The “No Surprises” Act: Congress Enacts Legislation to End Surprise Medical Billing in Omnibus Year-End Spending Bill
The recently-enacted Consolidated Appropriations Act, 2021 includes the long-debated “No Surprises” Act (the “Act”), which addresses how providers are paid for certain out-of-network health care services, and removes patients from the middle of out-of-network reimbursement disputes. The Act comprehensively addresses all types of commercial health plans by amending the Public Health Service Act (“PHSA”), the Employee Retirement Income Security Act of 1974 (“ERISA”), the Internal Revenue Code (“IRC”), and Federal Employees Health Benefits Program (“FEHBP”), each with substantially similar companion provisions. These provisions, summarized in brief below, will be effective January 1, 2022. Agency rules are expected to start rolling out in July 2021.
The Act applies to emergency services provided by non-participating facilities/providers and air ambulance services, and non-emergency services rendered by non-participating providers at participating facilities (unless a detailed notice and consent requirement is met). The Act covers all commercial plans governed by state and/or federal law.
Prohibition on Balance Billing
The Act prohibits out-of-network providers/facilities from balance billing patients for more than the in-network cost sharing amount for emergency services (and ancillary services), and non-emergency services rendered by out-of-network providers at in-network facilities (when the notice and consent criteria described below are not met).
Detailed Notice and Consent Requirements for Non-Emergency Services
The notice and consent criteria generally require non-participating providers/facilities to: (1) provide a written notice to patients; (2) obtain consent to be treated by a non-participating facility/provider; and (3) provide a signed copy of the consent to the patient.
Cost Estimate Requirement for Scheduled Services
The Act requires a provider to give a good faith estimate of charges to the patient’s health plan, generally within three days of the patient scheduling a service. The health plan is then required to provide an advanced EOB showing the provider’s network status, contracted rate, good faith estimates of patient cost-sharing and the amounts the plan will pay, certain disclaimers, and other information detailed in the Act.
Right to Direct and Timely Payment
The Act requires health plans to pay providers directly an initial “out-of-network rate,” as specified in the Act, thereby eliminating any impact from anti-assignment clauses governed by ERISA and exempt from state law.
Three Possible Out-of-Network Rates:
If there is an All-Payer Model Agreement in the State, then the amount specified in the Model Agreement should be used as the out-of-network rate.
If there is no All-Payer Model Agreement, then a state-law-specified amount would be the out-of-network rate if the state law governs each of:
the item/service furnished,
the provider/facility, AND
If there is no All-Payer Model Agreement and no state law governing, then the amount that the parties agree on (including any agreements from the more formal negotiation procedures detailed later in the Act) is the out-of-network rate.
Patient / Provider Dispute Resolution
The Act calls for the Secretary to establish a process by which uninsured individuals can challenge bills substantially in excess of good faith estimates provided pursuant to the cost estimate requirement above.
Provider / Health Plan Dispute Resolution
The Act sets forth a detailed dispute resolution procedure for providers and health plans that do not agree on the out-of-network rate. The procedure begins with an open negotiation process. If the provider and plan cannot reach an agreement through the open negotiation process, one party may escalate the dispute to independent dispute resolution known in the Act as the “IDR Process.” Both parties must then submit their “offer”, i.e. their argued price for the disputed item/service. The IDR Process is baseball-style, meaning the arbitrator must select one party’s offer.
Information the Arbitrator May or May Not Consider:
May Not Consider
Effect of IDR Decision
Absent some likely rare exceptions, like fraud, the arbitrator’s decision in the IDR Process is not subject to judicial review. The party who initiated the IDR Process cannot initiate another IDR Process against the same adverse party for disputes related to the same item/services during a 90-day “cooling-off” period following the arbitrator’s decision.
The IDR process is voluntary and does not prohibit the use of traditional litigation or other agreed dispute resolution processes.
The Act imposes a framework on providers and plans with the goal of sending timely bills to patients.
The Act takes action to make accurate provider information available to patients, so they can determine which providers are in their network.
All Payer Claims Databases
The Act establishes one-time grants for states that submit applications to create State All Payer Claims Databases.