Deciphering the No Surprises Act: Top FAQs to Prepare

The No Surprises Act (“the Act”), effective January 1, 2022, is a federal law designed to protect patients from unexpected excessive medical bills when they are unable to choose an in-network provider. The law requires that out-of-network providers (including hospitals, physicians, non-physician providers, and air ambulances) refrain from balance billing patients for emergency and specific non-emergency health care services.

Given the complexity of this law, federal agencies will be responsible for clarifying key portions via additional regulations that will be issued throughout 2021. To ensure providers understand the requirements of the Act, as currently written, R1 has created the following FAQ.

Balance billing occurs when a provider who is outside a patient’s insurance network bills a patient for the difference between the provider’s charges and the reimbursement they receive. In-network providers are contractually required to accept a payer’s rate for items and services. However, when a provider does not have a contractual relationship with the payer, providers often bill patients to recover the difference between their charges and the out-of-network reimbursement.

An example of balance billing is when a patient receives emergency services at a facility that does not have a contractual relationship with the patient’s insurance. If the facility’s charges are $5,000, and the patient’s insurer only reimburses a $200 out-of-network rate, a facility may bill the patient for the difference ($4,800). A patient may also receive separate physician bills from out-of-network practitioners (e.g., anesthesiologists, radiologists, Emergency Department physicians, pathologists, and hospitalists) who were involved in providing care. To learn more about how balance billing impacts emergency physician groups, read this blog post.

The language of the Act states that providers may not bill patients beyond in-network cost-sharing for 1. emergency services, 2. non-emergency services unless providers “satisfy the notice and consent criteria.” Any payments that patients make must count towards their in-network deductible or out-of-pocket maximum. Additionally, providers will have the opportunity to conduct negotiations with payers to settle on out-of-network insurance rates.

The protections as written apply to individuals with employer-provided group health plans (or insurers offering individual health insurance). Government health programs (e.g., Traditional Medicare & Traditional Medicaid) and managed Medicare & Medicaid already have program safeguards that prohibit providers from balance billing in most scenarios, and thus the Act would not apply. Finally, uninsured individuals, by definition, have no coverage and thus are neither in-network nor out-of-network. Although the balance billing protections do not apply, providers may still offer uninsured discounts to these patients consistent with applicable laws and site-specific policies.

As currently drafted, the Act requires providers to notify patients of any out-of-network services at least 72 hours before providing scheduled services. The notice must contain specific information, including a “good faith” estimate of what the provider or facility may charge, and must also provide a list of any participating providers who are able to furnish services. Importantly, if there are no participating providers available to furnish services, providers may not balance bill patients. Federal agencies, including the Department of Health & Human Services (HHS), will provide additional information by July 1, 2021.

The Act requires that providers may not balance bill patients for emergency services, and providers may only balance bill patients for non-emergency services in limited circumstances. The following decision tree provides a high-level overview as the law is currently written:

6. May providers balance bill for “ancillary services” commonly performed in conjunction with other services? Is there a complete list of what counts as “ancillary services”? 

The Act states that providers may not balance bill patients for ancillary services, even if patients have provided written consent. The Act defines ancillary services as the following:

1. Items and services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology (whether or not provided by a physician or non-physician practitioner) and items and services provided by assistant surgeons, hospitalists, and intensivists
2. Diagnostic services, including radiology and laboratory services
3. Items and services provided by certain specialty practitioners
4. Items and services provided by a nonparticipating provider if there is no participating provider who can furnish such item or service at such facility

The Act refers to the patient’s cost-sharing obligation as the “recognized amount.” The recognized amount will be determined in one of three ways:

• If a state law describes how to calculate patient cost-sharing, then the Act will default to that determination;
• If a state’s all-payer rate setting specifies an amount, then that amount will be the recognized amount;
• If neither (1) nor (2) applies, then the patient’s cost-sharing will be the “qualifying payment amount,” which is the median contract rate for similar services in that geographic location recognized by the health plan on Jan. 31, 2019 for 2022. If those rates are unavailable, then the amount will be calculated based on an independent database of historic payment rates for such items and service.

The language of the Act states that providers and payers may mutually agree on payment rates for out-of-network services during an open negotiation prior to any formalized resolution process. If a party is unsatisfied with the amount the other is offering, either party may initiate the Independent Dispute Resolution (IDR) process. Like other sections of the Act, further regulations are necessary to clarify the IDR process. The following chart describes this process as currently drafted: 

Additional IDR Details:

• During open negotiations, providers may “batch” similar claims that occurred within 30 days of each other.
• The IDR entity will choose one of the two offers. The party whose offer was not chosen will have to pay for the full cost of the arbitration. The parties are still allowed to come to an agreement during the IDR process. If they do, they will split the arbitration cost.
• The party who initiates the IDR process cannot submit another claim for the same service to the other party for 90 days after the initial notification.

It depends. The Act applies in all states to employer-provided group health plans (including self-funded group health plans). While some states have existing balance billing protections that may differ from the Act, those protections only apply to individuals with specific state-regulated health plans (e.g., “fully insured” plans). As such, the protections in the No Surprises Act could apply to individuals with certain federally regulated health coverage, but state law would apply to those with state-regulated coverage.

If your state does not have surprise billing laws, providers should follow the Act. If, however, your state does have surprise billing requirements, it may be difficult to determine whether state or federal requirements apply to a particular encounter, as patient insurance cards do not clearly indicate this information.

Yes. As the No Surprises Act is currently written, providers will need to make public on their website language that states:

• Provider requirements on balance billing;
• State law requirements regarding what amounts providers and facilities can charge a patient for out-of-network services, and;
• Information on how a patient can contact state and federal agencies if a provider has violated the Act’s requirements.

As the Act is currently drafted, states may take action against providers who violate the Act. If states do not enforce the Act, then federal agencies (e.g., HHS) may enforce it. HHS has the authority to issue penalties of up to $10,000 per violation. HHS may waive these penalties if the provider can show that it unknowingly violated the Act, if providers withdraw the bill, and if they reimburse the patient with interest.