Effective January 1, 2022, the No Surprises Act (NSA) established new federal protections against surprise medical bills and balance billing for services received from out-of-network providers. The Act applies to emergency and non-emergency services provided by all healthcare providers and all commercial health plans. The No Surprises Act is not applicable to Medicare and Medicaid programs, because patients who have Medicare and Medicaid are required to utilize a contracted provider.
The Interim Final Rule, “Requirements Related to Surprise Billing; Part 1” provides protections for patients who receive services from an out-of-network provider by addressing surprise billing, banning balance billing, and defining consent to balance bill for non-emergency services.
Key Terms Defined
Surprise Billing occurs when a patient unknowingly receives emergency and non-emergency services from healthcare providers that are outside of their health plan's network and is balanced billed for these services. For example, if a patient covered under Cigna seeks care at a healthcare facility or provider that is out-of-network with Cigna or seeks care from an in-network healthcare facility or provider but as part of their care ancillary services are sent to an out-of-network provider, then there is an opportunity for a surprise bill associated with these services.
Balance Billing occurs when a provider bills a patient for the difference between the provider’s charged amount and the payor’s allowed amount. For example, if the provider’s charge is $100 and the payor’s allowed amount is $70 ($50 of which is paid directly to the provider and $20 is shifted to patient responsibility by the provider), balance billing occurs when the provider bills the patient for the remaining $30 not covered by the payor. A provider who is in-network cannot balance bill the patient above the contracted allowable. However, prior to the No Surprises Act, an out-of-network provider could balance bill the patient the difference between the provider charge and the payor allowable because there was not a contracted allowable rate between the provider and payor.
Defining Consent to Balance Bill for Non-Emergency Services. For non-emergency services only, the provider can obtain consent from the patient to utilize an out-of-network provider for care and then balance bill the patient. Consent must be obtained 72 hours prior to scheduled appointment; for unscheduled appointments, no later than 3 hours prior to service performed. This requires a good faith estimate to be presented at the time of consent. CMS has developed specific consent forms that are required to balance bill for non-emergency services. Consent forms are not an option for emergency services. Under the No Surprises Act, ancillary services, including pathology, laboratory, and radiology, which individuals typically have little control over, are always subject to balance billing prohibitions.
The second interim rule, “Requirement Related to Surprise Billing; Part II” provided additional protections for consumers by establishing a process to determine the out-of-network rate, and requiring a good faith estimate for uninsured (or self-pay) individuals.
Process to Determine the Out-of-Network Rate - An independent dispute resolution (IDR) process has been established to determine out-of-network payment amounts between providers (including air ambulance providers) or facilities and health plans and for the uninsured. Under the Act, the out-of-network rate is determined by a hierarchy of factors including:
- State Laws – Does the state have an all-payor model agreement in place that would dictate price, or other state laws in place
- Agreement between provider and payor
- Independent Dispute Resolution (IDR) arbitration process to establish qualified payment amount (QPA)
The IDR process is an arbitration process that begins with a 30-business day open negotiation period. If open negotiation is unsuccessful, either party can select from a panel of certified arbitrators, or one will be selected for them. Each party submits a written offer for payment with information that is requested by the arbitrator. There is an emphasis on using the qualifying payment amount (QPA). QPA is determined as the payor’s median contracted rate as of January 31, 2019, in the same insurance market, adjusted by the CPI for all urban consumers. It is possible to have multiple claims resolved in a single arbitration process, but they need to be pretty close to identical types of claims to do that. There are costs and forms associated with this process.
Good Faith Estimates for Uninsured (or Self-pay) Individuals - The No Surprises Act also provides protection for uninsured (or self-pay) individuals from unexpected medical bills. Starting January 1, 2022, a provider or facility has to give an uninsured (or self-pay) individual a good faith estimate of expected charges after an item or service is scheduled, or upon request. The good faith estimate will include expected charges for the primary item or service received, as well as for any other items or services that would reasonably be expected to be provided as part of the same scheduled service.
