Last month, we discussed the Hospital Price Transparency rule, which requires hospitals to publish their standard charges for certain items and services in accordance with the guidelines published by the U.S. Department of Health and Human Services (HHS). This month, we’ll look at the No Surprises Act, which stipulates that healthcare insurers may not surprise patients with out-of-network care bills, instead requiring healthcare providers and insurers to broker a price compromise between themselves.
The No Surprises Act, enacted on a bipartisan basis in December 2020, protects patients from surprise billing from out-of-network providers for nonemergency services, out-of-network ambulance services, and certain emergency services. According to the United States Secretary of Labor, the purpose of the No Surprises Act and Parts I and II of the act’s interim final rules is to ensure that surprise billing isn’t a barrier to receiving medical care. In addition, the No Surprises Act and its interim final rules provide a dispute resolution framework for providers to resolve disputes regarding out-of-network rates.
No Surprises Act Overview
Part I of the interim final rules, released in July 2021, requires in-network pricing coverage for emergency and post-stabilization services rendered by out-of-network providers at participating healthcare facilities. Further, the rules obligate providers to give notice and receive patient consent prior to participating in balance billing and cost-sharing practices that exceed in-network cost-sharing amounts. The rules also establish disclosure requirements for providers related to the cost of services, procedures related to obtaining patient consent for certain billing practices, and a means by which patients can submit complaints for violations of the act.
Part II of the interim final rules, released in September 2021, furthers the goals of Part I by specifying the independent dispute resolution framework, establishing good faith cost estimate requirements in connection with self-pay patients, and forms an external review provision for the No Surprises Act.
Together, these rules seek to establish a framework that a Centers for Medicare and Medicaid (CMS) memo released in September 2021 states will equate to “new protections from surprise billing and excessive cost-sharing for consumers receiving healthcare items/services.”
In addition to Parts I and II of the interim final rules, a notice of proposed rulemaking was released in September 2021 that proposes the following:
- New reporting requirements regarding air ambulance services.
- New disclosures and reporting requirements regarding agent and broker compensation.
- New procedures for enforcement of Public Health Service Act (PHS Act) provisions against providers, healthcare facilities, and providers of air ambulance services.
- New disclosure and reporting requirements applicable to issuers of individual health insurance coverage and short-term, limited-duration insurance regarding agent and broker compensation.
- Revisions to existing PHS Act enforcement procedures for plans and issuers.
Independent Dispute Resolution
As highlighted in the CMS memo, one of the key aspects of the interim final rules is the strengthening of independent dispute resolution (IDR) procedures and timeframes. The memo states that “The Sept. 30, 2021, rule establishes the federal independent dispute resolution process that out-of-network providers, facilities, providers of air ambulance services, plans, and issuers in the group and individual markets may use to determine the out-of-network rate for applicable items or services after an unsuccessful open negotiation. Not all items and services are eligible for the federal independent dispute resolution process.”
The framework establishes the procedures and timeframes for providers and insurers to settle negotiations regarding out-of-network rates when state law doesn’t exist to govern dispute resolution procedures.
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In other words, the IDR framework establishes the procedures and timeframes for providers and insurers to settle negotiations regarding out-of-network rates when state law doesn’t exist to govern dispute resolution procedures. The IDR process will be governed by independent dispute resolution entities. (Per 86 Fed. Reg. 36,888 (Oct. 7, 2021)), an IDR entity is an arbitrator that is held to conflict-of-interest standards and has training that is, at a minimum, equivalent to arbitration training provided by the American Health Law Association or the American Arbitration Association.)
The IDR framework includes the following actions and timelines for actions pertaining to resolving differences substantially in excess of good faith estimates. HHS has defined “substantially in excess” of a good faith excess as the billed charges being at least $400 more than the good faith estimate for any provider or facility listed on the good faith estimate. Uninsured patients who are billed more than $400 above an up-front estimate may also bring cases to arbitration for an administrative fee.
Below are the steps to the new process that you might find yourself a party to if you or your heathcare facility requires mediation:
- Negotiating Period. Parties have 30 business days, starting on the day of initial payment or notice of denial of payment, to begin negotiating.
