The No Surprises Act
After years of debate surrounding “surprise billing,” Congress has finally taken action to ban this practice as part of its $900 billion stimulus bill with the enactment of the No Surprises Act, signed into law on December 28, 2020. Surprise billing involves two scenarios: (i) out-of-network emergency services; and (ii) out-of-network services performed at in-network facilities. This ban will go into effect on January 1, 2022.
This practice was already banned at the state level in some states (including Florida), but was limited to insurance regulated by state law (e.g., individual insurance and fully insured business). Now, however, with this new federal ban, patients covered by self-funded group plans are also protected against surprise billing, including those that are “grandfathered,” as that term is defined in the Affordable Care Act.
There’s no shock that surprise billing has been kicked to the curb; however, there has been bipartisan support to end surprise billing because it can result in dire financial consequences for patients, including bankruptcy, and results from instances where patient’s lack the ability to make an informed consumer-driven choice regarding their healthcare.
In sum, the No Surprises Act (the “Act”) establishes a dispute resolution process (“IDR”) for out-of-network emergency services and out-of-network services performed at an in-network facility out-of-network (“Surprise Bills”), and touches upon other aspects of the billing process, Including price transparency.
The following are key takeaways from the No Surprises Act:
- Deference to State Law. As noted above, states, like Florida, have already adopted legislation to protect consumers against surprise billing. The Act does not preempt state law on billing, and the Act will instead defer to state surprise billing legislation already in place. In Florida, for example, the reimbursement requirements for out-of-network emergency services set forth in Fla. Stat. §§ 641.513(7) and 627.64194(4) shall still apply to insurance regulated by the state.
- In-Network OOP Costs. Health plans must apply in-network cost-sharing amounts for Surprise Bills and these out-of-network services must be applied to the patient’s in-network deductible.
- Exceptions to the Act: Out-of-network non-emergent services are excepted from the Act if the provider provides notice to the patient and receives his or her consent, as described below:
- Notice must be provided in writing in the format requested by the patient (i.e., paper or electronic).
- Notice must be provided at least 72 hours prior to the date of service.
- Notice must be available in the 15 most common languages existing in the geographic location where is the provider is located.
- The notice must state the following in clear and understandable language:
- The provider is an out-of-network provider
- Provide a good faith cost estimate for the services, and that such an estimate does not establish a contract (i.e., charges are subject to change)
- For out-of-network services performed at an in-network facility, a list of participating providers at the facility that can perform the requested services and that the patient can be referred, at their option, to the participating provider. This seems like an unreasonable burden on a non-employed out-of-network practitioner, as they likely will not know who at the facility is in-network with a particular payor
- Information as to whether prior authorization or other care management limitations may be required prior to service at the facility. It is unclear whether this will be required for out of network hospital-based practitioners; however, this seems to be an unreasonable request, as these providers likely will not be privy to this information
- Out-of-network services may not apply to the patient’s in-network deductible
- The patient’s consent for out-of-network services is voluntary and the patient may choose an in-network provider
- Negotiation Period. There is a 30-day negotiation period for providers and health plans to settle out-of-network claims. This period to commences on the day the healthcare provider receives a response from the health plan regarding payment for a claim (i.e., receipt of payment, EOB, remittance, etc.)
- Independent Dispute Resolution (IDR). If the parties cannot achieve a resolution during the negotiation period, either the health plan or provider may, within four days after the negotiation period, submit the dispute to binding arbitration.
- The Act provides “Baseball” arbitration, meaning each party provides the arbitrator with a proposed settlement offer, and the arbitrator must choose one of those offers.
- The parties may consolidate various disputes into one arbitration if the parties are the same for each claim, the treatment is for a “similar condition,” and the services were performed within 30 days of each other. We will likely get further guidance from the Secretary in the upcoming regulations as to what constitutes a “similar condition.”
- The IDR entity must consider the median in-network rate and may consider other relevant information raised by each party and certain other considerations, such as the good faith efforts of both parties, the complexity of the services, the provider’s level of experience, and scope of the services. The IDR entity cannot consider the provider’s billed charges, usual and customary rates, or government payor rates (i.e. Medicare, Medicaid, CHIP, and TRICARE)
- If the IDR entity finds in the provider’s favor, the plan must pay the provider within 30 days of the IDR entity’s determination.
- Following the IDR, the party that initiated the IDR cannot take the same party to IDR for the same item or service within 90 days following a determination by the IDR entity; however, all claims that arose during the 90-day wait period are still eligible for IDR upon completion of the 90-day period.
- The non-prevailing party shall be responsible for paying the fees for the IDR. If the parties reach a settlement prior to the IDR entity’s determination, then the parties will split the fees for the IDR.
The IDR entity’s decision is binding on the parties and in very limited circumstances (including fraud), cannot be judicially reviewed. Based on certain limitations of the IDR process discussed above (e.g., the provider cannot file against the same payor within 90 days) as well as the lack of judicial review and potential distrust of the competency of the arbitrators (especially in the initial years of this process), I would expect that many providers would not elect to pursue the IDR process to resolve payor disputes.
- IDR Regulations. The Secretary of Labor and Secretary of the Treasury has one year from the date of enactment of the Act to establish regulations pertaining to the IDR process.
- Patient Protections Through Transparency. Providers must verify, within three days of service, and no later than one day after scheduling a service, what type of coverage the patient is enrolled in and provide a “good faith estimate” of the expected services to the payor, if the individual is covered by insurance, or to the patient if the patient is uninsured. Note this is not upon the patient’s request; but rather required for every patient, even if the provider has a consumer-friendly price transparency tool. As such, providers will need to develop processes to ensure this good faith estimate is issued for every out-of-network service. For the patients that are covered by insurance, the plan must provide the patient with an “Advanced Explanation of Benefits” (“AEB”). In this AEB, the payor must notify the patient: (i) whether the provider is in-network or out-of-network; (ii) a good faith estimate, which was included in the notification by the provider; (iii) a good faith estimate of the amount he plan will be responsible for; (iv) a good faith estimate of the cost-sharing amount; (v) a good faith estimate of the amount that the member incurred toward meeting his/her deductible and out-of-pocket maximums; (vi) if the services require prior authorization, concurrent review, or some other medical management technique, the payor must notify the patient of this fact; and (vii) a disclaimer that the information provided is just an estimate.
As compared to prior iterations of this bill, providers fared relatively well. We will await further instruction from the Secretary in its upcoming regulations.