What Revenue Cycle Can Do to Prepare for Surprise Billing Compliance

August 05, 2021 - A prohibition on surprise billing is coming at the start of next year and federal agencies have started to release what surprise billing compliance will look like. These new compliance requirements will have a major impact on revenue cycle workflows.

“This is a major new regulatory scheme which will have impacts throughout the revenue cycle and will directly impact workflows from admissions to billing,” Harvey L. Rochman, partner at Manatt, recently told RevCycleIntelligence. “Revenue cycle leaders should be proactive in developing strategies and processes to comply with the law and maximize reimbursement for out-of-network services covered by the NSA.”

The No Surprises Act, or NSA, was signed into law as part of the Consolidated Appropriations Act of 2021 at the end of last year. The law provides protections against surprise billing at the federal level by outlawing balance billing for out-of-network care delivered during an emergency or at an in-network facility, unless a patient consents to the care. Additionally, NSA establishes an independent dispute resolution (IDR) process to determine how much providers get reimbursed for out-of-network care by payers.

The law itself will “mean significant changes and new or different workflows for hospitals which they should be working on now given that the law is effective on January 1, 2022,” Rochman says. And with a recent interim final rule (IFC), revenue cycle leaders have a little more information to go on for compliance.

Compliance with the IFC

HHS jointly released an interim final rule (IFC) with the Office of Personnel Management (OPM), Department of the Treasury, the Internal Revenue Service, and the Department of Labor’s Employee Benefits Security Administration to provide more details. Rochman and colleagues at Manatt explain that the IFC addresses six provisions of NSA:

1. Prohibiting group health plans, individual and group health insurance coverage, and federal employee health plans, as well as out-of-network health care providers and facilities and air ambulance services, from balance billing patients
2. Determining how the Qualifying Payment Amount (QPA), which can be used to calculate the patient cost-sharing and is used in the IDR process, will be calculated
3. Limiting patient cost-sharing to the amount that would have applied if the provider was in-network
4. Requiring that notice be provided to patients regarding these protections
5. Establishing a complaint process, and
6. Enabling patients in certain circumstances to receive notice of, and consent to, charges beyond the in-network rate for care

READ MORE: Key Ways Providers Can Prepare for New Surprise Billing Rules

Revenue cycle leaders should particularly pay attention to the part of the IFC that prohibits balance billing.

“In the rule, HHS emphasizes the need for hospitals and other providers to be proactive in ensuring that they do not violate balance billing protections,” Rochman explains. “Under the NSA, hospitals may be subject to civil monetary penalties of up to $10,000 per violation. However, the HHS Secretary will waive those penalties if the hospital (i) does ‘not knowingly violate’ the law, (ii) ‘should not have reasonably known it violated’ the law and (iii) within 30 days withdraw the any improper portion of the bill and make restitution with interest of amounts improperly charged.”

“That standard requires hospitals to quickly conform their practices to the law so that they can establish that they acted reasonably,” Rochman adds.

Revenue cycle workflows will also need to change to accommodate new patient cost-sharing and reimbursement rules.

“The cost-sharing and reimbursement provisions require providers to interact with payors regarding out-of-network charges,” Rochman says. “These requirements will require workflow changes particularly in states where there are no balance billing laws or the state balance billing provisions provide limited protection.”

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How state laws interact with the federal ban on surprise billing will also be key to compliance for revenue cycle teams, Rochman points out.

“To comply, providers in multiple states will need to determine whether the NSA or state law applies to the calculation of cost-sharing amounts and reimbursement rates for out-of-network care covered by the statute,” Rochman states. “In states with balance billing laws, the rule makes clear that a single hospital visit could include out-of-network charges that could fall under either state law or the NSA, making it even more important for providers to understand the overlap between the two.”

“The rule also makes clear that other federal protections may apply alongside state protections as long as the state protections do not prevent application of the NSA.”

However, more clarification is needed with this aspect of the IFC, which may create challenges for revenue cycle leaders adopting new workflows to comply with new surprise billings rules.

“[T]he IFC does not contain enough information to clearly determine when state law will apply,” Rochman explains. “That makes it difficult for revenue cycle leaders to develop plans to implement the NSA, particularly given that there are a wide variety of state laws that already provide balance billing protection.”

READ MORE: Surprise Billing Arbitration Favors Providers, But Rates Are High

For now, revenue cycle teams should expect to apply both the federal law and its state’s requirements until federal departments provide more information.

More to come with surprise billing compliance

Complying with the provisions within the IFC will require a significant amount of work for revenue cycle leaders, Rochman admits. But their work won’t stop there.

The federal departments that released the IFC acknowledged that it only covered parts of NSA compliance and future rulemaking will be required to account for other aspects of the law, such as the much-anticipated independent dispute resolution process.

“The most hotly anticipated regulations are the rules regarding the new federal Independent Dispute Resolution (IDR) process which will be issued by December 27, 2021. These regulations will establish an entirely new federal arbitration process to determine out-of-network reimbursement amounts for charges covered by the NSA,” Rochman states.

While revenue cycle leaders have time before the next IFC is released—and HHS has promised sufficient time for providers to digest and comply with the rule’s provisions—they might want to start the process of compliance now.

“Hospitals should be developing a game plan to efficiently seek compensation through the IDR process and maximize their results,” Rochman advises.

“Although the new rule does not include the IDR process aspects, the detailed information regarding setting the detailed information regarding calculation of the Qualifying Payment Amount (QPA) will help revenue cycle leaders prepare for the IDR process because the QPA, which is generally the median in-network contract rate for the item or service, will be one factor considered by the arbitrators in determining the amount that should be paid to providers for out of network services covered by the NSA.”

Additionally, the IFC details the information for the QPA providers can get from payers. This “will help inform their approach to the IDR process, including developing evidence to support their proposed reimbursement amount,” Rochman adds.

Preparing now will ensure revenue cycles are ready for major changes coming January 1st, which provider organizations will be subject to whether the second IFC comes sooner or right before the compliance deadline as scheduled.