- Dispute Resolution Begun. Parties have four business days, beginning on the business day after the open negotiation period ends, to initiate an independent dispute resolution process following a failed open negotiation. Both parties must pay an administrative fee ($50 each for 2022), and the non-prevailing party is responsible for the certified independent dispute resolution entity fee for the use of this process.
- Choose a Dispute Resolution Entity. Once the official dispute resolution process has begun, the parties have three business days to agree upon the selection of a certified independent dispute resolution entity. In the case of a conflict in the selection of a certified independent dispute resolution entity, six days after the dispute resolution initiation, the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury will select an entity. The arbitrator that is selected cannot be associated with an insurer or medical provider.
- Submit Information. Parties have 10 business days after the date that the certified independent dispute resolution entity has been selected to submit payment offers and additional information for consideration.
- Payment Determination Is Made. A payment determination is made 30 business days after the certified independent dispute resolution entity has been selected. The payment will be submitted to the receiving party 30 business days after the payment determination has been made.
Looking Forward
Updates to protections against surprise billing aren’t limited to the creation of new federal rules. On the contrary, states are using the popularity of the No Surprises Act among consumers as an opportunity to establish new state laws that align with these new federal rules. Most notably, in 2020 Colorado (H.B. 19-1774), New Mexico (Surprise Billing Protection Act), Texas (S.B. 1264), and Washington (Balance Billing Protection Act) each established laws similar to the No Surprises Act. In addition, over 30 states already have some form of balance billing protections on record.
Heading into 2022, providers and healthcare facilities should ensure that these considerations are addressed and, if questions remain, should consider obtaining professional advice from a healthcare attorney.
As a result, going forward, healthcare providers should consider:
- The impact of the No Surprises Act and state law on their business model. Are changes in how a provider operates required to comply with the No Surprises Act? New policies and procedures may be required to conform to the No Surprises Act. Among other issues, these policies may be related to obtaining patient consent, providing adequate notice, and the preparation and distribution of required disclosures.
- The interplay between state law (if applicable) and federal law, particularly as it relates to the determination of out-of-network rates. In certain cases, preexisting state laws and the new federal rules are inconsistent, as Congress deferred to some state laws and limited the degree to which the No Surprises Act preempts state laws. However, this isn’t universally the case, and, as a result, is an issue that may require specialized counsel to help healthcare providers resolve this issue.
Heading into 2022, providers and healthcare facilities should ensure that these considerations are addressed and, if questions remain, should consider obtaining professional advice from a healthcare attorney. Although the worst of the COVID-19 pandemic may be over, the demand for diagnostics is likely to remain high in the years to come. In addition, the use of telehealth and other virtual services isn’t likely to fade even as in-person options become available. As such, providers and facilities need to understand how the demand for diagnostics and their evolving business models will fit into the No Surprises Act regulatory landscape for pricing.
Emily Johnson is a nationally recognized attorney, author, and speaker with McDonald Hopkins LLC. Email her at ejohnson@mcdonaldhopkins.com.
Reprinted with permission from the American College of Rheumatology.
The AMA/AHA Lawsuit
The American Medical Association (AMA) and the American Hospital Association (AHA) have filed suit in the district court for the District of Columbia against the federal government over the No Surprises Act’s billing dispute resolution.
The suit argues that the plan ignores statutory language and would result in reduced access to care for patients. The lawsuit is narrowly focused on the resolution process, says the AMA in a press release, and would not prevent the law’s core patient protections from moving forward, including limitations to out-of-pocket costs for patients. According to the AMA and AHA, the resolution process outlined in the September 2021 interim rule would lessen insurers’ incentives for negotiating fair contracts, and the AMA predicts that fewer insurance contracts will be offered because of it.
The AMA/AHA lawsuit notes that this scenario is already occurring in North Carolina. According to the AMA, the dominant insurer in the commercial market there, Blue Cross Blue Shield North Carolina, has threatened to terminate agreements with physicians and hospitals who do not agree to lower rates in light of the new rule.
“Congress established important patient protections against unanticipated medical bills in the No Surprises Act, and physicians were a critical part of the legislative solution,” said AMA president Gerald E. Harmon, MD, in the press release. “Our legal challenge urges regulators to ensure the meaningful process to resolve disputes between healthcare providers and insurance companies created by Congress is realized.”