It happens all the time: A person has an accident, gets seriously injured and is rushed to the hospital in an ambulance. This person is fortunate – they have health insurance – and they remember which hospital is considered “in-network” for their plan. They are rushed to that hospital, where they are treated by several specialists. Months later, that person receives a surprise “balance bill” for using an out-of-network anesthesiologist, radiologist or pathologist or for additional lab testing, despite going to an in-network hospital.

This was an entirely legal practice in Washington state, until Wednesday. Often, patients would not even know if a provider or service was out-of-network until they received their surprise bill.

Some Washingtonians will no longer get surprise medical bills in 2020, due to a new state law prohibiting the practice for state-regulated health plans.

The new balance billing law applies to all state and public school district employee plans, individual market exchange plans, as well as small and large employer plans purchased from health insurers directly. Large employers that use self-funded health plans can opt-in to the balance billing law, however.

Some companies and public employers in Spokane have opted into the balance billing protections for their employees, including the city of Spokane, Spokane fire and police pension boards, Washington Trust Bank, Pyrotek Inc. and Goodwill Industries of the Inland Northwest.

More than 150 employers have opted in so far, said Stephanie Marquis, media and outreach manager for the Washington Office of the Insurance Commissioner

In a medical emergency or scheduled procedure at hospitals statewide, a person with a state-regulated health plan cannot be charged more for out-of-network providers that provide care. So if a person is taken to an out-of-network hospital in a mental health, substance use or medical emergency, they cannot be overcharged for out-of-network costs anymore. The law essentially takes the consumer out of the negotiations, putting the onus on insurance companies and hospitals to agree to rates, which must be comparable to in-network costs for the care provided.

The Office of the Insurance Commissioner received nearly 100 complaints for surprise “balance bills” in 2019, Marquis said. Surprise medical bills can be incredibly costly.

“Just within the last year we learned of two consumers who received surprise bills of over $100,000, and who both faced losing their homes and medical bankruptcy,” Commissioner Mike Kreidler said in a news release.

Medical bankruptcies are still common even after the introduction of the Affordable Care Act and multiple states expanding Medicaid programs. A 2019 study found that two-thirds of the bankruptcy filings sampled were due to medical expenses or medical problems causing work loss as a major contributor to filing for bankruptcy.

Going forward, Washingtonians who get surprise medical bills can contact the provider or facility and tell them they have been wrongly charged as well as file a complaint with the insurance commissioner’s office. The new law spells out an arbitration process for providers and insurers to solve billing disputes with out-of-network providers. The consumer should only be responsible for the in-network cost-sharing amount, which is defined as the median amount of that same service if it was in-network in the same geographic area.

The insurance commissioner can also refer providers or facilities to the Department of Health for enforcement if they discover a pattern of balance billing under the new law.

Rep. Marcus Riccelli, D-Spokane, who sponsored the legislation, said the law is past due and hopes a federal version will pass soon. The law does not affect Washingtonians with Medicare coverage or TRICARE, which are federally regulated health plans.

Riccelli said he hopes the law will mean “less hurdles for the consumer and more obligations for the providers and insurers.”

“Nobody should open up a mailbox and be surprised by some bill that they owe for a service that they received that they thought was an in-network provider,” Riccelli said.

The new law requires hospitals and health insurance companies to post on their websites provider or facility networks they participate in. And while the law covers emergency, non-emergency surgical and ancillary services, health care consumers still need to be diligent to ensure their providers are in-network for other services.

“When you have the capacity to make those decisions, there is still an onus on consumers to gather information to make good choices,” Riccelli said. “The hard part is the complexity of the health care system makes it overwhelming.”

If a Washington resident has to receive emergency care in Idaho or Oregon, the law still applies, preventing health care providers from charging patients out-of-network prices across state lines. While the law got bipartisan support, providers and health insurers were able to comment on the rule before it was finalized. The Washington State Hospital Association asked the commissioner’s office to clarify some definitions in the bill.

“WSHA feels the new balance billing law establishes a fair process for addressing the issue of surprise medical bills. We convened an Out-of-Network Task Force and worked with the state medical association and insurance carriers to reach an agreement on how to best address the issue,” Tim Pfarr, assistant director of communication at the association, said in a statement.

“We understand the need for this law to protect patients, however we do not yet know what the financial impact will be to hospitals, and we will know more as 2020 progresses,” Pfarr’s statement continued. “We also know this isn’t just an issue in Washington state, as this is an issue patients face all across the country. We hope federal regulations will mirror the collaborative approach we took in our state to ensure the best and most fair solution possible.”

Riccelli said he would like to see more health literacy for consumers and transparency measures going forward, but said he was grateful that Washington has eliminated balance billing.

“No one should be afraid of unexpected health care bills when seeking the health care they need,” he said.

Arielle Dreher's reporting for The Spokesman-Review is funded in part by Report for America and by members of the Spokane community. This story can be republished by other organizations for free under a Creative Commons license. For more information on this, please contact our newspaper’s managing editor.