The No Surprises Act: Why it Matters Right Now and What You Can Do

December 15, 2021

The No Surprises Act comes into effect in early 2022. It makes vast changes to the payment environment, with patient protections and disclosure requirements, along with a dispute resolution procedure for health plans and providers. The implementation of the statute, however, strays from the statutory language to the detriment of physicians, who are challenging this interpretation.

During a workshop sponsored by Zotec as part of Becker’s Hospital Review 9th Annual CEO + CFO Roundtable, three experts from Zotec provided an overview of relevant portions of the regulations and shared observations on current trends:

  • Aaron Beckstedt, Director of Client Development
  • Ed Gaines, Vice President of Regulatory Affairs and Industry Liaison
  • Marc LeBrun, Senior Director of Client Relations

Five key takeaways from the session:

1. The No Surprises Act aims to tackle surprise billing to protect patients.

The No Surprises Act was passed in December 2020, a culmination of years of legislative work by Congress involving multiple stakeholders. This bill, shaped by physician and hospital advocacy, rejected alternative approaches in Congress that benchmarked payments to a median. Healthcare plans and insurance carriers had been anticipating a benchmarking law and had been managing the median in-network rates downward for years, often by summarily terminating practices above the median. The effect of benchmarking would be that the 50th percentile becomes the new cap for physicians.

The bill enacted nationwide patient protections, including Employee Retirement Income Security Act plans for the first time, and covers practices both in and out of network.

The existing patchwork of laws offering balance-billing protection in some states meant that the implementation would require some harmonization in regulation. State laws that meet certain criteria still apply, except for ERISA plans.

2. The interim final rule lays out a detailed process to protect patients and resolve disputes between physicians and insurance carriers.

The process is very patient-protective. The initial payment is decided by the health plan. The patient’s cost is determined from the qualifying payment amount, the median in-network rate determined by that plan as of Jan. 31, 2019, adjusted for inflation.

In the event of a reimbursement dispute between the clinician and the health plan, the interim final rule sets forth an independent dispute resolution process. “If you win more money later on as a physician, it doesn’t change the patient cost-sharing. Your patient’s out of it,” Mr. Gaines said. Within 10 days of the selection of the IDR adjudicator, each party submits its final offer for “baseball style” arbitration where the adjudicator must select one of the offers — he or she cannot “split the baby.” “The clinician may batch 30 days’ worth of claims” that are similar, Mr. Gaines said, followed by a 90-day cooling off period and 90-day batching, a benefit to the physician.

3. The rule to implement the statute poses significant problems for physicians.

The statute laid out a number of factors for the adjudicator to consider, including quality of outcomes, party market share, case complexity, good faith of the parties to contract and prior contracting rates over the past four years, in addition to the qualifying payment amount. “The statute says all those factors are equal,” Mr. Gaines said. “Unfortunately, that’s not the way it’s been written in the regulation.”

The September interim final rule builds in a rebuttable presumption that the qualifying payment amount is the appropriate amount, and that the other factors may only be considered when “credible” and demonstrate that the qualifying payment amount is materially different. In effect, the rule returns to benchmarking. “The plans lost the battle [in Congress], but they won the war in the rulemaking,” Mr. Gaines said.

A bipartisan group of more than 150 members of Congress wrote a letter expressing displeasure with this rule. The letter states that the rebuttable presumption is contrary to their intent in passing the legislation, which pointedly was not a benchmarking law.

4. Physicians and hospitals are partnering to meet the No Surprises Act’s notice requirements.

Physicians are working closely with hospitals to comply with the notice requirement in the statute. As part of the patient protections, providers or facilities must provide a one-page notice with a good-faith cost estimate. In order to prevent duplication, providers may coordinate with the facility to arrange for the notice. Practice groups are working cooperatively to reach agreements with hospital systems and clinics, sometimes involving, for example, as many as 50 agreements for a radiology group. “They’re scrambling, looking for agreements with all those hospital partners,” Mr. LeBrun said.

The obligation starts on Jan. 1, 2022, for uninsured and self-paying patients, but every patient of the hospital will have the right to good-faith estimates within the next 12-18 months. CMS has published a disclosure template that is deemed to be compliant. Good-faith estimates remain a challenge because every case is different, but physician groups are “trying to make it simple, but yet practical, to partner with your hospital,” Mr. Beckstedt said.

5. Physicians and allies are pursuing multiple options to mitigate the harms.

One tool that physicians have to get properly compensated is the FAIR Health database, an independent nonprofit with up to 50 billion claims from 60 health plans in its database. Zotec incorporates FAIR Health into its tools. Examining out-of-network payments relative to the FAIR Health standard (employed in many states under state law) enables providers to assess where they stand relative to their markets and assess opportunities to challenge payments.

At the end of October, a coalition of physician-aligned parties filed a lawsuit in federal court in the Eastern District of Texas challenging the interim final rule. This case does not seek to delay the patient protections. “The plaintiffs contend that the September rule that was issued is not supported by the text of the statute,” Mr. Gaines said. “The agency said that the median in-network rate is the predominant factor of all the factors listed in the statute, despite the fact that the statute says, ‘You shall consider all of these factors.'”

Most parties agree with the idea of avoiding surprise medical billing. However, the No Surprises Act, implemented in the interim final rule, poses significant problems for physicians. It is important for all parties to understand these statutes and rules and consider the options that are available to mitigate harms.

To learn more about Becker’s live events, click here