Financial Sustainability
The Buzz This Week
The “No Surprises Act” (NSA), which took effect on January 1, 2022, continues to draw attention from the media, objection from some providers, and confusion and/or lack of awareness from the general public.
The NSA aims to reduce large, unexpected bills for patients seen in Emergency Departments (EDs) and for other specific out-of-network services. The Peterson-Kaiser Family Foundation finds this type of billing occurs in about 20% of ED visits, and between 9% and 16% of in-network hospitalizations for non-emergency care. These “surprise” medical bills place a heavy, unexpected financial burden on patients, resulting in medical debt for them and unpaid collections for providers.
Per the Centers for Medicare and Medicaid Services (CMS), the NSA protects patients covered under group and individual health plans from receiving surprise medical bills for the following services:
- Emergency care at an out-of-network facility or from an out-of-network provider without prior authorization
- Emergency air-ambulance transportation (this does not include ground-based ambulance services)
- Elective non-emergency care at an in-network facility but from an out-of-network healthcare professional
Per the NSA, a patient who receives the services described above cannot be billed for an amount above their in-network cost-sharing rate. They cannot be presented with a “surprise” bill for services after they receive care from an out-of-network provider. The intention is to protect patients from large, unexpected medical bills for emergency and related services, and to create a more defined process through which insurers and providers disputing charges can reach a settlement.
One of the most controversial parts of the NSA from the provider perspective is an arbitration process clause (termed the federal independent dispute resolution, or IDR), which determines how much a patient’s health plan will pay a provider, should the patient qualify under the NSA. In this arbitration process, the health plan and provider are required to negotiate for 30 days. If those negotiations fail, either may initiate a secondary process through which each party offers a payment amount, and a neutral arbitrator makes the final decision. As the Commonwealth Fund stated in a recent report on this topic, “In an interim final rule establishing the arbitration process, federal officials directed arbitrators to pick the offer closest to the qualifying payment amount unless the parties submit credible information that shows the payment amount should be different. Federal officials and the plaintiffs refer to this as a ‘rebuttable presumption.’”
This arbitration clause has prompted strong objection from many providers. For example, the Texas Medical Association (TMA) recently filed several lawsuits against this part of the NSA, stating that the arbitration clause “unfairly gives health plans the upper hand in establishing payment rates when a patient receives care from an out-of-network physician, oftentimes in an emergency.” The first ruling on this objection in Texas invalidated portions (but not all) of the arbitration rule. But as the Commonwealth Fund recently summarized, “this could lead to greater variation in arbitration outcomes, thereby reducing the predictability of the process which could incentivize providers to leverage arbitration to obtain higher payments when doing so is not warranted. This, in turn, increases the risk that arbitration could become inflationary and lead to higher health care costs and premiums, which is inconsistent with Congress’ goals in enacting the No Surprises Act.”
Why It Matters
For services covered under the NSA, providers can no longer bill patients directly for any amount beyond in-network payer/patient cost-sharing (the “surprise” bill). Instead, providers will need to first determine a patient’s insurance and submit the out-of-network costs directly to the patient’s insurance plan. If necessary, some form of arbitration will occur between the provider and insurance plan. For providers, this will require a change in billing and claims processes and will likely impact the amount of revenue collected.
Enforcement of the NSA thus far is inconsistent across states. The Commonwealth Fund has created an interactive map that summarizes the roles of the federal and state governments on “various aspects of the No Surprises Act, including enforcement, specified state laws for payment determination, the use of external review for surprise-billing cases, and the patient–provider dispute resolution process.” As with any new healthcare payment/reimbursement rule, it is anticipated that additional objections and lawsuits will be filed, and the final rule may be amended before there is stronger enforcement. Still, providers should prepare for a different billing process for these services and should project the impact on expected revenue.
Related Links
The Commonwealth Fund
Health Care Providers Fight Arbitration Rule in No Surprises Act
Wall Street Journal
Medical Cost Disputes to Be Settled by Arbitrator
Kaiser Family Foundation
No Surprises Act Implementation: What to Expect in 2022
