The No Surprises Act:  State vs. Federal Arbitration Processes

Different states have different rules for pursuing arbitration.

The federal arbitration portal for the No Surprises Act (NSA) is now open for business. The portal can be used for providers who want to initiate arbitration related to their NSA reimbursement claims before a third-party entity. While this is good news, providers still must figure out whether they can be reimbursed and pursue arbitration under either the state or the federal rules.

At a recent meeting with state insurance commissioners, a representative from the Centers for Medicare & Medicaid Services (CMS) shared that work is underway with state departments to determine how NSA will intersect with state and federal enforcement procedures.

So, when does the state law apply versus federal law? The rule of thumb is if a state has enacted a balance billing law that covers the same scenarios as the NSA, then the state law would apply, and the provider would seek payment resolution through the state’s arbitration process. More importantly, when pursuing state arbitration options, providers will need to adhere to varying state timelines, guidelines, and portals. Providers will also need to understand which claim types are eligible for any state’s balance billing laws and related arbitration processes.

Providers must answer four threshold questions to analyze whether the state law and arbitration process applies versus the federal process:

• First, is there a state law on the books? There are at least 13 states with balance billing laws, where it could get confusing for a provider to know whether to seek state or federal arbitration. On the other hand, in the 14 states without any balance billing or reimbursement rules at all, the provider can immediately engage the federal NSA arbitration process.

• Second, does the state law apply to the patient’s insurance or employer benefit plan?  Nearly all the states with balance billing laws only apply to fully insured patients, and not to patients with self-insured employer benefits.

• Third, does the state law apply to this provider?

• Fourth, does the state law apply to this line item or service?

California has a balance billing law, AB 72, which only applies to services rendered from an out-of-network provider at an in-network facility. California AB 72 does not cover emergency claims due to well established case law that covers such scenarios. On its face, it would appear that since there is no specified California state law related to emergency services, that emergency claims would fall under the federal NSA. We anticipate CMS to address this confusion and provide further guidance on emergency scenarios and we also expect providers to continue to seek recourse via existing case law.

Alaska is another state that providers can engage either the state or federal arbitration processes depending on the claim. Alaska state law provides reimbursement rules to certain out-of-network services, therefore the NSA process will only apply to the specific services that are not covered by state law.

Another interesting state is Maine, where state law only provides balance-billing prohibitions and provider arbitration recourse for claims related to emergency services. 

Alabama and Oklahoma, on the other hand, are examples of states with no prior balance bill laws and providers can immediately seek recourse through the NSA process without applying a complicated analysis.

It is also important to note that CMS surveyed the states to ask which state laws would remain in place and to understand how states intended to enforce the laws considering the NSA Act. To address some of this confusion, CMS has released enforcement letters specific to each state, that detail what provisions each state will enforce directly and what CMS will enforce. The CMS letters also detail whether state or federal arbitration processes will apply.

Considering all the tangled laws, some providers will get this wrong. It will be interesting to see whether providers will have recourse in those instances where there is confusion in the state vs. federal laws and arbitration processes.

Contact the author: folana.houston@zelis.com

About the author: Folana Houston is an assistant general counsel at Zelis Healthcare. She has worked for more than a decade in healthcare operations and regulatory and legislative affairs. A significant part of her work during the past few years has been tracking both state and federal balance billing legislation. She holds a law degree and health law certificate from Georgia State University and a master’s degree in Public Administration from Kennesaw State University.