The No Surprises Act (the Act), enacted December 27, 2021, will take effect on January 1, 2022. The No Surprises Act puts into place important patient protections from surprise medical bills, while imposing significant obligations on healthcare providers and facilities. The No Surprises Act also ushers in major changes to provider reimbursement for out-of-network services, the effects of which are rippling throughout the managed care industry. The key provisions that providers and facilities need to be aware of prior to January 1, 2022 are summarized below.
Overview of the No Surprises Act
In cases where the No Surprises Act applies, providers and facilities are limited to billing patients the cost-sharing, deductibles, and out-of-pocket maximums that the patient would have paid if they sought service “in-network.” Providers and facilities may not “balance” bill patients—i.e., billing more than the patient’s in-network cost sharing amounts—unless certain exceptions apply. Payors, in turn, must issue payment directly to providers, and are prohibited from issuing payments to patients.
The Act’s surprise billing requirements apply in two circumstances: (1) when emergency services are provided by an out-of-network provider or facility; and (2) when non-emergency services are provided by out-of-network providers at in-network facilities. The Act also applies to certain post-stabilization services as discussed below. In addition to hospital-based emergency services, the Act covers services provided at an independent freestanding emergency department and urgent care centers, to the extent state law permits urgent care centers to perform emergency services.
With respect to non-emergency services, the protections apply when a health care facility has a contractual relationship directly or indirectly with a plan and the beneficiary receives non-emergency treatment at the facility from a non-participating provider. A health care facility is defined as (1) a hospital; (2) a hospital outpatient department; (3) a critical access hospital; or (4) an ambulatory surgical center. An urgent care center is not a health care facility for the purpose of non-emergency services.
The No Surprises Act applies widely to payors who offer individual, large group and small group health plans, self-insured (ERISA) health insurance markets, as well as to plans grandfathered under the Affordable Care Act and Federal Employee Health Benefit Plans. The No Surprises Act does not apply to fee-for-service Medicare, Medicare Advantage plans or Medicaid managed care plans.
Notice and Consent to Balance Bill
The No Surprises Act allows nonparticipating providers to balance bill if they furnish notice to an insured patient who acknowledges receipt of the notice and consents to waiving their balance billing protections under the Act. Notice and consent is only required if the provider or facility intends to balance bill the patient instead of limiting patient billing to in-network cost-sharing amount.
Patients may waive their balance billing protections in the following cases only: (1) when non-emergency services are furnished by a non-participating provider at a participating facility (for non-emergency services at a participating facility, the facility must have available at least one in-network provider available to render the services the patient is seeking for consent to be available); (2) when post-stabilization services are furnished by non-participating providers; or (3) when post-stabilization services are furnished at a non-participating emergency facility. In the latter two cases, waiver is only permitted if the provider determines the patient can travel by non-emergency medical or non-medical transportation and is in a condition to receive and understand consent. A waiver cannot be obtained for pre-stabilization emergency services. A patient also cannot be asked to waive balance billing protections for the following items or services: (i) items and services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology, whether provided by a physician or non-physician practitioner; (ii) items and services provided by assistant surgeons, hospitalists, and intensivists; (iii) diagnostic services, including radiology and laboratory services; and (iv) items and services provided by a nonparticipating provider if there is no participating provider who can furnish such item or service at such facility.
The notice must clearly identify each non-participating provider or facility and the services they will be rendering. It must also provide a good faith estimate of the amount the non-participating provider or facility expects to bill the plan for the item or services for which the provider seeks consent.
Disclosure of Patient Protections
Providers and facilities are required to make available in a public area and post on their websites a written disclosure explaining patient protections against surprise billing under the No Surprises Act. Providers and facilities are also required to furnish a one-page notice to the beneficiary on or before the date and time when the provider or facility requests payment from the individual. If no payment is requested from the individual, then notice must be provided on the date the provider or facility submits a claim to the plan or issuer. The one-page notice and public disclosures must include an explanation about balance billing prohibitions in cases of emergency and non-emergency services; information about state law requirements about balance billing; and contact information for state and federal agencies that an individual may contact if they suspect a provider is violating the requirements in the notice. The publicly available notice must be posted prominently in facilities at a central location such as the check-in counter. If no public location exists, then no sign is required.
Importantly, a provider is only required to give a disclosure notice to the individuals to whom the provider provides items and services at a health care facility or in connection with a health care facility visit. Providers may also enter into a written agreement with a facility to provide the disclosure to the individual in order to avoid duplicate disclosures that may confuse the individual.
Good Faith Estimates to Uninsured and Self-Pay Patients
Providers and facilities must ask about an individual’s health insurance coverage status prior to furnishing non-emergency services. If the patient is uninsured or self-pay and the item or service is being scheduled at least three business days in advance, the provider or facility must provide a good faith estimate of expected charges, in clear and understandable language, for furnishing items and services. The No Surprises Act also requires good faith estimates to be provided to insured patients upon scheduling or request, but HHS has deferred this requirement pending future rulemaking in 2022. The expected charges must include the actual charge expected to be billed, accounting for any discounts, for the scheduled or requested item or service, plus any item or service that is reasonably expected to be provided in conjunction with the scheduled or requested item or service and items, including those items and services reasonably expected to be provided by another provider or facility. The good faith estimate must include the expected billing and diagnostic codes for each such item or service. If a good faith estimate is inaccurate, it is subject to challenge by the patient.
