What is surprise medical billing?

Surprise medical billing (SMB) is an unfortunate byproduct of the overall shortcomings of the U.S. healthcare reimbursement system. However, the factors at the root of the problem often remain misunderstood and misconstrued in the public debate.

What is surprise medical billing and is there a solution?


Surprise medical billing is an unfortunate byproduct of the overall shortcomings of the U.S. healthcare reimbursement system. However, the factors at the root of the problem often remain misunderstood and misconstrued in the public debate.


Fortunately, the problem can be solved comprehensively, without undermining the healthcare delivery system, while also protecting patient access to emergency care services. That is why supporting the principles behind H.R. 3502, the Surprise Medical Bills Act, to achieve this goal. This legislation recognizes the balance necessary to simultaneously protect patients from the effects of surprise medical billing while not undermining limited available funding needed to preserve a fragile emergency medical delivery system. Several other bills under consideration in the U.S. House and Senate fail to provide this fundamental balance.

Sources of Surprise Medical Billing


Surprise medical bills created by narrowing insurance coverage and/or high deductibles often hit patients when they are most vulnerable. These bills impose severe hardship on many of the 140 million Americans who receive care in our nation’s emergency departments each year. More specifically, the primary cause of surprise billing are:

  • A rise in cost-cutting, limited-sized provider networks that are narrow, restrictive and closed
  • An unwillingness or lack of desire by insurers to include certain providers in their network plans
  • A failure of insurers and providers to reach financial terms for inclusion in networks
  • Shifting risk to patients in the form of high deductibles and ever-increasing amounts of co-insurance

TeamHealth Supports a Comprehensive Solution


TeamHealth, its partners and colleagues in the medical community, including large and small physician groups, support eliminating surprise medical billing. We have been working actively to reach a comprehensive legislative solution.


We believe that federal legislation to address surprise medical billing must protect patients and require insurer accountability, transparency and reasonable limits on patients’ out-of-pocket costs. Most importantly, it cannot be used as a vehicle for insurers to reduce reimbursements and ultimately reduce compensation to physicians and other medical providers.


Recently, the medical specialty societies signed on to a coalition letter submitted to the chair and ranking members of the U.S. House of Representatives’ Ways & Means Committee, as well as the Education and Labor Committee, offering a workable solution to address surprise medical billing.  The proposal couples a directive for a fair interim payment with “baseball style” arbitration known as Independent Dispute Resolution (IDR) as a means to protect patients and not undermine the existing reimbursement mechanism. It was signed by several prominent specialty societies, including the American Medical Association, American College of Emergency Physicians, American Society of Anesthesiology and others.


IDR protects patients by taking them out of the middle of reimbursement disputes while incentivizing insurers and providers to reach a fair, cost-effective and timely resolution of their dispute through an independent third party. Again, we are on record in support of H.R. 3502 “Surprise Medical Bills Act” as the appropriate and comprehensive legislative remedy.


Legislative proposals supported by the insurance industry would reduce commercial reimbursements by an estimated 20% to 30%. This drastically reduced level is unsustainable for emergency departments and would make it impossible to meet our professional and legal obligation to deliver care to everyone, regardless of ability to pay. Any solution that protects patients from surprise medical billing cannot undermine the current levels of commercial reimbursement. This is especially important as three out of four patients who are treated at TeamHealth emergency departments result in reimbursements at or below TeamHealth’s cost for delivering care.


Ultimately, a legislative solution must encourage arms-length negotiations between the two parties, which in turn promotes sufficient in-network reimbursement. Without sufficient reimbursements, emergency departments simply will not have the resources necessary to provide critically needed care.

TeamHealth Strives to Protect Patients


Disputes over reimbursement should not affect patients and is a matter between TeamHealth and the commercial payers who reimburse us for our services. Patients should not be in the middle of this process. TeamHealth ended the practice of surprise billing many years ago. When arbitrarily underpaid by insurers, we pursue legal action to force the insurer to uphold their commitment to patients. In fact, in order to protect patients from surprise medical bills, we have initiated 15 lawsuits against insurers to enforce fair, market-based reimbursement. We anticipate we will spend in excess of $15 million in legal fees this year to enforce our claims.

Protecting and Sustaining Emergency Care


No one doubts the value and importance of the continued need for high-quality emergency care, particularly in rural and economically disadvantaged communities. TeamHealth emergency departments fully embrace their federal obligation under EMTALA.


But in order to fund comprehensive emergency care and preserve unrestricted access to emergency departments across the country, any legislative solution for surprise billing must maintain optimal commercial reimbursement in order to off-set the losses incurred for treating uncompensated and underfunded care.


In addition, it is important to remember that America’s emergency departments nationwide are extremely busy and have high fixed costs across the board:

  • Emergency departments must be ready to treat all presenting conditions often on a moment’s notice, 24 hours per day, 7 days per week and 365 days per year.
  • 1 in 5 Americans will visit an emergency department every year, and for most, it is unanticipated.
  • Emergency departments are prepared to treat all conditions ranging from trauma to heart attacks and are comprised of:
    • A full suite of diagnostic and life support services.
    • Board-certified physicians with advanced training consisting of four years of medical school, three years of residency and one to two years of subspecialty training.
  • Emergency departments are required by federal law to provide stabilizing treatment to all presenting patients regardless of ability to pay (according to federal law under EMTALA).

TeamHealth’s Stance on Balance Billing


Surprise medical bills occur when patients receive out-of-network care and then receive a bill after the fact because their insurer failed to cover the cost. This most often happens in emergency care, when patients experiencing a medical emergency do not have the opportunity to research whether the closest hospital is part of their insurance network.


TeamHealth has a longstanding policy against surprise billing. Even though insurers frequently ask us to pass costs onto patients, we do not balance bill. Instead, we opt to take legal action to require insurers to uphold their financial commitments to their own customers. More than 85% of care delivered by our 9,000 TeamHealth doctors across the country is in-network. When care is out-of-network, it is often the result of insurers unilaterally canceling network agreements.


Subsequently, lawmakers are debating various proposals to best protect the 140 million Americans who receive emergency department care each year. Several states have recently passed legislation addressing surprise medical bills and others are in the process of doing the same. However, because of the nature of federally regulated, employer-funded insurance coverage, states cannot effectively regulate this practice, and a federal solution is needed.