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White Paper
The No Surprises Act: An overview with recommendations for physician practices
Summary
Optum has been assessing the No Surprises Act (NSA) since late 2020 and has made necessary modifications to its billing policies and procedures to support compliance with the NSA provisions that took effect January 1, 2022. Optum has also been monitoring key developments related to the NSA since its enactment. These include lawsuits filed by various organizations (e.g., Texas Medical Association) and their outcomes. This document provides physicians, billing staff and others with a detailed summary of the law’s key requirements and mechanisms, as well as recommendations to help support compliance. Finally, it includes a summary of some of the key new requirements being proposed by the Biden administration.
It would be an understatement to say the implementation of the NSA has been fraught with problems. There also have been numerous legal challenges.
By: Rob Saunders, Senior Consultant, Change Healthcare
What is the No Surprises Act?
The NSA provides individuals and families covered by group and individual health plans protection against unexpected, high-priced medical bills for services delivered at in-network facilities by out-of-network (OON) providers.
The law establishes an independent dispute resolution (IDR) process for payment disputes between plans and providers. It also creates dispute resolution opportunities for uninsured and self-pay individuals who receive a medical bill that’s substantially higher than the good faith estimate (GFE) they’d previously received from the provider. The federal government estimates the law will impact about 10 million medical bills each year.
Why this law was necessary
Prior to implementation of the NSA, if an individual had health insurance and received care from an OON provider or an OON facility, even unknowingly, their health plan wasn’t obligated to cover the entire OON cost. That frequently left the patient with higher costs than would have been the case had they received care from an in-network provider or facility.
As an example: A person had surgery at an in-network facility but unwittingly received care from an OON anesthesiologist. Along with any OON cost-sharing the patient might owe, the OON provider — unless prohibited by state law — could also balance bill, or “surprise bill,” the patient for the difference between the billed charge and the amount allowed by the patient’s health plan.
What about existing state laws?
Prior to passage of the NSA, 18 states already had comprehensive balance billing consumer protections, while 15 more had less robust consumer safeguards. The most substantial state rules:
- Include both emergency and inpatient settings
- Apply to all types of insurance
- Protect consumers from balance billing and extra provider charges
- Incorporate either an adequate payment standard or dispute resolution process for resolving provider-payer reimbursement disputes
However, state balancing billing laws, for the most part, cover only fully insured members and don’t apply to self-insured benefit plans or members. Self-insured plans cover about 67% of workers with employer-based coverage. The NSA was created to extend protections to this population.
It’s important to understand how the NSA interacts with state billing laws. The NSA essentially creates a floor for consumer protections against surprise bills from OON providers and related, higher cost-sharing responsibilities for patients. If a state law provides at least the same level of safeguards as the NSA, the state law applies.
What the NSA stipulates
If a person receives health coverage through their employer, a health insurance marketplace, or an individual health insurance plan purchased directly from an insurance company, the NSA:
- Bans surprise bills for most emergency services, even if received from an OON provider and without prior authorization.
- Bans OON cost sharing such as coinsurance and copayments for most emergency and some nonemergency services. Individuals cannot be charged more than the in-network cost-sharing amounts for these services.
- Bans OON charges and balance bills for certain additional services such as anesthesiology, radiology and pathology furnished by OON providers as part of a patient’s visit to an in-network facility. Also, certain providers (e.g., a radiologist, anesthesiologist, pathologist, neonatologist) may not request a consent waiver from the patient. (If it were allowed and is signed by the patient, certain providers could balance bill the patient).
- Requires providers and facilities to provide patients with an easy-to-understand notice explaining applicable billing protections and contacts if they’re concerned a provider or facility may have violated the protections. Patients must also be informed that patient consent is required to waive billing protections. A patient must receive notice of and consent to being balance billed by an OON provider.
NSA emergent care provisions
The NSA applies to emergent care if items or services are furnished in one of these 3 emergency services settings:
- Hospital emergency departments
- Independent, free-standing emergency departments
- Urgent care centers licensed to provide emergency services
Emergency services under the NSA include:
- An appropriate medical screening examination
- Further medical examination and treatment to stabilize
- Post-stabilization services, defined as covered services furnished after the patient is stabilized and as part of outpatient observation or inpatient or outpatient stay with respect to the visit for the emergency services
After satisfying certain notice and consent exception requirements, patients may waive the NSA’s balance billing prohibitions for post-stabilization services.
