As 2020 ended, the No Surprises Act (NSA) was signed into law as part of the Consolidated Appropriations Act of 2021 to remedy problems associated with surprise medical billing. The NSA, armed with $1.4 trillion in spending, goes into effect on January 1, 2022. In the summer of 2021, barely in time to meet a statutory deadline set by Congress, the Departments of Health and Human Services (HHS), Labor, and Treasury, and the Office of Personnel Management (OPM) issued an interim final rule (IFR) to implement important components of the No Surprises Act. 

The NSA builds on some of the protections of the Affordable Care Act (ACA), including broad patient protections against surprise medical bills. Out-of-network surprise medical bills, also known as out-of-network billing or balance bills, arise when a consumer inadvertently or unknowingly receives care from a provider or at a facility that is not part of their insurance plan’s network of providers. 

The patient then receives a bill for the difference between the out-of-network provider’s fees and the amount covered by the patient’s health insurance after co-pays and the deductible. Since there is no contractual agreement for payment between the provider and the health plan, the provider bills the patient for the outstanding balance.

Out-of-network providers and facilities typically charge higher rates, even to insurance companies, which causes consumers to incur a higher cost fortheir medical bills. If the insurance company refuses to pay the out-of-network provider’s charge as billed, the provider will often try to recover this balance by billing the patient. This billing occurs in both emergency and non-emergency situations and can cause patients to face extremely high, surprise out-of-pocket medical expenses.

The prevalence of surprise bills is well-documented. It also has implications for negotiations between payers and providers where some providers threaten to use balance billing to leverage higher in-network reimbursement from payers.

In a 2020 poll conducted by Kaiser Family Foundation, 16% of insured adults aged 18-64 reported they received a surprise bill related to care received from an out-of-network provider. One-third of insured adults ages 18-64 replied that they received a surprise or unexpected medical bill in the previous two years. The same poll revealed that almost 67% of adults said they worried about unexpected medical bills, a greater percentage than worried about affording other expected health care or household expenses.

These billings typically occurred after some medical service they believed was covered by insurance was rendered to them or a family member. Unfortunately, their health plan didn’t cover the bill for any amount or covered less than they expected. Typical scenarios where this occurs is when a patient goes to the closest emergency room, which is an out-of-network facility; or where the patient seeks care at an in-network hospital with an in-network surgeon, but is also treated by an out-of-network anesthesiologist. 

The groundbreaking NSA aims to protect patients from the most prevalent types of surprise balance bills for emergency services and non-emergency services at in-network facilities. Patients treated by an out-of-network provider will only be responsible for the same amount of cost-sharing that they would have paid if the service had been provided by an in-network provider. Perhaps most importantly, providers and facilities are legally prohibited from sending balance bills to patients.

The NSA also establishes a process to resolve payment disputes between insurers and out-of-network providers—this includes an open negotiation process with independent dispute resolution (IDR) if negotiations fail. The law incorporates several guardrails to prevent abuse of this process. The NSA goes into effect on January 1, 2022. In the meantime, the federal government is acting quickly to issue new rules and guidance. 

In that regard, this summer’s IFR addresses topics that include patient cost-sharing protections, notice and consent standards for waivers, rules for calculating the qualifying payment amount (QPA), disclosure requirements, and complaints processes, among other standards. By significantly reducing out-of-network surprise bills, the NSA will reduce out-of-pocket costs which will, in turn, reduce anxiety, financial stress, and medical debt.

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