Navigating health reform
Preparing for the No Surprises Act Can Help Avoid Costly Challenges
- The No Surprises Act prohibits balance billing for patients who unknowingly receive care outside their insurance network.
- In emergency care situations, a health insurer must cover the patient as in-network. In nonemergencies, the patient is held harmless from out-of-network bills if notice and consent procedures aren’t strictly followed.
- A newly created independent dispute resolution process will likely impact new and current contracts between providers and insurers.
Are you prepared for the No Surprises Act?
In early 2019 we wrote a CLA blog on the issue of surprise billing. We said we thought there was a better than likely chance something would be enacted in the 116th Congress (2019 – 2020). Flash forward to 2020, where no one expected a global pandemic whose dynamics would lead to enactment of the No Surprises Act under the Consolidated Appropriations Act of 2021 (Public Law 116-260).
While the years-long legislative debate is over (for now), the regulatory efforts of deciphering and implementing the law are underway. The new policies take effect January 1, 2022.
What is surprise billing?
Surprise bills stem from when a patients seeks medical care at a hospital, free-standing emergency department, or from providers he or she believes are in-network — only to receive a “surprise” bill for the balance (i.e., balance billing) of the cost because somewhere along the line a provider was out-of-network. (The law refers to these as participating or nonparticipating providers.) In these situations, the patient is left with a surprise bill.
The bottom line is that patients are generally held harmless in emergency situations and should not receive a balance bill nor be charged higher than any in-network cost-sharing by his or her insurer. Further, the patient is removed from the payment dispute, which is handled between the insurer and provider under prescribed timelines and methods.
We still have a variety of questions with how the consent process will work in practice for services after patients are stabilized. Even so, it appears the bar is set relatively high here as well.
This frequently happens in emergency situations, but can happen in nonemergencies as well. The No Surprises Act addresses both situations and will impact health care providers (including air ambulances), insurers (individual, group, and self-funded or sponsored), and patients. Detailed regulations are still forthcoming from multiple federal agencies.
Emergency care situations
Under the law, in emergency care situations a health insurer must cover the patient as in-network — regardless of whether the facility or provider(s) are participating providers in the patient’s insurance plan. The requirement to treat as in-network during emergencies extends to other hospital departments that are used and services provided after the patient is stabilized, unless certain criteria can be met.
Emergency facilities include hospitals and freestanding emergency departments. Providers include physicians or other health care providers acting within their scope of practice. Emergency services include medical screening and other ancillary services used to evaluate and treat the patient. Air ambulances are also covered.
In emergency situations, the insurer is prohibited from using prior authorization or waiting periods. For co-pays or cost-sharing, patients are to be treated as if they are covered in-network (assuming their insurance covers emergency services) by the group or individual health plan.
The law has specific requirements for how insurers determine any cost-sharing for patients in these situations. The cost-sharing amount will be governed by any state-mandated rates that apply, a state all-payor model rate, or the median in-network rate under the plan for like services by a similar provider in the same geographic region provided on January 31, 2019. This latter option is called the “qualifying amount.” Insurers must develop this amount by following a prescribed methodology to be released by federal agencies by July 1, 2021. The amount used for patient cost-sharing is based on whichever one of these three options is applicable, and is referred to as the “recognized amount.”
Payment process and balance billing
With respect to payment, an insurer either sends a notice of denial or a payment to the respective facility or providers within 30 days. The provider may accept the insurer’s payment or may begin a 30-day negotiation period. If no payment resolution can be reached during those 30 days, the parties may initiate a new independent dispute resolution process.
Generally, the provider or facility is prohibited from “balance billing” the patient for the remainder of the uncovered amount during the emergency. In some cases, the facility/provider may be allowed to balance bill and use out-of-network cost-sharing after a patient has been stabilized. However, this is available only if the following conditions are met:
- The patient can travel using nonmedical and nonemergency transportation
- Specific notice and consent criteria are met
- A patient is able to receive information and give an informed consent
- Other conditions as mandated by the federal Department of Health and Human Services (HHS), such as coordinating care transitions
In nonemergency situations, unless notice and consent are given, the patient is also held harmless from out-of-network bills. It is important to note that the No Surprises Act specifically excludes certain services and items from the notice and consent procedures. In other words, patients may not provide consent nor may certain providers request consent (to balance bill) for the following ancillary services and situations:
- Items and services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology, whether or not provided by a physician or nonphysician practitioner, and items and services provided by assistant surgeons, hospitalists, and intensivists
- Diagnostic services (including radiology and laboratory services)
- Items and services provided by other specialty practitioners, as provided by HHS
- Items and services provided by a nonparticipating provider if there is no participating provider who can furnish such item or service at such facility
- Unforeseen medical needs arising at the time of the service
A health care facility in a nonemergency situation includes a hospital, hospital outpatient department, critical access hospital, ambulatory surgical center, or any other facility as specified by HHS.
