The federal No Surprises Act went into effect on January 1, 2022. The Act is aimed at reducing “surprise bills” to patients in the context of services provided at hospitals and ambulatory surgical centers, and includes requirements for hospitals and ambulatory surgical centers, as well as physicians providing services at such facilities.

All such health care providers must take immediate action to ensure compliance with the Act.

In this alert, the first of two, we summarize the key provisions of the Act. Our second alert will outline in more detail the steps physicians need to take to comply with the Act.

What Is a Surprise Bill?

Generally, a “surprise bill” is one that the patient receives for services from a provider who the patient was not aware was out-of-network with their insurer. Surprise bills often occur with emergency services or with non-emergency services received from nonparticipating providers at in-network facilities, such as out-of-network anesthesiologists at an in-network hospital.

What Does the Act Do?

The Act and its implementing regulations prohibit certain balance billing practices by out-of-network providers and mandate a set of disclosures with respect to health care services provided at hospitals and ambulatory surgical centers. The Act also contains notice requirements for health insurers and establishes an arbitration process for out-of-network services in this context.

The Act prohibits:

• Surprise billing for emergency services. Emergency services, regardless of where they are provided, must be treated on an in-network basis without requirements for prior authorization.
• Out-of-network charges for ancillary care (such as from an anesthesiologist or pathologist) at an in-network facility in all circumstances.
• Out-of-network charges for surgeons and other non-ancillary professional services without advance notice to and consent of the patient.
• Out-of-network cost-sharing for emergency services, and for non-emergency services in this context without the patient’s advance consent. Patient cost-sharing, such as co-insurance or a deductible, cannot be higher than if such services were provided by an in-network provider, and any coinsurance or deductible must be based on in-network provider rates.

The Act mandates a plain-language consumer notice regarding:

• the restrictions on balance billing for such services under the Act
• any state law balance billing protections that may apply
• how to contact relevant state and federal agencies if a patient believes that the provider has violated any of the restrictions

This notice must be given to the patient no later than the date and time on which the provider requests payment from the individual (including cost-sharing amounts). The notice must also be published on an easily searchable part of the provider’s website and prominently displayed on-site at the provider where scheduling or questions about the cost of items or services occur.

The Act permits certain out-of-network physicians to bill a patient and the patient’s insurance plan at the full out-of-network rate for services provided at an in-network facility, but only if the physician provides a separate disclosure to the patient and obtains the patient’s written consent at least 72-hours prior to their appointment. Otherwise, balance billing for that service is prohibited.

The exception for out-of-network billing described above does not apply to the following services, which cannot be provided at higher out-of-network rates and for which a patient cannot be asked to give consent:

• emergency medicine
• anesthesiology
• pathology
• radiology
• neonatology
• diagnostic testing
• services provided by assistant surgeons, hospitalists and intensivists

Does the Act Address Uninsured Individuals?

Yes. The Act requires providers to give a good faith estimate of the expected charges for non-emergency services to any uninsured (or self-pay) patient within certain timeframes following the scheduling of that service. The estimate must contain certain information as detailed by the Act.

The Act also requires providers to inform all uninsured (or self-pay) patients of the availability of a good faith estimate of expected charges in connection with scheduling a service or upon request. The notice must be prominently displayed on-site at the provider where scheduling or questions about the cost of items or services occur and published on an easily searchable part of the provider’s website.

How Will Out-of-Network Providers Be Paid?

The Act creates an arbitration process to determine the amount insurers must pay out-of-network providers in scenarios where the patient did not consent to being balance billed for a scheduled service. If an out-of-network provider is dissatisfied with a health plan’s payment, it can initiate a 30-day negotiation period, after which the parties must submit their final offers to an arbitrator, who must select the most reasonable offer.

In making its determination, the arbitrator will consider a number of factors, including, but not limited to, the health plan’s historical median in-network rate for similar services in the geographic area and whether the parties have made good faith efforts to reach a network agreement within the last 4 years.

What if a State has its Own Surprise Billing Law?

The Act provides a floor for consumer protection against surprise billing by out-of-network providers in each state. To the extent that a state’s surprise billing law provides greater protection against surprise bills than the Act and its implementing regulations, the state law generally will apply.

For example, New Jersey has the Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act, which enhances consumer protections from surprise bills for out-of-network health care services. Similar to the federal Act, the NJ Act creates an arbitration process to resolve out-of-network billing disputes. Other states are enacting laws that focus solely on the notice required in advance of surprise bills, such as the North Carolina Medical Billing Transparency Act, which also took effect on January 1, 2022.

How Can I Comply?

The information in this alert is not exhaustive of the Act’s requirements. The Act’s arbitration provisions, in particular, are complicated and will continue to develop as regulations are issued.

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