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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.

Key Features

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:

  1. 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.

  2. 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

    • the plan/coverage/issuer.

  3. 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 Consider

May Not Consider

  • Median in-network rates
  • Provider’s training and experience, patient acuity, and the complexity of the service
  • Good faith efforts (or lack thereof) to become an in-network provider
  • Contracted rates during the previous 4 years
  • Quality and outcomes
  • Case mix
  • Provider/plan market share
  • A hospital’s teaching status
  • Any other non-prohibited information relating to the offer submitted by either party
  • Provider’s billed charges
  • Medicare rates
  • Medicaid/CHIP rates
  • TRICARE rates

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.

Voluntary Process

The IDR process is voluntary and does not prohibit the use of traditional litigation or other agreed dispute resolution processes.

Timely Bills

The Act imposes a framework on providers and plans with the goal of sending timely bills to patients.

Provider Directories

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. 

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume XI, Number 55

About this Author

David A. King Healthcare Attorney Polsinelli Nashville

David King is a shareholder in the Health Care Litigation and Disputes practice in Nashville. Leveraging over 30 years of health care litigation experience, David’s well-seasoned approach is pragmatic and highly detailed, enabling clients to advance their business and legal interests in managed care disputes, managed care strategy and contracting and national and state legislative matters. He works with a wide range of health care entities, including profit and not-for-profit hospital systems, ambulatory surgery centers, air ambulance services, specialty providers,...

Joshua D. Arters Health Care Attorney Polsinelli Nashville, TN

Josh Arters leverages a deep understanding of the issues health care entities encounter in the constantly-evolving health care industry to serve health care providers’ business and legal objectives. Josh has experience representing a diverse group of health care entities, including premier profit and not-for-profit hospital systems, hospital associations, ambulatory surgery centers, air ambulance service providers, specialty providers, national physician groups, ancillary service providers, and medical device companies. Josh’s practice focuses on managed care disputes, strategies, and...

Samantha M. Flener Health Care Litigation Attorney Polsinelli Nashville, TN

Samantha Flener is an associate in the Health Care Litigation and Disputes practice in Nashville. Client-driven service is at the heart of everything Ms. Flener does:  she lives by the maxim “when a wave comes, go deep,” showing up every single day to dive in and do what needs to be done to get the right results. She works with a wide range of health care entities, including profit and not-for-profit hospital systems, ambulatory surgery centers, air ambulance services, specialty providers, physician groups and ancillary service providers, and medical device companies to develop smart and...