In the absence of legislation to address surprise bills from medical providers, the self-funded health care market has largely relied on Reference -Based Pricing to leverage costs, alleviate uncertainty, and create better healthcare price transparency. The No Surprises Act came into play on December 27, 2020, in an attempt to protect patients from surprise medical bills and provide a clear path for negotiation and resolution. Naturally, self-funded employers and Third-Party Administrators may be wondering how this new legislation impacts their plans.
What Is a Surprise Medical Bill?
A “surprise medical bill” is sent to patients who unknowingly receive medical services from out-of-network providers and get charged an exorbitant rate. Surprise medical bills typically occur when a patient receives emergency medical care. Perhaps a doctor or hospital is In-network, but the ambulance, x-ray technician, anesthesiologist, or other specialists are not. The discrepancies can be huge. For instance, an insured patient may only owe a 10% copay for an in-network provider, while an out-of-network provider charges a 40% copay.
What are Surprise Balance Bills?
Make no mistake, a surprise balance bill IS NOT the same as a balance bill. A balance bill is ANY bill a provider sends to a patient for amounts over and above and beyond what their plan pays. A surprise bill, in the context of the NSA legislation, is a balance bill only for emergency services in the case of an RBP plan, or a balance bill for emergency services or services provided by an out-of-network provider at an in-network facility for plans that employ provider networks.
What Does the No Surprises Act Do?
Now in effect as of January 1, 2022, the No Surprises Act targets:
- Emergency Surprise Bills – The Act protects patients from surprise bills for emergency services performed by out-of-network providers. Even if a provider is deemed “out-of-network,” the patient will be required to pay only the deductibles and copays they would pay an “in-network” provider. They will not be held liable for excess costs charged. One notable exception is that the Act protects against surprise air ambulance service bills – but does not cover surprise ground ambulance bills.
- Non-Emergency Surprise Bills – The Act also protects patients from surprise out-of-network services provided at in-network facilities. Patients are only responsible for in-network amounts in most cases. Providers will be able to give patients written notice of an estimated out-of-network charge 72 hours prior to providing care, with the exception of anesthesiologists, radiologists, or laboratories.
- Dispute Resolution Process – The Act sets forth procedures for resolving disputes between patients, health plans, and healthcare facilities. Patients will not be directly involved in negotiations – but, rather, insurers will negotiate a good faith estimate on their behalf. Providers have up to 30 days to negotiate a surprise bill. The matter will be submitted to binding arbitration. Insurers are encouraged to refer to Medicaid or Medicare pricing in the absence of established benchmark payment standards.
Ultimately, the Congressional Budget Office estimates the No Surprises Act will result in 0.5-1% lower commercial insurance premiums, saving taxpayers $17 billion over the next decade and saving consumers twice as much in reduced premiums and cost-sharing.
What TPAs and Employers Need to Know About the No Surprises Act
If you’re currently using Reference Based Pricing, that’s OK! The new legislation does not prohibit the use of RBP in any way and only affects a small portion of RBP services, emergency care to be specific. The law does not speak directly to the amount paid for services, so it is unlikely the percentage of Medicare paid in an RBP plan will need altering. In fact, the dispute-resolution mechanism in the bill that prohibits UCR (Usual, Customary, and Reasonable) or gross charges in resolving disputes is set up to better accommodate those using a Reference Based Pricing model.
How Will the Law Affect Day-to-Day Activities for TPAs and the Self-Funded Marketplace?
Business will go on as usual under most circumstances. The only new twist arises when a provider disputes the plan’s payment for emergency services. The 30-day timeline for resolution will then apply. During that time, both parties must make an offer. Additional time can be requested, but in the end, the arbitration will be one of the two offers.
Various strategies can be employed to handle emergency claims. Paying the normal RBP amount and waiting for the provider to contest is one way. A second approach would be to take a deep dive into the details of Qualifying Payment Amounts and state regulations and make a payment based on those results.
Another impact of the Act is that providers must send in a good-faith cost estimate for scheduled services. The plan will then need to produce an Advanced Explanation of Benefits (Advance EOB) for the patient detailing the cost-sharing amounts the patient will be required to pay.
Given these changes, we highly recommended that TPAs submit their groups’ plan documents for review to ensure they are prepared for any negotiation or arbitration that may occur, particularly with emergency services.
Considering the continued developments and moving targets for enforcement of these new regulations, it’s critical to partner with a vendor that is keeping up with it all.
Preparing for the No Surprises Act with CompassConnect
Payer Compass continues to launch the modules within CompassConnect, our tech stack enterprise solution, for the legislation that was activated on January 1, 2022, which affects Third Party Administrators, Self-funded Employers, Stop-loss Carriers, Brokers, Health Plans, and of course, the plan members.
Our efforts to provide a solution to address the NSA accomplishes two things for health plans, plan admins and employers:
- Keeps them in compliance and takes the burden off of them to keep up with and interpret the new rules
- Encourages healthcare consumerism for the plan members
To learn more, contact Payer Compass today.
