What the No Surprises Act Means for Providers

September 08, 2021 - In December 2020, Congress passed the No Surprises Act to reduce unexpected medical bills on patients. But implementing the regulations by the January 2022 deadline might be a challenge for providers.

The Act targets both emergency and non-emergency situations where patients are balance billed for out-of-network services, providers, or locations. A patient may be taken to a hospital that is out-of-network in an emergent situation. In non-emergent cases, patients sometimes are treated at an in-network facility by an in-network provider but other providers on their case, such as an anesthesiologist or radiologist, are not considered in-network providers by their health plan.

In both situations, patients can be billed for the difference between the amount charged by the provider or hospital and the amount paid by insurance—oftentimes $0—through a practice called balance billing. Medicare and Medicaid both prohibit balance billing practices, but commercial or employer-sponsored plans do not. 

Balance billing is a surprise to many patients and often an unmanageable expense.

According to experts from Sidley’s Healthcare practice group, there are two main categories of providers who must be in compliance with the new law: freestanding emergency departments or hospitals with emergency departments and physicians who provide services at in-network facilities but are not themselves in-network for respective health plans.

“Both of these sets of providers are going to be under an obligation to not charge patients more than the cost sharing amount that they are charged by the plan,” Brenna Jenny, JD, MPH partner at Sidley told RevCycleIntelligence.

Complying with new requirements

Reaching out to payers first instead of patients will be a new practice for many providers. Revenue cycle teams need to reimagine traditional processes in order to comply with the No Surprises Act. Traditionally, out-of-network patients would be billed by providers for services rendered. The onus was then on the patient to work with her health plan to determine her out-of-pocket expenses.

“The patient will presumably have a closer relationship with that plan since it's out-of-network to the provider,” Jenny explained.

But the new regulations are questioning this assumption. Under the act, the burden shifts to the payer and providers to negotiate payments for the patient even sees the bill. Protections in the No Surprises Act apply to services covered under a patient’s benefits packages, so the provider will now bill the health payer first to see if services are covered under a patient’s specific plan.

“If the provider doesn’t know, the provider is going to have to bill the plan first,” continued Jenny.

The underlying challenge with this new strategy is that provider organizations will have to develop relationships with payers they might not already have connections with.

“There’s tension between the idea that you’re an out-of-network provider and having a good relationship with the plans sufficient to collaboratively work through these issues,” Jaime Jones, JD, partner at Sidley echoed. “That’s why there is an entire dispute resolution process contemplated by the statute. It is not always going to be possible for the plans and the providers to work through these issues.”

Out-of-network providers are expected to work with plans they previously had no relationship with. They now must not only create relationships with these organizations to work through disputes but develop standard processes for compliance and claims submission.

Currently, plans have thirty days after receiving a clean claim to make an initial payment, but there is no minimum payment rate currently established. During the open comment period of the interim final rule, HHS sought advice on this minimum rate.

“Once the plan chooses a rate, and it could be something that a provider thinks is outrageously low, the provider is going to need to decide whether or not to enter into negotiation with the plan,” Jenny furthered.

If negotiations are not resolved, the provider will then need to decide if they want to trigger an independent dispute resolution process.

Each step of this process requires workflows provider organizations need to begin planning for. Key questions of how they will resolve disputes, what payment rates they will accept, and how they will negotiate need to be answered for successful implementation.

What if states already have protections?

Provider organizations must also work to understand the overlap between the No Surprises Act and their state laws. Several states currently have their own surprise billing rules.

“This gets very messy very quickly when a state law only covers a fraction of what the federal law does,” Jenny warned. “In some circumstances, you can have a bill that is partially governed by state law and partially governed by the No Surprises Act.”

Working out the nuances to this overlap will be a challenge as the No Surprises Act is initially rolled out at the start of 2022.

“The impact may vary depending on the state,” Jenny furthered. “The jury is still out on whether the No Surprises Act kicks the balance right in terms of balancing burdens on providers and plans with benefits to patients.”

As the comment period closes, further information on the specific requirements for health plans and provider organizations will continue to develop. But the No Surprises Act ultimately focuses not on protecting these two groups but on protecting patients from surprise medical bills.

Providers need to ensure they are prepared to implement the act in order to uphold these protections and eliminate cost-of-care burdens for their patients.