Michigan recently enacted legislation intended to protect consumers from surprise medical billing. The legislation amends Michigan’s public health code (PHC) by adding Article 18, which establishes disclosure requirements and limitations on payments for out-of-network providers (i.e., providers that do not participate in a patient’s health benefit plan) in certain circumstances. The law was enacted primarily to prohibit out-of-network health care providers from sending large balance bills to patients, however, the law also establishes a number of circumstances which limit the amount an out-of-network provider may charge patients. Balance billing occurs when a provider charges more for a health care service than the patient’s insurance carrier will cover. Once the carrier pays out the amount that it covers for the service, the provider charges the patient for the balance (i.e., the amount the insurance carrier does not cover). The law was made effective as of October 22, 2020. However, sanctions will not be imposed for violations until January 1, 2021.
Below is a brief overview of key aspects of the new surprise medical billing law.
Disclosure Requirements
To prevent balance billing, the new law requires out-of-network health care providers providing care to a non-emergency patient to make the following disclosures to the patient:
- That the patient’s health plan may not cover all of the health care services the out-of-network provider is scheduled to provide;
- A good-faith estimate of the cost of the services to be provided to the patient; and
- That the patient may request the health care services are performed by an in-network provider (e., a provider that participates in the patient’s health benefits plan).
The disclosure must be provided in a written format with, at least, 12-point font. Note that MCL § 333.24509 provides sample disclosure language that providers may use. All disclosures must include language that is in substantially the same form as the sample language provided in § 333.24509.
Out-of-network providers must also obtain the patient’s signature on the disclosure form to demonstrate that the patient has received, read, and understands the disclosure. Providers are required to retain copies of the of the disclosure form for at least seven (7) years. The disclosure must be provided at the earliest of the following:
- If the health care service was scheduled at least fourteen (14) days prior (or within 14 days) to the provision of the health care service, and the service is being provided in a hospital, freestanding surgical outpatient facility, a skilled nursing facility, a laboratory, or a radiology/imaging center, disclosure must be made within 14 days of provision of the service;
- At the time of the patient’s first contact regarding the health care service, if the service was scheduled and is being provided in a physician’s office or certain other outpatient settings;
- A presurgical consultation for the health care service;
- A scheduling/intake call for the health care service;
- A preoperative review for the health care service; or
- Any other contact before the health care service.
The HLP believes that the timing requirements and the “good-faith estimate of the cost of the services to be provided to the patient” requirements will be extremely burdensome on providers/suppliers. We recommend that health care entities begin taking proactive measures to develop a process to comply with the law. Again, the law is in effect and the disciplinary subcommittee may begin sanctioning providers not complying with the disclosure requirements on January 1, 2021. Sanctions for violations may include fines (in an amount determined by the disciplinary subcommittee) and educational/training programs as deemed necessary by the disciplinary subcommittee. Note that the law does not specify a range for the fines to be imposed for violating the law, but the fines must be reasonable.
Limitations on Payment
The law also limits the amount that the out-of-network provider may collect in certain circumstances, including when the out-of-network provider fails to provide proper disclosure to the patient. The law also caps the amount that an out-of-network provider may collect in the following circumstances:
- The health care service is provided to an emergency patient, which is covered by the patient’s health benefit plan, the service is provided by an out-of-network provider, and the service is provided at either an in-network or out-of-network facility;
- The health care service is provided to a non-emergency patient, the service is covered by the patient’s health benefit plan, the service is provided by an out-of-network provider at an in-network health facility, and the patient either: (1) does not have the ability/opportunity to choose an in-network provider, or (2) the patient did not receive a proper disclosure; and
- The health care service is provided by an out-of-network provider at an in-network hospital to an emergency patient who was admitted to the hospital within seventy-two (72) hours after receiving a health care service in the hospital’s emergency room
In such circumstances, the law generally limits the provider to collecting the greater of: (1) the median amount for the service, negotiated by the patient’s carrier for the region and provider specialty; or (2) one-hundred-fifty (150%) percent of the Medicare FFS fee schedule amount. To obtain any higher payment for the services the provider would need to negotiate with the patient’s carrier or reach an agreement in an internal dispute resolution process with the patient’s carrier.
Lastly, note that out-of-network providers are prohibited from attempting to collect from the patient any amount other than the applicable in-network coinsurance, copayment, or deductible in any of the circumstances discussed in this “Limitations on Payment” section. Failure to comply with any of the applicable limitations will result in sanctions similar to those imposed for failure to comply with the disclosure requirements.
For any questions regarding the new surprise medical billing law, please contact Abby Pendleton. Esq. or Clinton Mikel, Esq. at (248) 996-8510 or by e-mail at apendleton@thehlp.com or cmikel@thehlp.com.