No Surprises Act Has Many Surprises

The No Surprises Act takes effect on January 1, 2022

On Dec. 27, 2020, President Donald Trump signed the longest law in the history of the United States, the Consolidated Appropriation Act, 2021, or the CAA. This Act included a provision that required the U.S. Intelligence agencies to release a report on everything the government knows about UFOs.

Late last week, the UFO report was released and… I can’t tell you anything more about it, because my report has to be about healthcare, but you should look it up. It’s interesting.

To wit, the CAA also included the No Surprises Act which prohibits out-of-network providers from balance billing patients in 1) emergency situations, 2) in-network facilities and 3) for air ambulance transport. If, in the state where the out of network services are provided, there are no laws on how a payer should reimburse the provider for these services, the No Surprises Act outlines a federal process for payers and providers can use to negotiate and settle on reimbursement for these out-of-network services.

If the provider is not satisfied with those negotiations, the Act also establishes an arbitration process where a third party decides on a final payment amount.  

The No Surprises Act takes effect on January 1, 2022, and this month, the administration set a general timeline for the publication of the first and second regulations that will implement the Act.

• The No Surprises Act Regulation Part 1 is expected be published in early July, really in the next few weeks. The Act’s Regulation Part 1 will focus on that reimbursement between payers and providers, how the Act interacts with state laws, and it’s expected to clarify how health plans should calculate the cost-sharing for the patient in these surprise balance billing scenarios.  

• The No Surprises Act Regulation Part 2 is slated to published soon thereafter, sometime in August. This second regulation should give us more detail on the arbitration process.

The main point of contention with both these regulations will be the calculation and the use of the payer’s median in network rate. Now, a payer does not have to pay the provider its median in-network rate initially for these out of network services. A payer can pay what it wants.

But, if the provider does not like that initial payment amount, and the negotiations fail and the provider wants to go to arbitration, when looking at the payer’s payment offer, the arbitrator must consider the payer’s median in-network rate, along with a list of other considerations such as acuity of the patient, experience of the provider, quality measures.

On the lobbying front, health plans, employers and some lawmakers argue that the median in-network rate should be primary in terms of what the arbitrators should consider when determining a final payment amount. In other words, payers want to pay out-of-network providers the same amount as their in-network providers.

In contrast, hospitals, emergency physicians and other lawmakers argue that the median in-network rate should just be one of many considerations that the arbitrator should use. In other words, out of network providers want to be paid more than what a payer pays in-network providers depending on the circumstance and context of the services provided.

Parts 1 and 2 are interim final rules (IFR), which means that, although industry will be given an opportunity to comment after the rules are published, the regulations will be pretty much baked and the chance of substantially changing any of the requirements with those comments will be slim.

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