Surprise! What the “No Surprises Act” Means for Patients, Providers and Health Plans
The “No Surprises Act” (the “Act”) was signed into law in December 2020, providing new federal protections for patients against surprise medical bills. The Act contains key consumer protections for the cost of unanticipated out-of-network medical bills, mandates fee and coverage transparency from providers and health plans, and improves access to care. Proposed regulations were published in July with additional regulations due in December. Key parts of the Act go into effect January 1, 2022, and will impact healthcare facilities, providers, health insurers and self-funded plans.
Bottom Line:
“The ‘No Surprises Act’ (the ‘Act’) provides new federal protections for patients against surprise medical bills, and contains key consumer protections for the cost of unanticipated out-of-network medical bills, mandates fee and coverage transparency from providers and health plans, and improves access to care. Key parts of the Act go into effect January 1, 2022, and will impact healthcare facilities, providers, health insurers and self-funded plans.”
No More Surprise Bills For Out Of Network Emergency Care, Air Ambulance Services & Provider Services at In-Network Facilities.
Beginning January 1, 2022, out-of-network (“OON”) hospitals and free-standing emergency facilities are prohibited from balance billing a patient for more than the patient would pay if the facility were in the patient’s health plan network. The prohibition also applies to OON Air Ambulance Services and OON providers of inpatient and outpatient services at or for in-network acute care and critical access hospitals and ambulatory surgery centers.
Any health plan that covers medically necessary emergency care must cover OON emergency services as if they were furnished at an in-network facility. Likewise, to the extent a health plan would cover in-network ambulance services the plan must cover OON air ambulance services as in-network services. And, with few exceptions, most facility-based provider services performed by OON providers must also be covered as if the provider were in-network. The Act defines “health plan” to include insurers issuing fully-insured individual and group health plans and ERISA self-funded group plans. Under the Act, health plans:
Cannot require members to pay a higher deductible, copay and/or co-insurance for OON emergency care, air ambulance services or facility-based provider services than they would if the services were performed by a participating facility or provider;
Must apply the member’s costshare for the OON care to their in-network deductible and maximum out-of-pocket amounts;
Must deny a claim for the OON services or directly pay the OON provider an “initial payment” within thirty days of receiving the claim;1
Cannot require a preauthorization for OON emergency services;
Cannot conduct more stringent utilization review of an OON claim for emergency care than for an in-network claim;
Must treat post-stabilization patient care at an OON facility as in-network unless/until the patient can travel on their own or be transferred non-emergently to an in-network facility.
With respect to OON Network Emergency Services, health plans cannot require a preauthorization for those services or conduct more stringent utilization review of an OON claim than it would for an in-network claim. Additionally, plans must treat post-stabilization patient care at an OON facility as in-network until the patient can travel on their own or be transferred non-emergently to a participating facility.
Notice and Consent Exception
As an exception to the balance billing prohibition for OON providers furnishing services at in-network facilities, some OON facility-based providers will be permitted to balance bill if they notify the patient that they are out-of-network and of the fees they will charge prior to treatment and the patient then signs a written consent to be balance billed. Requirements for a valid notification and consent will be prescribed in the regulations. Importantly, however, the notice and consent exception expressly excludes most facility-based providers from using it, as follows:
Services of physician and non-physician practitioners of emergency medicine, anesthesiology, pathology, radiology and neonatology services;
Services of assistant surgeons, hospitalists, and intensivists;
Diagnostic services including radiology and laboratory services;
Other specialty provider services specified by regulation, and
The services of an OON specialty provider when there is no in-network provider at the facility who can furnish the same services for the patient.
Recognized and Qualifying Amounts for Determining Costshares
A critical element of the Act as far as the balance billing prohibitions is the manner in which a patient’s costshare is calculated. The Act requires a patient’s in-network co-insurance for an OON emergency, air ambulance or facility-based provider’s services to be calculated on the “Recognized Amount” for the service. The Recognized Amount is the amount required to be paid for a service under the applicable State’s surprise medical billing law or “All Payer” rate setting model if the State has either. If not -- which is currently the case in most States including Kentucky -- the Recognized Amount is instead the “Qualifying Amount.”(2)
The “Qualifying Amount” for 2022 is the “median” of a plan’s contracted rates on January 31, 2019 that are recognized by the plan as the total maximum payment (including the patient’s costshare) for the same or a similar service furnished by a provider in the same or similar specialty in the same geographic region where the OON service was provided. The 2019 median rate is then increased by the percentage increase in the consumer price index for 2019, 2020 and 2021. The median contracted rates for 2023 and later years will be the median contracted rate for the prior year plus the increase in the CPI that year.(3)
Health insurers will have sufficient data to establish median in-network rates for different services, but self-funded plans may not. Plans that don’t have enough rate data to come with a median rate may use an independent All Payer Claims Database to establish the median rate. However, Kentucky is in the majority of States that do not currently have APC databases. While the Act provides for fund appropriations to States to establish independent APC databases, until that happens, plans that don’t have enough rate information must follow whatever process is established by regulation to determine the Qualified Amount.
