Congress Acts on Surprise Bills, Yet a New Loophole Fuels More Costs

The 2020 Surprise Billing Law and Its Intent

In 2020, federal lawmakers enacted a measure aimed at protecting patients from unexpected charges that arise when they receive care from out of network providers during emergencies or at in‑network facilities. The law, often called the No Surprises Act, set clear rules about when balance billing is prohibited and required insurers to cover the full cost of emergency services.

Key provisions

Emergency care must be treated as in network, regardless of the provider’s contract status.
Non‑emergency services delivered at an in‑network facility cannot be billed separately by out of network specialists.
Dispute resolution between insurers and providers is handled through an independent arbitration process.

The legislation was celebrated as a major step toward financial transparency and patient protection.

How Providers and Intermediaries Bypass the Law

Despite the clear language of the act, many health care entities have found ways to sidestep its requirements. The most common tactics involve leveraging the complex web of billing codes, third‑party administrators, and ancillary services that fall outside the strict definition of “medical care.”

Balance billing through out of network services

Providers may classify certain procedures as “ancillary” or “support” services, which are not covered by the act’s protections. By doing so, they can issue separate invoices that the patient is legally obligated to pay.

Using “facility fees” that are billed by the hospital rather than the physician.
Labeling diagnostic imaging as a “stand‑alone service” to avoid in‑network pricing.
Contracting with “billing middlemen” who submit claims under different payer codes.

These practices exploit a gray area that the original legislation did not anticipate.

The Unintended Consequence: A New Billing Gap

Researchers from the Kaiser Family Foundation have documented a rise in out of pocket expenses that correlate with the emergence of these workarounds. The gap appears because the law focuses on direct patient‑provider interactions, leaving indirect charges largely unregulated.

Why the gap emerged

Several factors contributed to the loophole:

Rapid growth of “network‑independent” billing firms that specialize in navigating insurance nuances.
Limited enforcement resources within the Centers for Medicare & Medicaid Services to monitor complex claim patterns.
Ambiguities in the statutory language regarding what constitutes a “service” versus a “facility” charge.

The result is a new class of surprise bills that appear after the patient has already received care, often weeks later, and are not covered by the original protections.

Potential Policy Fixes and Ongoing Debates

Lawmakers, consumer advocates, and industry groups are now debating how to close the loophole without undermining the original intent of the No Surprises Act.

Legislative proposals

The U.S. House Committee on Energy and Commerce has introduced a bill that would expand the definition of “medical service” to include ancillary and facility fees. The proposal also calls for stricter penalties for entities that repeatedly submit disputed claims.

Industry response

Hospital systems argue that broader definitions could increase administrative burdens and drive up overall health care costs. Some insurers suggest that a market‑based solution, such as transparent price‑setting tools, would be more effective than additional regulation.

What Patients Can Do Now

While the policy debate continues, patients can take practical steps to protect themselves from unexpected charges.

Ask providers in advance whether any part of the treatment will be billed as out of network.
Request an itemized estimate before procedures, especially for elective services.
Review Explanation of Benefits statements carefully and dispute any unfamiliar charges.
Contact state consumer protection agencies if a bill seems inconsistent with the No Surprises Act.
Consult resources such as The Commonwealth Fund for guidance on navigating complex medical bills.

Staying informed and proactive remains the most effective defense against hidden costs, even as lawmakers work to tighten the legal framework.