The No Surprises Act Explained

The No Surprises Act (NSA) was enacted in December 2020 as part of the Consolidated Appropriations Act of 2021. The rule bans the practice of surprise-billing for out-of-network medical care, including from air ambulance providers, hospitals, facilities, and individual providers.

Surprise billing happens when patients unknowingly get care from providers that are outside of their health plan's network. The law outlines new requirements and restrictions for many billing situations; however, the major focus on the bill is on three major categories of care, those where patients are most vulnerable to surprise billing.

  • Emergency Care - At Out-of-Network Facilities: Surprise billing often occurs in an emergency care situation where patients have little or no choice in where they receive care. Examples of this would be emergency care at a non-participating hospital or air ambulance services furnished by a non-network provider.
  • Ancillary Care – By Out-of-Network Providers at In-Network Facilities: Surprise billing can also occur in non-emergency care situations when patients at an in-network hospital or other facility receives care from ancillary providers (such as anesthesiologists or radiologists) who are not in-network and whom patients do not specifically choose.
  • Air Ambulance: Air ambulance services are usually furnished by nonparticipating providers, and the service is called upon when patients have essentially no choice of provider.

The problem of “balance billing” occurs when a provider charges a patient the remainder of what their insurance does not pay. This practice is currently prohibited by both Medicare and Medicaid. The No Surprises Act extends similar protections to insureds covered under employer-sponsored and individual health plans.

New Guidance

On July 1, 2021, the DOL, HHS, and the IRS released the first round of guidance (Interim Final Rule) prescribing regulatory requirements pursuant to surprise medical billing. Broadly, the guidance puts prescriptive rules into place to protect individuals from surprise medical bills, and details how providers will navigate these rules behind the scenes.

In short, the new rules clarify that patients are only responsible for their in-network cost-sharing amounts in emergency situations and certain non-emergency situations where they do not have the ability to affirmatively choose an in-network provider.

Highlights

Following is a summary of the key provisions of the guidance:

  • In-Network Cost Sharing: Cost-sharing (deductible or coinsurance) for out-of-network services that fall within the surprise billing protections are limited to in-network levels. That means patient cost-sharing cannot be higher than if the services were provided by an in-network provider.
  • Counts Toward In-Network OOP: Applicable cost-sharing (deductible or coinsurance) must count toward in-network deductibles and out-of-pocket maximums.
  • All Emergency Care In-Network: Emergency services, regardless of where they are provided, must be treated as if it were provided on in-network basis.
  • No Pre-Authorization: The practice of requiring a prior authorization for emergency services is prohibited.
  • Ancillary Care at In-Network Rates: Out-of-network charges for ancillary care (such as an anesthesiologist or assistant surgeon) provided at an in-network facility is prohibited in all circumstances.
  • No Balance Billing: The practice of balance billing (when providers seek to collect more than the applicable cost sharing amount from the patient) is banned.
  • Notice Required When OON Provider is Selected: When a patient voluntarily seeks care at an out-of-network provider, the provider/facility must provide patients with a plain-language consumer notice. The notice must explain that patient consent is required before that provider can bill at out-of-network rate (and collect any balance billed amount).

Effective Date and Applicability

The new law becomes effective for plan years beginning on or after January 1, 2022. It applies to nearly all private health plans offered by employers (including grandfathered group health plans) as well as individual health insurance policies offered through the Marketplace or directly through insurance carriers.

More Details . . .

The following sections provide a deeper dive into the details of the guidance for those that prefer a more in-depth review.

Emergency Services Provided by Out-of-Network Providers

If a nonparticipating provider (for example, an anesthesiologist or assistant surgeon) provides services at a participating facility or at a nonparticipating emergency facility, the provider may not bill beyond an allowed cost-sharing amount (essentially, the in-network levels).

In addition to specifying the payment constraint, the guidance also prescribed a specific process by which providers are paid. Within 30 days from when the provider submits a bill to a plan, the plan must determine an initial payment and directly pay the provider or issue a notice of denial. (The regulations clarify that this “initial payment” does not refer to a first installment, but rather the amount that the plan or insurer reasonably intends as payment in full.)

If the provider disagrees with the plan’s payment, the parties may begin a 30-day open negotiation period. If the parties fail to reach an agreement, the plan or provider has four days to notify the other party and the HHS that they are initiating an Independent Dispute Resolution (IDR) process. The No Surprises Act prescribed the details of this process, including the IDR as the final solution.

