Transparency Rules and the No Surprises Act

Healthcare providers face two new rules certain to complicate a busy year already dominated by the pandemic.

The nation’s capital is facing a tremendous number of complex issues this week. Amid all this, legislative activity on two healthcare policy initiatives has advanced in the past few weeks – and those two initiatives will add substantially to the already heavy burden that healthcare providers are taking on this year in the face of the pandemic.

First, the Hospital Transparency rule took effect recently. The rule requires hospitals to disclose the prices it charges for 300 shoppable items and services, including the negotiated rates it charges specific payers for those services.

Most recently, the American Hospital Association (AHA) led a last-ditch effort to stop the rule from taking effect with an emergency stay; however, just a few days before the New Year, a federal appeals court decided that the rule was going forward. In the past week, the AHA has urged both the Trump and Biden administrations to exercise enforcement discretion on the rule – which, in practice, would push the effective date back – noting that hospitals are already burdened by the post-holiday surge of the pandemic and a need to effectively distribute the vaccine. No word yet from either administration on a delay.  

Next, a few days after Christmas, the longest legislation in U.S. history, the Consolidated Appropriations Act, was signed into law, clocking in at over 5,500 pages. As most of you are aware, the Appropriations Act included the following:  

• Government funding that kept the federal government open;
• The $900 billion COVID relief package, which included $600 for most individuals and extended the federal unemployment assistance and eviction moratorium; and
• The No Surprises Act, a sweeping law that prohibits surprise balance billing across the country. The Act also adds new transparency and provider directory requirements for hospitals and other providers.

Healthcare attorney David Glaser has addressed the situations in which the prohibition on the balance billing applies. In this article, we’ll describe the reimbursement and settlement provisions in the law as they pertain to the payer and the provider. In later articles, we’ll outline the arbitration process and some of the hospital transparency requirements included in the Act.

• First, unlike state laws, the No Surprises Act applies to both self-funded and fully funded patients. However, if there is a state law in which there is a balance billing prohibition, the payer should pay the provider in accordance with that state law – that is, for state laws with balance billing reimbursement provisions, the federal No Surprises Act would not apply. The state law would apply, at least with regard to fully insured patients.
• Second, unlike previous surprise balance billing legislation that we’ve seen proposed in Congress over the past two and half years, the No Surprises Act has no reimbursement benchmark. The No Surprises Act intends that the payer and the provider will work out appropriate reimbursement by themselves through a negotiation and settlement process.
• The negotiation and settlement process outlined in the law starts when a payer sends an initial payment for the submitted claim. If, within 30 days, the provider does nothing, then the provider is presumed to accept that initial payment. If the provider disagrees with the initial payment, they can initiate what the Act calls an open negotiation process with the payer. This open negotiation period lasts an additional 30 days and includes just the payer and provider.
• If there is no settlement between the provider and the payer during this open negotiation period, the provider can then initiate an independent dispute resolution (IDR) process with a third-party arbitrator. We’ll touch on that IDR process in future articles.

Although the U.S. Department of Health and Human Services (HHS) will be going through rulemaking this year to clarify many of the law’s provisions, the effective date for the provider requirements is in less than a year: Jan. 1, 2022.

Looking forward to 2021, hospitals and providers have some heavy lifts when it comes to implementing legislation, with Transparency Rules already in effect, certain effective dates for Interoperability coming due, and a balance billing Act to prepare for, taking effect in 2022.  

Programming Note: Listen to the Monitor Mondays Legislative Update with Matthew Albright, sponsored by Zelis, Mondays at 10 a.m. Eastern.