Surprises can be fun if followed by a party with your friends, and maybe even cake and ice cream. But that’s not so much fun when it comes to medical bills.

In 2017, the state passed a law prohibiting surprise medical bills from out-of-network providers when seeking non-urgent care at an in-network facility. For example, you need surgery, you choose a facility that is part of your health plan’s preferred provider network. You’re relieved that you don’t have to worry about how everything is covered.

Then the bills start rolling in. You notice that the anesthesiologist or the laboratory are not under contract with your hospital. Previously, this happened regularly in the North State and you would be left with substantial additional costs.

Fortunately, the California law of 2017 protects you. It indicates that you would only pay the cost sharing amounts in the network and could not be billed evenly. A fact sheet explaining the process is available online at bit.ly/3h2k8iX.

However, this bill did not protect people covered by a plan self-funded by the employer. Self-funded plans are regulated by the US Department of Labor.

A new federal law took effect Jan. 1 that extends these types of protections to all citizens and fills the gap for the six million Californians covered by self-funded plans: www.cms.gov/nosurprises.

But as they say, the devil is in the details.

The American Hospital Association and the American Medical Association dispute the way the law is administered. The rules are set to direct health plans and providers to negotiate payment between themselves, leaving the insured to pay only copays and coinsurance in the network.

If health plans and providers fail to agree, the process moves to arbitration. Both sides present their best offer and the arbitrator chooses the winner, leaving the loser the reduced amount plus the arbitration fee – between $200 and $500.

The Biden administration has emphasized the network-negotiated rate to the process standard. These lawsuits from the AMA and AHA allege that this is unfair and not in accordance with the spirit of the law since Congress has not specified the weighting of this factor.

Health and Human Services Secretary Xavier Becerra said in an interview that if the arbitration process was “wide open,” costs would increase, so a system that “provides the benchmarks to keep us efficient , transparent and cost-effective” was established.

As the law stands, the Congressional Budget Office projects that the federal “No Surprises Act” could cut premiums by about 1% and reduce the federal deficit by $17 billion.

Coated in the concept of being unfair to the medical provider, these lawsuits also allege that it gives insurers an advantage when negotiating with providers. But the other scenario is – with consolidation of medical groups – an area could end up with just one anesthesia group for example, and the group could just refuse to negotiate.

California has significant experience with this type of regulation. Over a four-year period, the Department of Managed Health Care resolved 1,006 consumer complaints about balance and surprise billing, earning nearly $1 million from 467 enrollees. I suspect there are many more potential claimants who don’t even know this law exists.

Here we have another small step in reforming our very cumbersome and inefficient health care system. Remember, it’s important to know your deductible, co-payments, and spending limits on your health plan. “No surprises” laws don’t cover the fact that you didn’t understand your plan.

A note to Anthem Blue Cross EPO network policyholders: Effective January 1, the following University of California Health Hospitals will no longer be covered.

• Benioff Children’s Hospital, also known as Oakland Children’s Hospital and Research Center
• University of California San Francisco Medical Center
• UCSF Children’s Hospital
• UC Davis Medical Center

Remember that EPO stands for Exclusive Provider Organization, so if you go out of the network, there is no coverage. A letter has been sent to policyholders explaining the continuity of care process for those already receiving treatment at these facilities.

Margaret Beck has been a licensed insurance broker since 1978. Call her at 530-225-8583.