While these policies make sense on the surface, there may be many situations that will not fall neatly into place due to the complexity of health care coverage and payment — especially when there are items and services that cannot be waived by patients, multiple or nonparticipating providers involved, and related issues.
Let’s look at when a patient needs surgery. She researches the hospital and surgeon, doing her best to make sure they are all in-network. Unbeknownst to her, the pathologist used during her procedure is not in her network’s plan. The patient later receives a “surprise bill” for the balance of the cost. Under the new law, the pathologist is not allowed to balance bill the patient and the patient will only pay the in-network cost-sharing rate. The pathologist and the insurer will need to work out any payment issues.
In a different scenario, the patient researches the hospital and surgeon. The preferred surgeon is out of her insurance plan, but she wants this surgeon to perform the surgery, nonetheless. The hospital is in-network. In this situation, the patient can receive notice and provide consent to be treated by this nonparticipating provider under certain criteria.
If all the following conditions are met, then she would be held to the out-of-network cost sharing and could face balance billing from the surgeon:
- Notice and consent are provided to the patient at least 72 hours prior (if scheduled within at least 72 hours) or at time of service if less than 72 hours
- The notice and consent form clearly states consent is optional or the patient may seek care from a participating provider. The form is signed, maintained by provider, and given to the patient (email or mail, patient preference)
- Information on prior authorization or other care management requirements
- A good faith estimate of the cost is given
- A list of in-network providers is given
Independent dispute resolution (IDR)
If there are disputes between the health care provider and insurer related to reimbursement, a newly created IDR process may be utilized. There are various timelines that must be followed during this process, but within 10 days of selecting the IDR entity, each entity submits its best and final offer. The provider and insurer may submit additional information to support its offer.
We suspect the law will impact new contracts, result in renegotiation of current contracts, and potentially create an environment where other payment arrangements are considered to avoid the IDR process altogether.
The arbitrator does not have the discretion to change either offer, so will select one or the other as is. However, in its deliberations, the arbitrator may consider other factors, such as the level of training, experience, quality and outcomes, market share held in that geographic region, patient acuity, complexity of services, teaching status, case mix, and scope of services, among others.
The arbitrator may not consider a provider’s charges or the payment rates from government programs, such as Medicare or Medicaid. An insurer would need to pay the provider within 30 days of the arbiter’s determination.
Several federal agencies will be required to release IDR regulations by December 27, 2021.
There are many other provisions in this law, a few of which include:
- Dispute resolution procedures between uninsured or self-pay patients and providers
- Air ambulances are required to submit a variety of information such as costs, number and location of air ambulances, and disaggregated data by payer
- Health plans must be able to provide advanced explanation of benefits to patients when a service or item is scheduled
- Health insurers must also have up-to-date directories and price comparison tools and ensure continuity of care with any provider changes
- Enforcement generally falls to the states but the federal government may step in
- Various reports and studies are required
Due to the interplay between state and federal laws related to surprise bills, we would anticipate state legislatures to become even more active —either to standardize to the federal law or create their own state-mandated rates, for example. We encourage stakeholders to review and understand their state’s respective approach.
Finally, an area of complexity will be the interplay between state surprise billing laws and the No Surprises Act. In some situations, state laws will apply with respect to governing payment rates. In other instances, the federal law will govern, such as with self-funded plans, in states without surprise billing laws, or where the surprise billing law is less robust.
What are a few steps to take now?
- Be educated on the new law, stay current on subsequent regulations, know your state(s) law
- Review current contracts with respect to emergency and ancillary providers to determine potential areas of concern or exposure
- Begin thinking through revenue cycle and workflow processes (e.g., necessary notices, consent form, good faith estimate, balance billing)
- Consider or review price transparency tools with this law in mind
- Establish an internal work team to oversee planning and implementation
- Watch state legislatures for surprise billing activities
How we can help
Your first step in preparing for the No Surprises Act is to understand the state of play. From regulatory insights to workflow changes and revenue cycle assessments, our health care practice is here to help.