Items and services furnished in connection with a visit for emergency services covered by the NSA include but are not limited to:
- Equipment and devices
- Telemedicine services
- Preoperative and postoperative services
- Items and services that are included in a global payment for the original service provided by:
- Assistant surgeons
- Hospitalists
- Intensivists
- Items and services related to:
- Neonatology
- Anesthesiology
- Pathology
Covered non-emergency services
To qualify as an NSA-covered non-emergency service, the following 3 conditions must be met.
- The care setting must be in-network.
- The patient’s visit must have started in 1 of 4 nonemergency services settings:
- Hospital
- Hospital outpatient department
- Critical access hospital
- Ambulatory surgical center
- The items and services furnished to the patient in connection with non-emergency services include all provided until the patient’s departure from the facility where the visit for non-emergency services was initiated.
Importantly, it’s the patient’s location in an in-network care setting during the visit, not the provider’s location, that determines whether non-emergency services are subject to the NSA’s balance billing prohibitions.
For example, telehealth or lab services from an OON facility would still be covered by the NSA if the patient visit occurred at an in-network care setting. Items and services provided in connection with a visit for non-emergency services covered by the NSA are the same as those listed above for emergency services.
OON claims processing and payments
Under the NSA, payers are required to make an initial payment or a denial of payment within 30 days of submission of a clean claim. They must also send the payment notice directly to the provider. Historically, some payers have paid the patient directly if a provider was OON, a practice that often resulted in collection headaches for providers. Receiving payments directly from the payer should decrease a group’s overall accounts receivable days.
How payment disputes are handled
If the provider disagrees with the amount offered by the payer, both parties must engage in an open negotiation period to reach an agreement regarding the total OON rate. The open negotiation period begins the day the initiating party sends the open negotiation notice to the other party.
When arbitration is initiated
If open negotiations don’t produce an agreement between the parties by the end of 30 business days, either party may then initiate the federal IDR process. This must be done during the 4 business days beginning on the 31st business day after the start of the open negotiation period. The initiating party must provide a written Notice of IDR Initiation to the other party, as well as to the U.S. Departments of Treasury, Labor, and Health and Human Services (HHS), via the federal IDR portal.
How arbitration works
Payment disputes are resolved by an independent arbitrator or IDR entity who is authorized to employ “baseball style” arbitration, such as choosing 1 of 2 offers. When selecting between the provider’s requested payment and the plan’s offer, the IDR entity is required to consider:
- The qualifying payment amount (QPA)
- The training and experience of the provider
- The market share of the plan and provider
- Any contract history
- Quality of outcomes
- Patient acuity
- Prior contract history between the two parties
- The services provided
The QPA is defined as the lesser of the provider’s billed charge or the plan’s median contracted rate for the same or similar service in the geographic region where the service is performed as of Jan. 31, 2019, adjusted for inflation.
The resolution process is not settled law
On February 23, 2022, a federal judge vacated portions of the NSA’s IDR process in response to a suit brought by the Texas Medical Association. The suit argued that the final rule unlawfully created a presumption in favor of the median in-network rate, and in so doing, skewed the IDR process in favor of insurers. The judge agreed and ruled that all previously enumerated variables, including the QPA, training, market share, outcomes, services provided, and contract history must be considered fully and equally by arbitrators when determining an appropriate price. HHS and other federal agencies have said they’re reviewing the ruling to determine next steps and that they’ve withdrawn guidance documents that refer to “the portions of the rule that the court invalidated.”
Who pays for arbitration
The IDR implementation rule imposes a “loser pays” model wherein the administrative costs of arbitration become the responsibility of the losing party. This approach is designed to encourage settlement and deter overly aggressive positions on either side.
At present, there are 13 organizations listed on cms.gov to handle claims submitted via the IDR portal and their various fees depending on whether single or batched determinations. Each party to arbitration must now pay an administrative fee of $115 (this new higher fee became effective January 22, 2024) in addition to the costs of resolving a dispute, which range from $200 to $840 for single determinations and $268 to $1,173 for batched determinations with an add-on fee for batched disputes of $75 to $250 for every additional 25 items (beginning with the 26th line item). The rule requires that both sides pay the administrative and IDR fees up front with their respective IDR submissions.
The prevailing party will then receive a refund of the resolution fees within 30 business days of the arbitration award. In the case of batched claims, the party with the fewest determinations in its favor is considered the non-prevailing party and is responsible for the IDR resolution fee.
Given the significant costs involved, disputing a payment may not be worth the time and money for some providers, even if numerous claims are batched during the same arbitration session. Optum predicts that many disputes ultimately will be resolved by providers and payers agreeing to enter into a participating provider agreement.
