How the No Surprise Law Will Affect Health Insurance
The No Surprises Act was signed into law in late 2020 after years of negotiation between insurers, employers and health care providers regarding the elimination of “surprise” medical bills. The bill represents a step change in how providers can charge and be reimbursed for “out of network” services. This update provides an overview and analysis of the law and recent legal challenges to part of the law.
Background: The No Surprises Act aims to eliminate surprise medical bills often received by patients from medical providers who are not part of an insurance plan’s or other payer’s preferred provider network. This is often referred to as “balance billing” because the out-of-network provider bills the patient directly for the portion of the bill that is not covered by insurance (the balance). Often, patients assign their right to collect from the payer to the provider, and the provider attempts to collect directly from the payer.
Elimination of surprise invoices: The law eliminates surprise medical bills in three main circumstances, limiting the amount a patient must pay to network costs and the cost-sharing requirements of the applicable health plan or policy.
Patients who receive emergency medical services from out-of-network providers. In this case, patients can only be billed in accordance with network cost sharing requirements from initial patient assessment through stabilization. The law applies the surprise billing limitation to emergency services provided in hospitals, free-standing emergency departments, and urgent care centers licensed to provide emergency care. Emergency services include post-stabilization care until a physician determines that a patient can travel safely via non-emergency medical transport.
Patients who receive non-emergency services in a network establishment. This circumstance arises when out-of-network providers such as anesthesiologists or radiologists do not have a contractually negotiated rate with the facility where a patient is receiving treatment. The law applies the limitation to a host of establishments, including hospitals, hospital outpatient departments and outpatient surgery centers. Notably, urgent care centers, birthing centers, hospices, drug treatment facilities, and nursing homes are not included for the purpose of limiting non-emergency services.
Patients receiving air ambulance services. Patients can use air ambulance services, which has traditionally resulted in large payroll bills.
Notice and Consent to Balance Billing: There is a limited circumstance where a provider may balance a patient’s bill for the services described above. If a provider provides notice to a patient and the patient consents to receiving a bill for payment, the billing protections provided by law do not apply. Consent to balance billing cannot be provided in the following circumstances:
Treatment for emergency medicine, anesthesiology, pathology, radiology and neonatology
Treatment provided by assistant surgeons, hospitalists and intensivists
Treatment for diagnostic services, including radiology and laboratory services
Services provided by an out-of-network provider if there is no in-network provider at the facility where the patient is being treated
Dispute resolution process: The law does not specify who is responsible for the cost of care that is not otherwise covered by insurance or other forms of reimbursement (for example, Medicare, Medicaid). In anticipation of disputes that will undoubtedly arise between providers and payers, the law provides for a mandatory and independent dispute resolution process.
As part of this process, the parties have 30 business days to negotiate a payment amount. If negotiation fails, either party may invoke binding arbitration within four business days of the end of the 30-day negotiation period. At this point, an independent arbitrator will be selected. As part of the arbitration process, each party must submit a final written offer and supporting documentation for the disputed amount. The arbitrator must select one of two written submissions – it is not possible for the arbitrator to select a different amount.
The law directs the arbitrator to consider various factors to determine an appropriate rate: (i) the median of the contractual rates recognized by the plan or insurer as of January 31, 2019 for the same services in the same geographic region (c is called eligible payment amount); (ii) the service provider’s level of experience and expertise; (iii) the parties’ respective market share for such services; (iv) the composition of cases and the scope of services traditionally provided in the facility; and (v) demonstration of good faith or lack of good faith when entering into a contract with the plan or the payer. There is a rebuttable presumption that the amount closest to the “eligible payment amount” should be selected.
Patient Disclosures: Suppliers and facilities must publicly post a written disclosure explaining the law’s protections with no surprises. In addition, providers and institutions must notify a patient or beneficiary when payment is requested for the billing of the balance or when a claim is submitted to a payer. The required disclosure must contain an explanation of balance charging prohibitions, state legal requirements prohibiting balance charging (if any), and contact information for federal and state agencies that enforce the law.
Enforcement: The law contains similar enforcement provisions to the Affordable Care Act and HIPAA, which means states will continue to regulate fully insured group medical plans and the U.S. Department of Labor will regulate self-employed plans. -insured. Federal enforcement provisions include civil monetary penalties of up to $10,000 per violation and the creation of a federal process to receive consumer complaints related to surprise medical bills. States can enter into collaborative enforcement agreements with the federal government, which would cede some enforcement power to federal agencies if states fail to voluntarily comply with a violator.
Dispute: On February 23, 2022, a federal court struck down a provision of the interim final rule regarding the dispute resolution process. Specifically, the court found that the U.S. Departments of Health and Human Services, Labor, and Treasury exceeded their authority by having independent arbitrators favor certain factors over others in determining the “amount of qualifying payment”. In response to the litigation, the departments issued a memorandum withdrawing the overridden provision and stating that arbitrations should not otherwise be affected by the court’s decision. According to the memorandum, the departments intend to proceed with opening the arbitration portals and will consider “next steps” related to the court ruling.