Provider Reimbursement
OON providers covered by the Act are to be reimbursed by health plans at the “Out of Network Rate” which the Act defines as one of three amounts. It can be the amount of the initial payment the plan has to make to the OON provider upon receiving the provider’s claim. If the provider refuses to accept that amount as payment in full, the parties have 30 days to negotiate an agreed rate. If they don’t reach an agreement during that 30 days, either the plan or the provider may initiate the new binding independent dispute resolution (IDR) process described in the Act. The IDR process will be conducted by a CMS approved “IDR entity” that appoints an “arbiter” to finally decide the amount the plan has to pay the OON provider. Notably, when making that decision, the arbiter cannot consider the OON provider’s usual and customary charge for the service or the Medicare or Medicaid rate. Incentives to agree on a rate include that the losing party pays 100% of the IDR entity’s fees.
Provider Fee Transparency
Provider Good Faith Fee Estimates. When a patient has a scheduled appointment with an individual practitioner or facility, the provider will have a duty to promptly determine the patient’s insured status. The provider must then send an insured patient’s health plan a good faith estimate of the expected charges for the scheduled service, including billing and diagnosis codes, at least three days before the date of service, or sooner if the appointment is scheduled more than 10 days in advance. The provider has to send this same information directly to an uninsured patient.
Health and Human Services is to issue regulations by January 1, 2022 establishing an independent dispute resolution process for resolving fee disputes between providers and uninsured patients when the provider bills the patient substantially more for the service than the “good faith estimate.” Healthcare providers will also be required to notify patients of their rights under the Act.
Health Plan Transparency
Member ID Cards. Health plan member ID cards must include the member’s in-network and out-of-network deductible amounts and maximum out-of-pocket cost limits, as well a phone number and website address where the member can find a participating provider directory and regularly update the directory.
Price Comparison Tools. Health plans will be obligated to have up-to-date online price comparison tools on their websites and a mobile application so plan members can compare their anticipated out-out-pocket costs for a service or items across multiple providers.
Advanced EOBs. Upon receiving a provider’s good faith estimate for a member’s scheduled service, the plan must issue an “Advanced Explanation of Benefits.” Advanced EOBs are to inform the plan member of whether the provider is in-network, and of an in-network provider’s contracted rate for the service based on the billing and diagnostic codes in the good faith estimate. If the provider is out-of-network, the Advanced EOB must tell the member where they can get information on participating providers that perform the same service. The EOB must also include “good faith estimates” of the expected charge for the service, the amounts the plan and the member will pay, and the extent to which the member has met their deductible and maximum out of pocket amounts. Finally, the Advanced EOB has to contain a disclaimer that the estimated amounts are based on information known to the plan at the time and could change as the result of medical management.
Improved Access to Pediatric & Ob-Gyn Care
Under the Act, health plans must allow a child’s pediatrician to serve as the child’s primary care physician. Additionally, health plans can no longer require female plan members to obtain a pre-authorization or a referral from their PCP or the plan in order to see an OB-GYN.
Continuity of Care for Continuing Care Patients
Plans will be required to give “continuing care patients” timely notice of any change in the network participation status of their providers or facilities. Continuing care patients are those receiving inpatient or institutional care for a serious or complex condition, or who are scheduled to have non-elective surgery, pregnant and undergoing treatment, or terminally ill and receiving hospice care. If the patient’s provider or facility will no longer be in-network, the plan must continue covering their services as in-network services for up to 90 days so the patient can be transitioned to a new in-network provider.
As with most new healthcare legislation, the devil is in the details. The regulations provide some clarification and guidance on implementing the Act. Ensuring you stay up to date on the regulations and plan for the new requirements will make the adjustment easier in 2022.
1. The Act does not explain how plans are to decide the amount of the initial payment. Plans must provide for a new external review process for OON provider claims the plan has determined are not subject to the Act.
2. Maryland partnered with CMS in 2014 to establish and operate the only All Payer hospital rate setting and regulation system in the country.
3. Slightly different rules will apply to new health plans that don’t have historic rates, and to items/services a plan is covering for the first time in or after 2022.
This article is intended as a summary of state and/or federal law and does not constitute legal advice.
An edited version of this article was originally published in Medical News.