Can Surprise Billing Protections be Waived?

There are differences in how the guidance treats whether a patient may waive their surprise billing protections. These distinctions are useful in understanding the specific (and narrow) circumstances under which additional cost sharing and balance billing can be applied.

Out-of-Network Emergency Care
Types of Care:

  • Emergency Room Care
  • Air Ambulance Services

Involuntary Ancillary Care at Out-of-Network Facilities
Types of Care:

Circumstances where a patient does not have control in choice of provider:

  • Emergency medicine
  • Anesthesiology
  • Pathology
  • Radiology
  • Neonatology
  • Diagnostic services (including radiology and laboratory services)
  • Assistant surgeons
  • Hospitalists
  • Intensivists
  • Nonparticipating providers at a facility where there is no participating provider who can furnish the necessary item or service

Right to Waive:

No. Protections can never be waived. Notice and consent provisions cannot be used under any circumstances.

Voluntary Ancillary Care at Out-of-Network Facilities/Providers
Types of Care:

Circumstances where a patient has a meaningful choice as to whether to select a nonparticipating provider:

  • Other services (not listed above)
  • Nonemergency care where the patient elects a specific specialist
  • Care provided where additional cost sharing and balance billing amounts are not a “surprise” because a patient knowingly and purposefully seeks care from the nonparticipating provider

Right to Waive:

Yes. Protections can be waived if patient agrees to receive nonemergency care from certain nonparticipating providers. Notice and consent provisions must be followed.

Cost-Sharing Amounts

Participants in group health plans will pay cost-sharing for items and services that fall within the No Surprises Act’s scope based on the “recognized amount,” which generally will be the lesser of the “qualifying payment amount” (QPA) (i.e., the plan’s median in-network rate for an item or service) and the amount billed by the provider.

What is the Qualifying Payment Amount?

The Qualifying Payment Amount (QPA) is an amount paid to a non-participating provider as determined by the plan or insurer. Generally, it is the median of all the plan or insurer’s contracted rates from January 31, 2019 for a given item or service in that geographic region, increased for inflation. The QPA affects patient cost sharing in many instances and is a key factor for arbitrators to consider if and when payment disputes are resolved through the IDR process.

Accurate Provider Network Directories

Health plans must update their provider directory at least every 90 days. They also must respond within one business day to requests from individuals about whether a provider or facility is in-network. Lastly, consumers who rely on incorrect information conveyed by plans or posted in directories are entitled to have services covered with in-network cost sharing applied.

Continuity of Care

The No Surprises Act also includes a provision which requires health plans to notify enrollees when a provider/facility leaves the plan network while it is providing ongoing care. In certain circumstances, health plans must provide transitional coverage for up to 90 days or until treatment ends (whichever is earlier) at in-network rates.

The continuity of care requirement applies to treatment for serious or complex health conditions, institutional or inpatient care, nonelective surgery, pregnancy, and care for patients with terminal illness.

Advanced Explanation of Benefits

Beginning in 2022, patients can request advance information about how services will be covered before they are provided. For scheduled services, if a request is submitted, the health plan must provide written information including whether the provider/facility participates in-network and a good faith estimate of what the plan will pay and what patient cost liability may be. Generally, this information must be provided to the patient within three business days.

Notice and Consent Exception

Providers furnishing non-emergency services where the patient voluntarily elects to seek care out-of-network must provide notice and receive written consent from the patient in order to be exempt from the NSA’s balance-billing and cost-sharing restrictions. The nonparticipating provider generally has 72 hours before the service is delivered to obtain the patient’s consent. The process can be executed either in paper or electronic form, but notice must be provided to patients and patients must provide consent in advance of services in order for the provider to apply out-of-network cost sharing and/or balance bill for any services. To enable a plan or insurer to apply cost-sharing correctly, a provider relying on the notice and consent exception must timely notify the plan or insurer and provide the plan or insurer a signed copy of the binding notice and consent documents.

Model Notice

A model notice is provided for plans and insurers to post and include in all explanations of benefits to which the No Surprises Act applies. The regulations outline the process for providing the notice, which is intended to serve as good faith compliance with the NSA requirement that, beginning in 2022, a plan or insurer must disclose the prohibition on surprise billing and the entities to contact in the event of a violation.

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