The Federal "No Surprise Act" Not Surprisingly, Its Complicated

Introduction

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After years of debate[1] about how to rein in charges for out of network (“OON”) medical services, Congress delivered the Consolidated Appropriations Act, 2021, a $2.3 trillion piece of legislation. The CAA includes the No Surprises Act (the “Act”), which was designed to provide patients with protections against “surprise bills” for health care services. The Act goes into effect on January 1, 2022.

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This article is intended to provide a high-level overview of the obligations imposed on physicians by the Act and the associated regulations, and it does not address all of the exceptions, inconsistencies, and nuances that are embedded in the law.[2] Given the complexity of the law, numerous internal inconsistencies in the language that has been released to date, and the fact that Arizona’s own surprise billing rule[3] will apply in some circumstances, physician practices will need to do,[4] or request that someone else do, additional homework to determine whether and how the Act applies to their services and billing.

Obligations Imposed on Physicians

The Act impacts physicians’ practices in two ways. First, it imposes billing limitations on OON physicians in certain circumstances. Second, it requires all physicians to comply with certain notice and disclosure requirements.

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Limitations on Billing

Under the Act, physicians who provide OON emergency services cannot bill (or seek to recover payment from) insured patients for more than the maximum cost-sharing amount the patient would have been obligated to pay if the emergency services were provided by an in-network physician. The Act also imposes billing and payment limitations on non-emergency services provided by an OON physician during a visit at an in-network facility;[5] for these services, the Act requires the OON physician to limit claims for payment to the in-network cost-sharing amount, unless the out-of-network provider gives the enrollee notice and obtains the enrollee’s prior consent.

In order to qualify for the notice and consent exception to the limitation on claims non-emergency services, so the OON physician can recover more than the in-network cost-sharing amount, the OON physician must provide the patient with notice of the physician’s OON status; a list of in-network physicians as alternatives; and an estimate of the OON physician’s charges.[6] This notice must be given to the patient at least seventy-two hours before the service is furnished, and the patient must acknowledge receipt of the notice and consent to the services. The notice and consent exception does not apply for many types of services commonly provided at facilities.[7]

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Notice and Disclosure Obligations

All physicians, including those who provide in-network services, only, must comply with certain notice and disclosure requirements imposed under the Act. For example, effective January 1, 2022, physicians must “make publicly available, and (if applicable) post on a public website of such provider … and provide to [insured individuals] … a one-page notice … containing information on” the relevant provisions of the Act relating to prohibitions on balance billing; any applicable State law requirements relating to OON billing; and information on how to contact State and federal agencies to complain about violations of the Act or applicable state law.[8]

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Dispute Resolution

The Act provides for a negotiation and dispute resolution process for situations in which health plans and OON physicians disagree about charges for emergency services and non-emergency services provided by out-of-network providers at in-network facilities.  The process will be fleshed out in regulations (due to be released in December), but the Act provides the broad outlines of the process, the core feature of which resembles “baseball arbitration”: each party picks a number, and the arbitrator (called an “IDR entity”) selects one of those two numbers. To motivate the parties to settle, the process includes a provision under which the losing party pays the IDR entity’s fees. For those of you with children looking for a career, being an “IDR entity” could be a lucrative opportunity.

Conclusion

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There is a lot not to like about our current system, which exposes many people to unexpectedly high, uninsured charges. The complexity of the Act promises to create confusion and traps for the unwary physician, however. Also, if physicians who provide call coverage for emergency and trauma departments - to all comers, at all hours - cannot charge more for their services than they could charge for scheduled, elective services done at the physician’s convenience, the Act may contribute to a shortage of physicians willing to provide call coverage. The situation seems to require a more comprehensive solution, involving financial concessions from hospitals that maintain emergency and trauma departments, and from insurers whose patients end up in those departments.

Citations:

[1] Opposition to the legislation was funded by - no surprise here - Team Health and Envision Healthcare (the parent company of Emcare).  These companies, which, derive significant revenue from services that are associated with surprise bills, were major contributors to the ironically named “Doctor Patient Unity” group, which spent $28 million to oppose the legislation.  Sanger-Katz M, et al, Mystery Solved: Private-Equity-Backed Firms Are Behind Ad Blitz on ‘Surprise Billing,’ New York Times, September, 2019.  According to one study, “the entry of Emcare into [hospitals with low out-of-network rates] raised out-of-network rates by 81.5 percentage points.”  Cooper, Z, et al., Surprise! Out-Of-Network Billing for Emergency Care in the United States, NBER Working Paper No. 23623, July 2017, Revised July 2018, JEL No. I11,I13,I18,L14.

[2] The Act and regulations occupy several hundred pages of statutory and regulatory text, and as commentary. 

[3] ARS Section 20-3111, et seq.

[4] Many of the provisions of the Act that apply to physicians are in Section 104, Health Care Provider Requirements Regarding Surprise Medical Billing. https://www.naag.org/wp-content/uploads/2021/02/No-Surprises-Act.pdf

[5] Some refer to this as the true “surprise billing” situation, e.g., an in-network surgeon performs surgery on an insured patient at an in-network facility.  The patient then receives OON claims from anesthesiologists, pathologists and other providers, and the patient is personally responsible for a significant percentage of those OON claims. 

[6] The required Standard Notice and Consent Documents, with instructions, are available on the CMS website at https://www.cms.gov/httpswwwcmsgovregulations-and-guidancelegislationpaperworkreductionactof1995pra-listing/cms-10780.

[7] These services, referred to as “ancillary services,” include anesthesiology, pathology and radiology.  In addition, the exception does not apply if there is no in-network alternative provider available at the facility.

[8] A Model Disclosure Notice is available on CMS’s website. See the link in footnote 6.