By Stacy Hooper, Nathan Kottkamp and Nate Lykins, Waller Lansden Dortch & Davis, LLP
The end of surprise billing is certain to be a blessing for patients, but for providers, insurers and employers, it could result in significant compliance hassles.
Intended to address the persistent problem of balance billing patients for the costs of services of facilities and providers who are not in their health plan network—often with no prior notice—the “No Surprises Act” was signed into law in December 2020 as part of the Consolidated Appropriations Act, 2021.
The No Surprises Act’s requirements become effective on January 1, 2022. With proposed regulations yet to be released, there could be a few surprises yet for healthcare providers.
Overview
A “surprise” bill is an unexpected bill that a patient receives after he or she has obtained services from an out-of-network provider at an in-network facility. For example, a patient might have surgery at a hospital that participates in his or her health plan’s network while the anesthesiologist and pathologist who provide services as part of the surgery do not. In this situation, patients are often surprised to learn that all of the services are not in-network and they are stunned to discover that they are expected to pay the difference between the providers’ fees and their health plan’s out-of-network rates.
Surprise billing also creates problems for payers and providers. Payers are often required to spend additional time helping unhappy employees or enrollees understand why the services they received were not covered under their health plans. For providers, the disparities in payment rates may lead to uncollected fees and patient dissatisfaction. The Act is the first comprehensive federal reform effort and it affects health plans, hospitals, physicians and air ambulance transportation companies.
Although the full scope of the new regulatory scheme will not be known until regulations are published in mid-2021, the Act makes it clear that healthcare providers, insurers and self-insured health plan sponsors should be ready to address budgetary, operational and administrative changes soon.
These changes include the following significant provisions:
Out-of-Network Services & Patient Financial Responsibility
- When a patient receives out-of-network emergency services, the hospital or physician providing emergency services may not hold the patient liable for copayments, coinsurance and deductible amounts that exceed in-network rates.
- Emergency services must be provided without requiring prior authorization or any other term or condition of coverage and regardless of whether the provider is part of the patient’s health plan network.
- Health plans must count any cost-sharing payments for emergency services toward in-network deductibles or out-of-pocket maximums.
- For non-emergency services, providers cannot impose cost-sharing requirements that would exceed the requirements applicable to in-network services, unless certain notice and consent rules are met.
Provider Reimbursement Rates
- Reimbursement rates will be set by applicable state law or, if no such law exists, a calculation that is based on the median contracted rate among other payers for the same service and in the same market.
- An “independent dispute resolution” mechanism will be established to arbitrate claims between providers and payers that cannot be resolved by the parties themselves. Using “baseball-style” arbitration, the dispute resolution entity must accept one of the parties’ proposals without modification or “splitting” the difference.
Other Patient Protections
- To facilitate patient understanding about pricing, health plans must provide “price comparison guidance” to their members by phone or online.
- Health plans must provide updated directories that include, among other things, network status of health care providers.
- The rules and scope of information in “explanation of benefits” documents will be expanded.
- Patients will enjoy a transition period of 90 days to facilitate continuity of care if a provider terminates network participation during a particular course of care.
- Transparency rules will require providers to inquire about a patient’s health plan coverage at the time of scheduling and provide patients with a good faith estimate of anticipated charges. These transparency rules will be in addition to the Hospital Price Transparency final rule that became effective at the beginning of this year.
Unanswered Questions
Because the Act is a broad change to the laws applicable to an entire industry, it is not clear how its requirements will work in practice and many issues remain to be clarified. Among them are issues such as:
- How will the Act affect the nature of network agreements overall? Will it compress prices such that the benefits of network agreements are significantly diminished or entirely meaningless?
- Who will shoulder the array of administrative burdens and costs that are necessary to ensure compliance with the Act?
- How will patient consents for waivers work in practice? Patients are already required to sign countless forms to receive medical treatment. Will there be protections to ensure that patients understand what they are signing when they sign forms related to out-of-network billing?
- How will the Act be applied in states where there are existing and complementary surprise billing laws?
- The Act provides that it does not supersede state law, except to the extent a particular state law prevents it from applying. It is not clear, however, how this will apply in practice.
- How, if at all, will Congress address surprise bills from out-of-network ground ambulance providers? Such providers are frequently a source of surprise bills, but the Act only addresses air ambulance providers (although it does establish an advisory committee to study ground ambulance bills).
- The Act attempts to remove patients from the process of resolving conflicts between health plans and providers regarding payment rates. Will it be effective in doing so, or will further legislative updates be necessary?
Conclusion
The Act is an attempt to address issues related to surprise billing, but the government must provide more guidance to enable affected parties to comply with the Act’s requirements by January 1, 2022. For their part, providers, insurers, health plan sponsors and others should continue monitor activities related to the regulations and rollout of the Act. Among other things, interested parties will have an opportunity to submit comments to the proposed regulations following the publication of the Notice of Proposed Rule Making.