In September 2021, the Department of Health and Human Services (HHS) acknowledged that it may take time for the primary providers and facilities to develop systems and processes for providing and receiving the expected charges from others. Therefore, for good faith estimates provided to uninsured (or self-pay) individuals from January 1, 2022, through December 31, 2022, HHS will exercise its enforcement discretion in situations where a good faith estimate does not include expected charges from other providers and facilities that are involved in the individual’s care.
Summary of Provider Requirements
Compliance with Disclosure of No Surprises Act
The Act also requires healthcare providers to notify patients regarding the No Surprises Act protections. Compliance with these notice requirements includes posting the notice at the provider’s physical locations, posting a link to the notice on the searchable homepage of the provider’s website, and delivering the notice to certain patients is required by January 1, 2022.
A provider that does not have a publicly accessible location or website is not required to make a disclosure. However, if possible, the provider should consider posting the notice on its website. CMS has developed a model disclosure notice for utilization by healthcare providers.
Providers may also want to post on their websites a list of insurance providers they are contracted with as well as review payor websites to determine they are listed appropriately on the payor website as an in-network provider. This will allow patients to easily determine a provider’s contracted status with an insurance provider.
State Legislation Addressing Balance Billing
Prior to the national legislation, several states have implemented legislation at the state level to address surprise billing. The No Surprises Act does not overrule state law. Some states may have additional requirements in addition to the national legislation. Currently, 18 states have comprehensive balance billing legislation in place that prohibits balance billing in both emergency and non-emergency situations.
How Can Your Billing Provider Help?
There are numerous reasons a provider may be out-of-network with a payor. Some payors have closed networks and aren’t accepting new providers, or the provider and payor couldn’t agree on rates for treatment. In addition, due to the numerous payors in the market, it is often difficult to contract with every payor. Regardless of the reason, most healthcare providers will not be in-network with all payors and will be impacted by the No Surprises Act.
The following are ways providers can leverage their billing system to assist with complying with the No Surprises Act.
- Determine In-Network Rate – Proactively contact any out-of-network payors to establish what the in-network rate is or work with the payor to define an agreed-upon, consistent approach, such as a percent of the fee schedule. This will allow providers to bill at an agreed-upon out-of-network rate from the start.
- Establish Fee Schedules by Payor – Within your billing system, categorize payors as contracted vs. non-contracted and associate the specific fee schedule by payor. For out-of-network payors, your charge should equal the payor in-network allowable if defined upfront.
- Place Out-Of-Network Payors on Hold – If your billing system doesn’t have the functionality to establish individual fee schedules by payor, consider placing out-of-network payors on hold for manual review prior to sending a patient statement. This will provide an opportunity to review the Explanation of Benefits (EOB) and ensure the patient is billed the corresponding in-network rate. This might be applicable for a hospital-based provider that is out-of-network with a specific payor that the hospital is contracted with.
- Send Proactive Courtesy Letters to Patients – When applicable, consider sending a courtesy letter to patients, informing them that their claim should be processed by their insurance provider as in-network under the No Surprises Act. When utilized strategically, proactively educating patients prior to them receiving an explanation of benefits (EOB) from the payor or with their billing statement, can help alleviate patient confusion and patient phone calls. For instance, this might be utilized when a payor is denying claims for a hospital-based pathology group that is out-of-network when the hospital is in-network.
- Educate Patient Service Representatives – Providers may not know they are providing service to an out-of-network payor until after the bill is sent and the patient calls customer service. Having a customer service workflow process in place will help representatives handle patient phone calls.
- Utilize Patient Responsibility Estimator Tools – Patient estimation tools can assist patients in understanding their out-of-pocket expenses before a test is performed. Leveraging a patient out-of-pocket estimation tool can proactively educate patients prior to receiving a bill and help them understand their out-of-pocket cost.
Learn more about our Patient Estimator in this video.
For additional information on the No Surprises Act:
Download XIFIN’s Preparing for the No Surprises Act Step-by-Step Guide.
Visit the XIFIN No Surprises Act Resource Center which includes FAQs, Complimentary Webinars, NSA industry news and resources from industry experts.