,600 complaints annually from patients who think their doctor or hospital has violated the new law.

. The law provides funding for that new system, and gives the federal government authority to assess fines as high as $10,000 per billing violation.

The regulation indicates that the Biden administration is still deciding whether it will limit the time patients have to submit complaints, potentially setting a limit at three or six months after they learn of a possible billing violation.

Consumer advocacy groups were still in the process of reviewing the 411-page rule, but generally felt positive about the Biden administration’s proposal.

“I haven’t seen any red flags, and I’ve seen several cases where they interpreted things more broadly than narrowly from a consumer perspective, so that is a good thing,” said Jack Hoadley, a research professor emeritus at Georgetown University.

One particular decision he liked was an expansion of the law to apply to urgent care centers that are licensed to provide emergency services. Those providers were not explicitly named in the federal law.

Subsequent rounds of regulation will provide more detail about how the arbitration process will work, and what factors the neutral arbiter can or can’t consider in deciding the right price for a medical service. Another rule is expected to deal specifically with air ambulances, which are regulated under the new law and tend to generate some of the biggest surprise medical bills.Surprise Medical Bills Cost Americans Millions. Congress Finally Banned Most of Them.Dec. 20, 2020Mystery Solved: Private-Equity-Backed Firms Are Behind Ad Blitz on ‘Surprise Billing’Sept. 13, 2019Doctors Win Again, in Cautionary Tale for DemocratsDec. 17, 2019

Sarah Kliff is an investigative reporter for The New York Times. Her reporting focuses on the American health care system and how it works for patients. 

Margot Sanger-Katz is a domestic correspondent and writes about health care for The Upshot. She was previously a reporter at National Journal and The Concord Monitor and an editor at Legal Affairs and the Yale Alumni Magazine. @sangerkatz • FacebookA version of this article appears in print on July 2, 2021, Section B, Page 6 of the New York edition with the headline: Regulators Move Toward Ending ‘Boogeyman’ of Surprise Medical Bills. Order Reprints | Today’s Paper | SubscribeREAD 338 COMMENTS