What the “No Surprises Act” means for patients, providers, health plans

By Sarah Charles Wright

The “No Surprises Act,” signed into law in December 2020, contains important consumer protections against surprise bills for unanticipated out-of-network health services, mandates fee and coverage transparency from providers and health plans, and improves access to care. The Act will have significant implications for healthcare facilities, providers, health insurers and self-funded plans, with new requirements not only for coverage and calculating costs, but also obligations to provide detailed estimates and cost information to patients and insurers prior to providing services.

Developing procedures to meet the new requirements will be essential. Key parts of the Act are effective January 1, 2022. Proposed regulations implementing the Act will be published this July with additional regulations due out in December.

Out of Network Services Treated as In Network

Starting January 2022, out-of-network (OON) hospitals and free-standing emergency facilities are prohibited from billing patients more than the patient would pay if the facility were in the patient’s health plan network. Any health plan that covers medically necessary emergency care or air ambulance services must cover those services when performed by an OON facility or provider as if they were provided in-network.

OON Facility-Based Providers

Health plans must also cover most services performed by OON providers at in-network facilities as in-network. These OON providers will likewise be prohibited from balance-billing patients. As an exception, a few types of OON facility-based providers at in-network hospitals will be permitted to balance bill if they notify the patient of their OON status in advance and the patient signs a consent to be balance billed. However, the exception does not apply to most facility-based specialists, including, e.g., emergency practitioners, radiologists, pathologists and anesthesiologists.

Determining Costshares

Under the Act, a patient’s in-network costshare for OON emergency or facility-based care will be calculated using the “Recognized Amount” for the service. For the 33 states with surprise medical billing laws, the Recognized Amount to be paid for the service is dictated by statute. In Kentucky and other states with no surprise billing laws, the Recognized Amount will be the “Qualifying Amount.” The Qualifying Amount for 2022 is the “median” of a health plan’s contracted rates on January 31, 2019 recognized by the plan as the total maximum payment for the same or similar service and specialty in the same geographic region where the OON service was performed.

Provider Reimbursement

OON providers covered by the Act are to be reimbursed by health plans at the “Out of Network Rate” which the Act defines as one of three amounts. It can be the amount of the initial payment the Act requires plans to make to an OON provider upon receiving the provider’s claim. If the provider refuses to accept that amount as payment in full, the parties have 30 days to agree to a rate. If they do not reach an agreement within that 30 days, the plan or the provider may initiate the binding independent dispute resolution process described in the Act.

Provider and Health Plan Transparency

  • Provider Good Faith Fee Estimates: When a patient schedules an appointment with a provider, the provider will have a duty to promptly determine the patient’s insured status. The provider must then send an insured patient’s health plan (or an uninsured patient) a good faith fee estimate for the scheduled service, including billing and diagnosis codes, at least three days before the appointment or sooner for appointments scheduled more than 10 days in advance.
  • Advance EOBs: Upon receiving a provider’s good faith fee estimate, the patient’s health plan must send the patient an “Advanced Explanation of Benefits” stating whether the provider is in-network, and if so, the provider’s rate for the service based on the billing and diagnostic codes in the estimate.
  • Member ID Cards: Health plan member ID cards must include in-network and OON deductible amounts, maximum out-of-pocket limits, and a phone number and website where the member can view a current participating provider directory.
  • Price Comparison Tools: Health plans must have up-to-date online and mobile price comparison tools for plan members to compare costs across multiple providers.
  • “Continuing Care Patients”: Plans must give members timely notice of any change in the network status of their treating providers or inpatient facility.

As with most new healthcare legislation, the devil is in the details. The regulations expected in July will hopefully provide clarification and guidance on implementing the Act. Ensuring you stay up to date on the regulations and plan for the new requirements will make the adjustment easier in 2022.

-Sarah Charles Wright is a partner in Healthcare Law at Sturgill, Turner, Barker & Moloney in Lexington, Kentucky.

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