No Surprise Act
In December 2020, the No Surprise Act (NSA) was passed as part of the Consolidated Appropriations Act. As the name suggests, NSA aims to protect patients from the financial impact of surprise medical billing. No Surprises Act will come into the picture when a patient receives care from an out-of-network provider in either an emergency situation, where the hospital might be out of network, too, or at an in-network facility where the patient wasn’t able to choose or select their provider. As per the Peterson-KFF research study, this happens in about 1 in 5 emergency room visits. In such cases, there’s no contract in place between that provider and the plan. And then the provider usually sends the bill to the plan, the plan determines what they want to cover, and then historically that difference between the provider’s bill and what the plan pays is the balance or surprise bill.
Surprise medical bills pose financial burdens on consumers when health plans deny out-of-network claims or apply higher out-of-network cost-sharing. But starting January 1st, 2022, a patient is no longer responsible for this balance. Patients are only responsible for the cost-sharing amount that would have been applicable if the provider and the plan had a contract in place. The NSA will protect consumers from surprise medical bills by:
- requiring private health plans to cover these out-of-network claims and apply in-network cost-sharing. The law applies to both job-based and non-group plans, including grandfathered plans2
- prohibiting doctors, hospitals, and other covered providers from billing patients more than in-network cost-sharing amount for surprise medical bills.
Charging In-Network Cost-Sharing Amount
For services covered by the NSA, providers are prohibited from billing patients more than the applicable in-network cost-sharing amount; a penalty of up to $10,000 for each violation can apply. Today, many out-of-network doctors and hospitals bill patients directly for their full, undiscounted fee, leaving patients to submit the out-of-network claim to their insurance and collect what reimbursement they can. That common billing practice will change starting next year. Providers will need to first find out the patient’s insurance status and then submit the surprise out-of-network bill directly to the health plan. Providers are ‘encouraged’ to include information about whether NSA protections apply to the claim itself.
Health plans must respond within 30 days, advising the provider of the applicable in-network cost-sharing amount for that claim; cost-sharing generally will be based on the median in-network rate the plan pays for the service. The health plan will send an initial payment to the provider and send the consumer notice, called an explanation of benefits (EOB), that it has processed the claim and indicating the in-network cost-sharing amount the patient owes the out-of-network provider. Only at this point is the out-of-network provider allowed to send the patient a bill for no more than the in-network cost-sharing amount. An exception to federal surprise billing protections is allowed if patients give prior written consent to waive their rights under the NSA and be billed more by out-of-network providers. Providers are never allowed to ask patients to waive their rights for emergency services or for certain other non-emergency services or situations described above. Consent must be given voluntarily and cannot be coerced, although providers can refuse care if consent is denied.
Payments for Surprise Bills
The amount paid for surprise out-of-network surprise bills will likely end up close to the median rate that plans pay in-network providers in a geographic area, also known as the qualifying payment amount, or QPA. Under the law, the patient’s cost-sharing for a surprise medical bill must be based on the QPA. Health plans and providers can negotiate privately over the amount to be paid for the surprise bill, and if they can’t agree, either party can ask for an Independent Dispute Resolution (IDR) process to decide the payment amount. However, there are strong incentives for both plans and providers to either rely on the QPA or on private negotiations.
To Summarize
The No Surprises Act creates important new federal protections against surprise medical bills – a leading cause of affordability concerns for consumers. This law is highly complex, however, setting coverage and billing standards for a specific subset of private insurance claims that could number 10 million annually. Providers are permitted to ask consumers to waive their NSA protections in some cases. Oversight and enforcement will be conducted by an array of federal and state agencies, some of which are still to be determined, and more than one of which could be involved in any given case of noncompliance.
MedicalBillersandCoders (MBC) is a leading medical billing service provider company, that provides complete revenue cycle services (RCM). For provider education, we share articles on the latest medical billing and coding guidelines and industry news. You can visit our blogs section to stay updated on the latest industry news.
FAQs
1. What is the No Surprises Act (NSA) and how does it protect patients?
The NSA, effective from January 1, 2022, protects patients from surprise medical bills by requiring out-of-network providers to bill at in-network rates in specific situations, such as emergency care or when patients have no control over the provider choice. It limits what patients can be charged for out-of-network services to the in-network cost-sharing amount.
2. How does the NSA impact out-of-network providers?
Under the NSA, out-of-network providers can no longer directly bill patients for the difference between their charges and the insurance payment. Instead, they must submit the surprise bill to the health plan and collect only the in-network cost-sharing amount from the patient. Providers face penalties of up to $10,000 per violation for non-compliance.
3. What is the qualifying payment amount (QPA) and how does it affect surprise medical bills?
The QPA is the median in-network rate that health plans typically pay for a service in a geographic area. It determines the amount providers will be reimbursed for out-of-network services under the NSA. Patients’ cost-sharing is based on the QPA, which ensures that patients pay only what they would for in-network services.
4. Can providers and health plans negotiate surprise medical bill payments?
Yes, health plans and providers can negotiate privately on the payment for a surprise medical bill. If they can’t reach an agreement, they can initiate an Independent Dispute Resolution (IDR) process to resolve the payment amount. However, both parties are incentivized to rely on the QPA or negotiate privately to avoid the IDR process.
5. Are there exceptions to the NSA’s protections against surprise medical bills?
Yes, patients can waive their NSA protections in certain non-emergency situations, but only with prior written consent. However, providers cannot ask patients to waive their rights for emergency services or certain non-emergency services, and consent must be given voluntarily without coercion.
