The No Surprises Act

The No Surprises Act, passed by Congress and signed by President Trump in December 2020, was designed to protect consumers from receiving unexpected medical bills. The law, which went into effect on January 1, 2022, addresses payment, Good Faith Estimates for billing, dispute resolution for both insured and self-paying patients, balance billing, provider directories, and external review.

Surprise! You owe a bundle.

Surprise bills have become a major problem in the healthcare system. Consumers would go to a facility that was in-network with their insurance company but receive services at that same facility from a far more expensive out-of-network provider. The consumer was then surprised by medical bills that their insurance didn’t cover, in some cases totaling thousands of dollars.

A few studies estimated that surprise medical bills happen about 1 in every 5 emergency room visits, in addition to 9-16% of in-network hospitalizations for non-emergency care. A particular problem has arisen with private equity groups acquiring physician practices and then using surprise out-of-network billing as a business strategy.

Envision Healthcare was noted for this technique. In July 2017, a National Bureau of Economic Research working paper looked at emergency department visits involving Envision’s EmCare unit, which supplies staff physicians to emergency rooms. The study found that in 22% of emergency department visits, a patient who went to an in-network doctor was treated by doctors that were out-of-network, resulting in an expensive surprise medical bill. Envision earned about $1 billion in out-of-network doctor services revenue from health insurers at the end of 2016. Envision claimed to be abandoning this practice as early November 2017. As the issue of surprise medical bills gained attention in the U.S., and states passed consumer-protection laws, it became more cost-effective for Envision to negotiate prices.

Balance Billing

Another issue driving up consumer healthcare costs is balance billing, the practice of billing consumers for the difference between the insurance payment and the out-of-network provider’s rate. The No Surprises Act includes new restrictions on balance billing; these restrictions most commonly apply to services provided by out-of-network healthcare providers at in-network facilities. The Act prohibits balance billing for emergency care. For non-emergency care, balance billing is only allowed if the consumer has been given notice and provided specific consent.

Provider Directories

Provider directories maintained by insurance companies have been criticized in recent years for including outdated and inaccurate information, making it harder for consumers to find a provider who is actually in-network. Under the No Surprises Act, as of 2022 insurers must update their directories every 90 days. Providers must inform any in-network insurances of any meaningful changes to their directory listing, and any time the provider terminates an agreement.

Along similar lines, insurers are required to notify patients when the in-network status of a treating provider changes. The patient will have the option to continue with that treating provider for up to 90 days under the same payment terms that existed under the provider’s in-network contract, with some exceptions.

External Review

The interim final rule of NSA adds to the scope of external review processes The AffordableCare Act (ACA) required non-grandfathered group health plans and insurers offering group and individual coverage to comply with state external review. The NSA now allows external review to extend to grandfathered plans.

In addition, the IFR expands rights to external review to include adverse benefit determinations (e.g., claims denials for medical necessity). External review is available for any adverse benefit determinations that do not meet criteria for expedited review. These include determinations based on requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit. For example, a patient could ask for review if a plan decided that pre-stabilization emergency treatment in an out-of-network emergency room did not qualify as “emergency services” under the NSA and thus imposed greater cost sharing on the patient.

Not everyone likes NSA

Many provider groups have objected to both the law and its implementation. The American Hospital Association has sued the federal government over the law’s dispute resolution process.

Click here for part 2 of this series.