Any Surprises in the No Surprise Act?

When former President Donald Trump signed the Consolidated Appropriations Act, 2021, on December 28, 2020, the majority of the public’s attention was on the Coronavirus Stimulus and Relief section of the bill and the stimulus checks that came with them.

Providers, however, were more interested in the No Surprises Act section of the bill, which directly affects how facilities and providers are paid for out-of-network services. Prior to this bill, the patient was responsible for whatever amount insurance didn’t cover – even if they didn’t expect it. Those surprise medical bills left patients owing more than they thought they would. A study published by the Kaiser Family Foundation and JAMA Network in February of 2020 found that in the past two years, 1 in 5 insured adults had a surprise medical bill, and that two-thirds of adults worry about being able to afford unexpected medical bills.

It’s taken several years and multiple failed acts to reach what would become the No Surprises Act. In previous versions of the act, the main dispute revolved around who would be responsible for the difference between the amount billed and what the insurance company would pay. What set the No Surprises Act apart from previous acts is the mechanism to determine how much out-of-network providers will be paid by insurers. Unlike the prior bills, the No Surprises Act does not establish a benchmark payment standard for insurers to pay out-of-network providers. The act directs insurers and providers to try and resolve payment disputes on their own. If that fails, insurers and providers can turn to arbitration. Many consider this a win for hospitals and physicians because prior bills did not have these concessions.

What’s in the Bill?

With the No Surprises Act, consumers will have protection from surprise medical bills in both emergency and nonemergency settings with the protections extending to out-of-network air ambulances. This was to ensure patients will be protected from surprise bills in situations where they have little to no control over who provides their care.

Emergency Services (Including Air Ambulances)

On the emergency side, patients will be protected from surprise medical bills from the point of evaluation, treatment and stabilization to when they can consent to being transferred to an in-network facility. These protections apply both when emergency services are received at an out-of-network facility – including any facility fees – or provided by an out-of-network emergency physician or other provider.

The No Surprises Act also protects patients from the costs associated with air ambulances, It does call for a special advisory committee to recommend the best ways to protect consumers from these surprise medical bills and improve transparency for ground ambulance services.

Nonemergency Services

Surprise medical bills for nonemergency services provided at an in-network facility but by an out-of-network provider are also included in this legislation. For many patients, these surprise bills are more likely to come from ancillary services (i.e. radiology, anesthesiology, pathology, etc.) or specialty services needed for unexpected complications (i.e. neonatology, cardiology, etc.)

One area that the No Surprises Act does allow for some voluntary exceptions to surprise medical bill protections is when a patient knowingly and voluntarily agrees to use an out-of-network provider. An example is a patient is having a hip replacement and wants to select an out-of-network orthopedist, or a pregnant patient wanting an out-of-network obstetrician for a scheduled delivery. In cases like these, the patient could waive the federal protections – and thus be charged a balance bill – because the patient is knowingly choosing to see an out-of-network provider. The reasoning is since the patient is making this decision, the additional cost would no longer be a “surprise” to the patient.

How Will this Legislation Affect Providers?

In previous attempts benchmark payment standards were used, but the No Surprises Act does not rely on these numbers. This legislation instead relies on voluntary negotiations between insurers and providers, which is backed up by arbitration if negotiations fail.

The Arbitration Process

The No Surprises Act establishes timeframes for the arbitration process and includes other guardrails. Insurers and providers will have 30 days to enter into voluntary negotiations in an effort to resolve the payment dispute. If negotiations fail, either party has four days to request independent dispute resolution. It is assumed that if there is no settlement and no request for arbitration that the provider will accept the amount paid by the insurer.

To assist, the federal government will establish the independent dispute resolution process including a list of entities available to take cases. This will allow the arbitration process to be administered by independent dispute resolution entities that are subject to conflict-of-interest standards.

In arbitration, each party will offer a payment amount and the arbitrator selects one amount or the other with no ability to split the difference. These decisions are binding on the parties, but the parties can continue to negotiate or settle. Also, multiple cases can be batched together in a single arbitration proceeding to encourage efficiency. The only stipulation is batched cases must involve the same provider or facility, the same insurer, treatment of the same or similar medical condition and had to have occurred within a single 30-day period.

