February 9, 2021

What You Need to Know: ‘No Surprises’ Act Distilled in 650 Words

As you may know, the U.S. Congress passed the Consolidated Appropriations Act, 2021 on December 27. The legislation mostly focused on COVID relief, but there was a surprise for healthcare buried in the 5,593–page appropriations act. Long-debated legislation addressing surprise bills for healthcare services, known as the No Surprises Act, also became law.

Here we break down the major components of the No Surprises Act and what it means for healthcare payment processes and insurers. We hope this distills the major impacts so you can understand and focus preparation for key changes mandated by this recently passed legislation.

The No Surprises Act primarily focuses on patients getting out-of-network bills when they receive care at in-network facilities and protecting them from unexpected out-of-network prices. The passing of the No Surprises Act is considered a major patient consumer protection victory. Once it goes into effect on January 1, 2022, providers and health plans must pay careful attention to the new rules or risk incurring hefty fines.

The new law applies to health plans and providers prohibiting them from billing enrollees above in-network amounts for all emergency services and non-emergency services in certain situations. Bills must match in-network rates and providers will be prohibited from “balance billing” above the in-network price.

Surprise billing is generally focused on emergency services, when patients often do not have a choice about where they receive care. However, some non-emergency situations also are included, making use of estimates to give patients the opportunity to provide informed consent to be billed out-of-network costs prior to their service.

Health plan impacts:

Must hold enrollees harmless for amounts beyond in-network amounts charged by out-of-network emergency services providers.
Can’t impose limitations on coverage for emergency services from out-of-network providers that are more restrictive than those limitations on coverage for in-network services.
Count cost-sharing payments for such out-of-network emergency or non-emergency services toward any applicable in-network deductible or out-of-pocket maximum.

Provider Impacts:

Prohibits out-of-network facilities/providers of emergency services from billing or holding patients liable for amounts greater than the cost that would apply if the services were provided by an in-network facility/provider.
Prohibits same from air ambulance services (though does not apply to ground ambulance services).
Prohibits same for non-emergency services, except if the out-of-network provider gives the enrollee notice and obtains the patient’s prior consent.

In the case of non-emergency services, the provider can bill out-of-network rates if the patient gives prior consent. The patient must sign a consent form to receive the services from the out-of-network provider and acknowledge that he or she received the written or electronic notice. To satisfy the non-emergency notice and consent exception, the provider must give the patient:

Written or electronic notice of the provider’s out-of-network status
A list of alternative in-network providers
A good faith estimate of the charges at least 72 hours prior to service

Calculating out-of-pocket costs will play a key role in the financial engagement with the patient and will represent a liability on the provider side. Failure to provide this information means providers will not be able to bill out-of-network rates, resulting in lost revenue.

The legislation goes into detail on “recognized amount,” which is the in-network limit rate. Though there are edge cases and exceptions, it’s essentially a median of in-network prices for similar services. Another item of interest is a “good-faith estimate” and what happens if that estimate is grossly under the actual charges. In those cases, HHS will establish a patient-provider dispute resolution process, allowing the patient to submit the estimate and dispute whether it was made in “good-faith” or purposefully underestimated.

This coming year will be interesting as processes are developed throughout healthcare to put the No Surprise Ruling into place. As we’ve done with the Price Transparency ruling, RevSpring is here to support your organization with compliance. Look for future blog posts and other information from us as implementation of the No Surprise Act becomes reality.