The provider or facility with whom the patient scheduled the item or service—the “convening provider”—is responsible for collecting the good faith estimate amounts from all co-healthcare providers who are expected to provide care in conjunction with the scheduled item or service. HHS has stated it will exercise its discretion not to enforce this requirement until 2023 but convening providers should make a good faith effort to comply in the interim.
If the provider bills the patient an amount that exceeds the good faith estimate by $400 or more, the patient can challenge the billed charge in the patient-provider dispute resolution process within 120 days of receipt of the first bill from the provider. A selected dispute resolution entity (SDR entity) appointed by HHS will resolve the dispute. The good faith estimated charge is presumed to be the appropriate amount unless, through written submissions, the provider or facility can demonstrate the difference in cost reflects the cost of a medically necessary item or service and that the difference is due to unforeseen circumstances that could not have reasonably been anticipated by the provider or facility when the good faith estimate was provided. If a provider or facility fails to provide a good faith estimate, the patient may not challenge the billed amount in the Act’s patient-provider dispute resolution process, however, the provider or facility may be subject to enforcement actions. The Act allows HHS to impose penalties of up to $10,000 per violation.
Payment Standards
The No Surprises Act imposes the following payment rules. For patients, their cost sharing obligation must not be greater than the amount they would pay if they received their services from a participating provider (unless the patient has given consent). Under the Act, a patient’s cost sharing is generally calculated as if the total amount that would have been charged for the services by a participating emergency facility or participating provider were equal to the “recognized amount.” The “recognized amount” is defined as: (1) the amount determined by an applicable All Payer Model Agreement; (2) if there is no All Payer Model Agreement, then the amount determined by applicable state law; and (3) if there is no applicable state law, then the lesser of the amount billed by the provider or facility and the Qualifying Payment Amount (QPA). The QPA is the median of the contracted rates recognized by the plan or issuer on January 31, 2019, for the same or similar item or service provided in the same or similar specialty and in a geographic region in which the original item or service was furnished. The QPA is increased to account for inflation. The plan calculates the QPA and is required to disclose the QPA to the provider in the initial payment or notice of denial.
As for plans, the Act obligates a plan to pay the provider an out-of-network rate less any cost sharing from the plan participant. The out-of-network rate is defined as: (1) the amount determined by an applicable All Payer Model Agreement; (2) if there is no All Payer Model Agreement, then the amount determined by applicable state law; (3) if there is no applicable state law, the amount agreed upon by the plan and the provider; or (4) if the parties do not reach an agreement, then the amount determined by the Independent Dispute Resolution (IDR) process, discussed below.
Dispute Resolution Process
The Act is designed to encourage negotiated resolution of payment disputes between payors and providers and mandates dispute resolution procedures in the event the parties do not reach a negotiated agreement. In the absence of state law or an agreement between the parties, the Act mandates the parties use the IDR process to determine the payment amount. Before initiating the IDR process, the parties may engage in an open negotiation period for up to 30 business days. If they are unable to agree upon a payment rate through negotiation, either party may initiate the IDR process within four business days from the end of the negotiation period, after which an IDR Entity will be selected. Within 10 business days of appointment of the IDR Entity, each party must submit a final offer for payment and written documentation to support their offer (within specified limitations). The IDR Entity will review the written submissions and pick one of the two offers in a “baseball style” arbitration.
The statutory language provides that the IDR entity shall consider a number of enumerated factors in determining the out-of-network rate, including: (1) the QPA; (2) the provider’s level of experience and outcomes; (3) the parties’ respective market share; (4) patient acuity; (5) teaching status, case mix, and scope of services of the facility; and (6) demonstrations of good faith or lack thereof of the provider or facility to contract with the plan. The implementing regulations issued in September 2021 (the Second Interim Final Rule) creates a rebuttable presumption in favor of the offer that is closest to the QPA. Additional information on the Second Interim Final Rule is available here in a previous issue of Health Headlines.
Three lawsuits have been filed to challenge this presumption. The Texas Medical Association, the Association of Air Medical Services, and the American Medical Association together with the American Hospital Association, joined by other medical providers and facilities, each filed lawsuits against the federal government challenging the portions of the second interim final rule relating to the IDR process. Each of the three suits request that the courts vacate the implementing regulations and reinstate the IDR process as enacted in the No Surprises Act—without the presumption in favor of the QPA. One hundred and fifty-two members of Congress also submitted a letter to the Secretaries of the Departments of Health and Human Services, Labor, and the Treasury urging the Departments to amend the September interim final rule relating to the IDR process. The Congressmembers’ letter was previously reported in Health Headlines, available here.
