After a drawn-out drafting-and-review process, the hotly contested No Surprises Act (Act) has made its way into law after being tucked into the 5,500+ pages of the Consolidated Appropriations Act, 2021, signed into law on December 27, 2020. The Act, which will be effective January 1, 2022, is designed to protect patients from surprise medical bills in situations where a patient may not have had a choice of provider or was otherwise unaware that certain services may not be covered by a patient’s insurance plan.
The Act sets forth provisions prohibiting balance billing for items or services provided as emergency care or furnished by providers who are out-of-network with a patient’s payor when providing services to the patient at a facility that is in-network with a patient’s payor. For purposes of the Act, “emergency care” means medical screening exams, treatment and examination to stabilize a patient (regardless of whether this occurs in the emergency room or another hospital department), post-stabilization inpatient and outpatient stays, outpatient observation (unless an exception applies), and air ambulance services.
With respect to care rendered by an out-of-network provider at an in-network facility, the Act’s prohibitions apply to bills for items and services furnished during “visits,” including equipment and devices, telehealth services, imaging services, laboratory services, pre- and post-operative services, and other items or services that the Secretary of the Department of Health and Human Services (HHS) might find appropriate. Although the Act is unclear, it appears that, with respect to non-emergency care, the Act applies even when an out-of-network provider is not located on-site at an in-network facility.
The Act also puts in place an independent dispute resolution (IDR) process that payors and providers may utilize to resolve reimbursement disputes, as well as reporting and auditing requirements, and price-transparency provisions. Although viewed by some as an improvement over prior balanced billing legislative proposals, many healthcare providers are concerned that the requirements of the Act and IDR process will be unwieldy and burdensome and overall disadvantageous to healthcare providers.
Surprise Billing & Rate Determination
The Act requires that a patient’s cost-sharing responsibilities (including the deductible and out-of-pocket maximum) for items or services covered by the Act be no greater than if the items or services were furnished by an in-network provider. The provider may not bill the patient for any amounts over the appropriate cost-sharing amounts.
An exception exists for certain providers who give notice to, and obtain informed consent from, a patient for out-of-network services; providers relying on this exception may be eligible to seek payment at their normal rates. The exception is only available, however, if the out-of-network provider does all of the following:
- Informs the patient that the provider is out-of-network with the patient’s payor.
- Informs the patient that he or she may obtain care elsewhere.
- Provides the patient with a good faith estimate of the anticipated charges for the out-of-network items or services to be provided.
After providing the patient with the required disclosures, a provider must obtain the patient’s informed consent no more than 72 hours prior to the patient receiving the items or services to support the provider’s use of the exception.
Notably, the exception is largely inapplicable to “ancillary services,” which includes anesthesiology, pathology, radiology, hospitalist services, and intensivist services, among others.
Industry stakeholders have expressed concern that the Act further emphasizes the bargaining deficit of providers with respect to inclusion in payor networks by tying reimbursement to payor-driven rates. For items or services rendered in scenarios covered by the Act, the patient’s cost-sharing amount will be calculated as if the total amount that an in-network provider would have charged is equal to the “recognized amount,” that is, one of the following:
- The amount determined by applicable state law.
- In states without an applicable law, the “qualifying payment amount.”
- The amount approved by a state with an All-Payer Model Agreement.
Absent relevant state law, the “qualifying payment amount” will be generally based on the median of the contracted rates recognized by the payor as the total maximum payment, adjusted annually for inflation. HHS has until July 1, 2021, to develop a methodology for determining the qualifying payment amount, differentiating by large-group and small-group markets.
Within 30 days of receiving a bill from an out-of-network provider, the payor must make an initial payment or give notice of denial of payment unless determined otherwise through IDR as described below. A payor must pay the provider the amount by which the out-of-network rate exceeds the cost-sharing amount for the services.
The Act also requires HHS, in conjunction with the Department of Labor and the Department of the Treasury, to initiate rulemaking to develop an audit process. The audit process is intended to ensure that plans and reimbursement rates comply with the qualifying payment amount.
The Act creates a framework for IDR between payors and providers that cannot agree on the level of coverage or reimbursement for out-of-network items or services. Within 30 days from the date that a provider receives an initial payment or denial from a payor, the provider and payor each have the right to request an open negotiation with the other. After 30 days of engaging in open negotiations, either party can initiate an IDR.
The payor and provider must each submit to an IDR entity an offer for a payment amount for the items/services furnished. In determining which offer is most appropriate, the IDR entity will consider, among other things, the qualifying payment amounts comparable to items or services furnished in the same region; the level of training, experience, and quality and outcomes measurements of the provider; and the market share held by the provider. The IDR entity may not, however, consider the provider’s usual and customary charges, the amount that would have been billed by the provider had the surprise-billing provisions not applied, or the reimbursement rate under government healthcare programs (e.g., Medicare, Medicaid). Payment of the determined amount must be submitted by the payor to the provider within 30 days of the IDR entity’s determination.
Price-Transparency and Reporting
The Act requires providers to assess upfront the charges they are likely to bill to a patient and make certain disclosures within set timeframes relative to the anticipated date(s) of service. Providers must disclose a good faith estimate of expected charges in a notification to the payor (where there is one) or to the patient (absent payor coverage or upon the patient’s request). This estimate must include the cost of the items or services to be provided and those that are reasonably expected to be provided in conjunction with the scheduled items or services.
Additionally, the notification must include the billing and diagnostic codes that the provider expects to use to bill for the items or services. This disclosure must be provided before furnishing the items or services, within three to ten days of being scheduled (with the timeframes dependent upon when the patient was scheduled for the items or services).
HHS is required to establish a process under which certain uninsured patients can dispute provider charges that are substantially in excess of the provider’s good faith estimate of expected charges by 2022.
In the lead up to the Act becoming effective in 2022, healthcare industry stakeholders should stay tuned for opportunities to influence the impending HHS regulations. At a minimum, healthcare industry stakeholders will have the opportunity to submit comments to proposed HHS regulations as part of notice and comment rulemaking, though we suspect there may be opportunities to express concerns or feedback even leading up to the release of the proposed rules.