2023/2024 proposed changes
In addition to a change in the administrative fee referenced above (was originally $50), there are several new requirements as part of a proposed new rule issued by the Biden administration in late October 2023. The Departments (HHS, Labor and Treasury) reopened the public comment period for the IDR process which closed on February 5, 2024. Examples of certain aspects of these proposed rules include:
- Proposing that payers include additional information alongside their initial payments or notices of denials, such as the qualifying payment amount and contact information for initiating the open negotiation period.
- Establishing time frames for various steps in the IDR process (e.g., initial payment or denial, responding to a notice of open negotiation, responding to initiation of the IDR process).
- Proposing that the parties provide a formal open-negotiation notice to the other entity and HHS through the Federal IDR portal. The other party would also be required to respond to the notice before the fifteenth day of the open negotiation period.
- Permission to allow related payment determinations to be “batched” into a single dispute for efficiency and broaden the “extenuating circumstances” that qualify for an extended timeline.
Optum NSA recommendations
- Contact your client service manager for any specific questions regarding the NSA. For example, under what circumstances, if any, could an office visit fall under the NSA’s patient balance billing prohibitions? Also, if the patient’s health plan does not respond to the OON provider within a given time frame, can the provider bill the patient the full amount for the service without violating the NSA’s patient balance billing prohibitions?
- Any groups that are OON with specific commercial payers should compare the allowed amounts for 2022 for services, year over year. For example, by being OON with Payer X — which historically has resulted in reimbursement approximating 180% of the Medicare fee schedule — is your group now being reimbursed at 120% of Medicare, and if so, what is the projected annual impact to the practice?
- Be aware of the numerous steps associated with the open negotiation and IDR processes, including any notice requirements and the associated timelines. Also, understand the requirements for batching claims.
- Speak with your client service manager for any changes in NSA provisions, as well as any updates concerning the provisions that have been delayed. Delayed provisions include:
- The requirement of providers to provide a good faith estimated amount for insured members to payers. Payers will also be responsible for providing an Advanced Explanation of Benefits to patients so patients can better predict their out-of-pocket expenses.
- The requirement in which the convening provider or facility, the entity that receives a GFE request from an uninsured or self-pay individual, coordinates all related estimates. For example, for a knee surgery, an orthopedic surgeon’s office would need to consider anesthesia, assistant surgeons, prescription drugs and durable medical equipment to create the consolidated estimate.
- Consider using consultants from Optum if your group decides to pursue a participating provider agreement with a payer.
Good faith estimate requirements
The NSA requires that providers and facilities assess a patient’s insurance coverage at the time of scheduling and, if the patient is uninsured or self-pay, inform them of their right to a GFE of the amount they can expect to be charged for the service.
The estimate, which should also be made available on request when patients are shopping for services, must include the costs of both the provider responsible for scheduling the service as well as the co-providers who typically furnish services as part of the primary item or service.
It’s important to note that this element of the rule is not yet fully enforced. HHS has indicated it will exercise discretion regarding co-provider estimates.
At some point, however, the convening facility will be responsible for coordinating and consolidating anticipated co-provider charges for the GFE. Estimated charges are defined in the Act as the cash pay rate for an uninsured or self-pay individual and must reflect any available discounts or adjustments.
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References
- Internal documents, Optum Technology-Enabled Services division, Business Integrity Unit.
- CMS. No Surprises: Understand your rights against surprise medical bills. Jan. 3, 2022.
- CMS. Overview of Public Health Service (PHS) Act Provider and Facility Requirements. No date.
- U.S. Department of Labor. FAQs about Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 49. August 20, 2021.
- U.S. Department of Labor. Memorandum Regarding Continuing Surprise Billing Protections for Consumers. Feb. 28, 2022.
- Office of the Assistant Secretary for Planning and Evaluation (ASPE). Evidence on surprise billing: Protecting consumers with the No Surprises Act. U.S. Department of Health and Human Services. Nov. 22, 2021.
- Stempniak M. Feds issue final rule setting No Surprises Act IDR administrative fee at $115. Radiology Business. Dec. 19, 2023.
- Roberts B Choe K, Wallace V, Halaby X. Public comment period reopened for Proposed Rule on No Surprises Act’s IDR Operations. Hogan Lovells. Jan. 20, 2024.
- Muoio D. Biden admin proposes overhauls to lambasted out-of-network billing dispute resolution process. Fierce Healthcare. Oct. 27, 2023.
6. “FAQs About Affordable Care Act And Consolidated Appropriations Act, 2021 Implementation Part 49”
7. Memorandum Regarding Continuing Surprise Billing Protections for Consumers, Department of Labor
8. “Evidence on Surprise Billing: Protecting Consumers with the No Surprises Act,” Assistant Secretary for Planning and Evaluation, Office of Health Policy
