No Surprises Act: What It Means For You

The “No Surprises Act,” a new federal law, goes into effect on January 1, 2022. It was passed as part of the Consolidated Appropriations Act and signed into law on December 27, 2020.

What is the No Surprises Act and what does it mean for healthcare payers? Let’s look at this piece of landmark legislation and its potential impact on the healthcare sector.

What Is The No Surprises Act? 

The No Surprises Act was designed for the primary purpose of increasing transparency into medical billing and reducing unexpected ‘surprise’ medical bills for patients who received medical care from out-of-network providers in situations where they had no alternative. The Kaiser Family Foundation noted studies that showed approximately 20% of emergency room visits and 9—16% of hospitalizations for non-emergency care result in patients inadvertently receiving medical care from out-of-network providers (such as anesthesiologists or other specialists.)

This places a financial burden on consumers. Health plans often either deny claims including out-of-network charges or apply higher copays for using out-of-network providers. Balance billing is also an issue; consumers often receive bills from out-of-network providers since they haven’t contracted to accept discounted payment rates from the payer.

The No Surprises Act institutes several new consumer protections against surprise medical bills:

  • Private health plans will be required to cover out-of-network claims and apply in-network cost sharing. This applies to both employer-based and non-group plans, including grandfathered plans. The law doesn’t apply to Medicare/Medicaid, as those already have limits on balance billing by non-participating providers.
  • Doctors, hospitals, and other covered providers will be prohibited from billing patients more than the in-network cost-sharing amount for ‘surprise’ medical bills.
  • Health plans must publish their in-network negotiated rates, prescription drug prices, and out-of-network billed and allowed amounts on the internet for full transparency.
  • An Advanced Explanation of Benefits document must be provided to the patient. This will lay out estimated prices and cost-sharing details, in advance of a scheduled medical treatment.  

The law also establishes a process for payers and providers to negotiate the proper billing amount for surprise out-of-network medical bills.

What Does This Cover? 

The new protections in the No Surprises Act cover specific types of bills in specific contexts. This is mostly to prevent consumers from receiving huge, unexpected bills after medical treatment when they had no realistic alternative. It is estimated that the law will apply to approximately 10 million out-of-network medical bills each year. These bills can include:

Emergency Services: Ambulance transports, air ambulance transports, and emergency room visits are all covered by the law. For example, if a consumer is in a car accident and gets taken to a hospital by air ambulance, they didn’t have the capability to ensure that air ambulance was in-network. The law protects them from a surprise massive out-of-network charge for that lifesaving service.

Stabilization Services: Care intended to stabilize a patient in a hospital setting following the initial emergency treatment is included in the No Surprises Act’s provisions. Post-emergency stabilization care is considered emergency care until a physician determines the patient can safely be transferred to an in-network facility. The patient must receive written notification of the transfer and must consent.

Surprise Out-Of-Network Services: A patient may have surgery or other medical procedures at an in-network hospital, only to have an out-of-network specialist assist in the surgery (such as an anesthesiologist.) The patient thinks their procedure is covered under their insurance, only to receive large bills for the portion of the procedure conducted by the out-of-network specialist.

Balance billing: The payer may negotiate a rate with the provider for their own accounting. However, the provider can still send a bill of their own to the patient for the remainder of the amount they charged. This is separate from copays, deductibles, or other charges connected to the patient's health plan. The law eliminates or reduces these bills for many individuals.

Compliance Deadlines

The No Surprises Act’s provisions for health plans to provide Advanced Explanation of Benefits documents and publish in-network rates, prescription prices, and out-of-network charges for full transparency to consumers were delayed by agreement between federal regulators and the health insurance industry. While the majority of the No Surprises Act will go into effect on 1/1/22, the AEOB and Transparency in Coverage components will go into effect in July of 2022. This gives the industry time to put these processes into place.

Changes To Workflow

Providers can no longer bill patients more than the applicable in-network cost sharing amount. A penalty of up to $10,000 will be assessed for each violation.

Before the No Surprises Act, many out-of-network providers bill their full, undiscounted rates directly to the patient. The patient must then submit the out-of-network claim to their insurance and receive whatever reimbursement they can. Once the new law is in effect, the billing practice must change. Providers will have to find out the patient’s insurance status and submit the out-of-network bill directly to their insurance plan. The provider is encouraged to include all applicable information regarding whether NSA protections apply to the claim and whether the patient has consented to waive their protections.

Health plans must respond within 30 days, advising the provider of the applicable in-network amount for the claim in question (which is based on the median in-network rate the plan pays for the services rendered) along with an initial payment. The health plan then sends the consumer notification of the claim and the amount owed to the out-of-network provider. At this point, the out-of-network provider can bill the patient.

Providers and payers must also identify bills protected by the No Surprises Act, and disclose applicable protections to patients, both on their website and on an individual basis to patients that receive services covered by the law.  

Patient Consent And Waivers

The law provides for patients to waive their rights under the No Surprises Act. Providers can refuse care if the patient refuses to give consent to waive their NSA protections. However, this is intended for use under limited circumstances, such as when a patient chooses to seek care from an out-of-network provider in spite of in-network alternatives, and must not be used to circumvent consumer protections. Consent waivers are not permitted for emergency services, ancillary services, urgent medical needs, and services from an out-of-network provider if there’s not an in-network provider available for that service at a given facility.

The patient must waive consent at least 72 hours in advance of a scheduled procedure when possible. If there  no later than the day they schedule the procedures if there are less than 72 hours. Providers cannot seek consent to waive NSA rights from a patient impaired or otherwise incapable of making an informed decision.

Enforcement And Consumer Appeals

Enforcement of the consumer protections in the No Surprises Act will be mostly a federal matter. In some cases, states will be responsible for enforcement. The federal government will step in and enforce if states fail to do so.

Consumers will have the right to appeal health plan denials and decisions that bill the patient for an amount higher than allowable under the provisions of the law. If the plan upholds its decision, an independent external reviewer will make a final determination.

The No Surprises Act directs DHS to establish a portal and help desk for consumer complaints. These shall go active with the advent of the law on 1/1/22.

A Win For Medical Affordability

Consumer advocates herald the No Surprises Act as an important step in consumer protection against surprise medical bills. This addresses many affordability concerns for consumers. The law is complex and several different agencies will handle oversight, which could make implementation and enforcement a complicated endeavor.

More than ever, healthcare payers will need strong payment integrity programs and partners. These are necessary to prevent overpayments to providers in the rapidly changing landscape expected under the new law. Alaffia Health provides an integrated turnkey payment integrity solution to help healthcare payers avoid fraud, waste, and abuse charges. Learn more today about how Alaffia Health can prevent overpayment and improve your bottom line.