There are also a pair of rules designed to help deter overuse of the resolution process. The first is the losing party will be responsible for paying for the administrative costs of arbitration, increasing the financial stakes for pursuing long-shot cases. It also allows for the costs to be split equally if the case is settled after arbitration has begun, unless the parties agree otherwise.

The second rule is that whichever party that initiates arbitration is “locked out” from taking the same party to arbitration for the same item or service for 90 days following the decision. The goal of this provision is to encourage settlement of similar claims. Any claims that occur during the lock-out period can go to arbitration after the period ends, if it falls within the 30-day period.

Factors for Arbitration

There is a wide range of factors that arbitrators will have the flexibility to consider during the process. It includes any relevant factors raised by the parties excluding the provider’s usual and customary charge or the billed charge. This is to help limit any potential inflationary effects if arbitration leads to settlements well above the amounts insurers typically pay in-network providers. Reimbursement rates paid by public payers, such as Medicare, Medicaid, CHIP or TRICARE, are also not to be considered during arbitration. This is a victory for providers as these rates tend to be lower than those paid for by insurers.

Optional factors that an arbitrator can consider include, among others:

• Level of training or experience of the provider or facility
• Quality and outcome measurements of the provider or facility
• Market share held by the out-of-network healthcare provider or facility
• Plan or issuer in the geographic region in which the item or service was provided
• Patient acuity and complexity of services provided
• Teaching status, case mix and scope of services of the facility
• Any good faith effort – or lack thereof – to join the insurer’s network
• Any prior contracted rates over the previous four years
• Median in-network rate paid by the insurer

Federal officials may opt to provide more guidance on the use of these factors when implementing the dispute resolution process now and in the future.

These same general factors also apply to air ambulance providers, but with some adjustments such as the location where the patient was picked up, population density of the location, and the air ambulance vehicle type and medical capabilities.

Enforcement

The No Surprises Act utilizes the same enforcement framework as the ACA and HIPAA. When it comes to insurers and , states will continue to be the primary regulators of fully insured health insurance products (with back-up enforcement from the federal government if a state would fail to substantially enforce the law). The Department of Labor will also continue to regulate self-funded plans.

On the provider side, this legislation allows states to require a provider (including air ambulances) to comply with the new standards. The federal government will step in if a state fails to substantially enforce these requirements and allows the federal government to impose civil monetary penalties against providers (up to $10,000 per violation). Federal officials will also establish a process to receive consumer complaints on surprise medical bills.

At this point, 17 states have enacted surprise billing laws and an additional 15 states have more limited protections. The No Surprises Act does defer to existing state laws with respect to state-established payment amounts, which means state payment standards are not preempted or displaced by the No Surprises Act. States are also free to pass additional surprise billing laws in the future with a payment standard or arbitration with different criteria. Future guidance may also be available from federal officials on the extent to which state standards can be used in place of the federal arbitration process.

Additional Provisions

The No Surprises Act also includes further provisions that are critical to protecting patients from surprise medical bills. They include:

• Uninsured Consumer Estimates – Providers will be required to provide uninsured consumers with a good faith estimate before healthcare service is delivered. If the eventual charges are “substantially” higher than the good faith estimate, the patient can use the independent dispute resolution process to challenge the higher amount, but may have to pay a fee to do this.
• Officials must regularly report to Congress on the impact of the No Surprises Act. The Department of Health and Human Services must report on the legislation’s impact on factors such as provider consolidation, health costs and access in rural areas. The Government Accountability Office will have to issue three reports on the impact on network adequacy, provider payer rates and the independent dispute resolution process.
• The act provides funding to states to set up all-payer claims databases, makes changes to current external review and continuity of care provisions, and requires HHS to finalize rules related to provider discrimination with the goal of preventing discrimination against providers that are acting within the scope of their license or certification.

While providers and insurers will not be completely pleased with the No Surprises Act, it will extend comprehensive protections to millions of consumers across the country and is , a step towards eliminating surprise medical bills once and for all. Providers will be able to work with insurers or utilize arbitration to level the playing field when it comes to payments.