Don’t Be Surprised: A No Surprises Act Primer

Jenni Colagiovanni and Daniel Ayyash, Wachler & Associates, P.C.

Overview

Signed into law on December 27, 2020, the No Surprises Act addresses surprise medical billing or “balance billing” at the federal level by protecting patients from receiving surprise medical bills resulting from gaps in coverage for emergency services and certain services provided by out-of-network clinicians at in-network facilities, including by air ambulances. Effective January 1, 2022, healthcare providers, facilities, and providers of air ambulance services (hereinafter “providers”) are subject to new requirements that generally apply to items and services provided to individuals enrolled in group health plans, group or individual health insurance coverage, and Federal Employee Health Benefit plans. These requirements generally do not apply to beneficiaries or enrollees in federal programs such as Medicare, Medicaid, Indian Health Services, Veterans Affairs Health Care, or TRICARE.

Under the Act, patients are liable only for their in-network cost-sharing amount and are removed from payment disputes between a provider and their health plan, while providers and insurers are given an opportunity to negotiate reimbursement. The Act provides for an Independent Dispute Resolution (IDR) process in the event disputes arise over reimbursement between providers and insurers.

Independent Dispute Resolution Process Between Providers and Insurers

Under the Act, if a provider and insurance company cannot resolve a disagreement over payment for out-of-network services through negotiation, the parties may utilize an IDR process in the form of a “baseball-style” arbitration. In this process, a third party chooses one appropriate payment from two suggestions offered by the provider and the insurer, taking into account certain considerations. Where the insurer denies or “downcodes” a claim under the Act, the insurer is required to disclose the Qualified Payment Amount (QPA) for each item or service at issue. The QPA is generally the insurer’s median in-network rate and may be an approximation of what the insurer would have paid for the service if provided by an in-network provider or facility.

Notably, legal challenges to the IDR process have resulted in changes to the use of the QPA. Arbitrators were initially required to give greater deference to the QPA. However, a federal court ultimately struck down this rule and arbitrators are now directed to consider the QPA more generally along with certain additional information submitted by the parties.

No Balance Billing for Out-of-Network Emergency Services

The Act generally prevents surprise or balance billing for out-of-network emergency services. Non-participating providers and emergency facilities are generally forbidden from billing patients in group health plans or group or individual health insurance coverage who receive emergency services at a hospital or an independent freestanding emergency department for a payment amount greater than the in-network cost-sharing requirement for such services. There are exceptions for certain post-stabilization services if the notice and consent requirements are satisfied. However, the exception is not available for services furnished as a result of unforeseen, urgent medical needs that arise at the time an item or service is furnished, regardless of whether the notice and consent criteria are satisfied and regardless of whether they are emergency or non-emergency services.

No Balance Billing for Non-Emergency Services by Non-Participating Providers at Certain Participating Healthcare Facilities, Unless Notice and Consent Given in Some Circumstances

The Act prevents surprise billing for non-emergency services rendered by non-participating providers at certain participating healthcare facilities, unless notice and consent was given in some circumstances. Applicable healthcare facilities include hospitals, hospital outpatient departments, critical access hospitals, and ambulatory surgical centers.

Disclosure of Patient Protections Against Balance Billing

The Act requires providers to disclose patient protections against surprise or balance billing to the patient. A provider or facility is generally required to disclose information regarding federal and state (if applicable) balance billing protections and how to report violations. Providers must post this disclosure information prominently at the facility, post it on a public website (if applicable), and provide it to the patient in a timeframe and manner outlined under the applicable regulations.

Good Faith Estimate and Continuity of Care when a Provider’s Network Status Changes

The Act’s protections generally require a provider to inquire within a specific timeframe whether an individual who schedules an item or service is enrolled in a group health plan, group or individual health insurance coverage offered by a health insurance issuer, a federal health care program, or a Federal Employee Health Benefit plan. If so, the provider must inquire whether the individual seeks to have their claims for such item or service submitted to the plan and must provide notification (in clear and understandable language) of the good faith estimate of the expected charges, expected service, and diagnostic codes of scheduled services. The Act also requires a healthcare provider or facility that ends a contractual relationship with a plan and has a continuing care patient to accept payment from the plan for up to 90 days and continue to adhere to plan policies and procedures.

Michigan Balance Medical Billing Law

The federal No Surprises Act serves to supplement state surprise billing laws and provides a floor for consumer protections against surprise billing. On October 22, 2020, the Michigan Legislature enacted Enrolled House Bills 4459 and 4460, which created limitations on out-of-network provider payments and require certain disclosures to patients related to costs of services. Specifically, House Bill 4459 limits how much an out-of-network provider can collect in certain situations by implementing fee restrictions. The amount an out-of-network provider can collect from the patient is limited in certain circumstances, including:

• Where the service is provided to an emergency patient, is covered by the emergency patient’s health benefit plan, and is provided by a non-participating provider at either a participating health facility or non-participating health facility.
• Where the service is provided to a non-emergency patient by a non-participating provider at a participating health facility and the service is covered by the non-emergency patient’s health benefit plan.
• Where a non-emergency patient does not have the ability or opportunity to choose a participating provider or the non-emergency patient has not been provided the disclosures required by HB 4460.
• Where the service is provided by a non-participating provider at a hospital that is a participating health facility to an emergency patient who was admitted to the hospital within 72 hours after receiving a healthcare service in the hospital’s emergency room.

In these circumstances, the provider is limited to collecting the greater of:

• The median amount negotiated by the patient’s carrier for the region and provider specialty, excluding any in-network coinsurance, copayments, or deductibles; or
• 150% of the Medicare fee for service schedule for the healthcare service provided, excluding any in-network coinsurance, copayments, or deductibles.

HB 4460 sets forth certain disclosure requirements for out-of-network providers administering care to non-emergency patients, including:

• That the patient’s health insurance may not cover all services the out-of-network provider will offer.
• A good faith estimated cost of services to be provided.
• That the patient may ask for the services to be performed by an in-network provider.

Taken together, the federal and state laws against surprise billing include various consumer protections aimed at increasing transparency around health care costs and empowering patients in healthcare purchase decision-making. In doing so, these laws also impose new regulatory requirements on providers and to some extent insurers.