In the U.S., one in every ten adults owes medical debt. To help remedy this problem, the U.S. enacted the No Surprises Act in 2020. The rule aims to protect patients by establishing rules for out-of-network care and promoting transparency in healthcare pricing. Its provisions are designed to prevent patients from being caught off guard by exorbitant bills and provide avenues for resolving billing disputes.

Overview of the No Surprises Act

The No Surprises Act was included as part of the Consolidated Appropriations Act of 2021, which was a comprehensive spending bill signed into law on December 27, 2020. The law protects Americans from balance billing, which occurs when patients receive care from out-of-network providers and are billed for the difference between the provider’s charges and what their insurance covers. Additionally, it establishes a process for independent dispute resolution (IDR) and mandates transparency requirements.

Implications of the No Surprises Act on Patients

The No Surprises Act has introduced significant changes to the balance of payments between healthcare providers, payers, and patients. Under the Act, patients cannot be balance billed by out-of-network providers for care they sought in an emergency. Instead, they are responsible for paying only their in-network cost-sharing amounts.

The bill also protects patients from being billed excessively for out-of-network care provided at an in-network facility. If a patient receives care at an in-network facility, they can only be billed at in-network rates, regardless of whether some providers involved in their care are out-of-network.

When patients receive emergency services from out-of-network providers or unintentionally receive out-of-network care at an in-network facility, they are no longer billed the total out-of-network rate. They are only responsible for their in-network cost-sharing amounts, such as copayments or deductibles. This helps prevent patients from facing exorbitant bills for care they did not choose or anticipate.

The No Surprise Act’s transparency requirements also allow patients to make more informed decisions about their healthcare — as do the law’s provisions to ensure Americans are informed about potential out-of-network charges and receive an estimate of the costs. This fosters competition and drives some patients to forgo care with an out-of-network provider they may have sought treatment from had they not been aware of the costs involved.

Strategic Considerations for Payers

The No Surprises Act has impacted how health plans do business in several different ways. For example, it bans payers from surprise billing and requires them to provide an advance explanation of benefits and disclose prices for services.

The Act also establishes a fair payment framework for out-of-network care. In cases where a dispute arises between insurers and providers regarding reimbursement rates, an independent mediator reviews the case and determines a fair payment amount. This mechanism represents a significant change in how providers and payers conduct these negotiations — the process aims to ensure a more equitable payment structure and prevent providers from demanding higher reimbursement rates.

Payers must also understand that the law includes continuity of care protections to ensure that patients can receive the care they need without disruption, even when there are changes in their insurance coverage.

If a patient has an ongoing course of treatment with a provider who becomes out-of-network due to changes in insurance coverage, the Act requires the insurance company to provide continuity of care for a specified period. This means that the patient can continue receiving care from that provider at the in-network cost-sharing rates, preserving the established patient-provider relationship and avoiding disruption in their treatment. Pregnant women receiving prenatal care from an out-of-network provider at an in-network facility are also entitled to continuity of care protections.

Arbitration also plays a vital role in the No Surprises Act. During the IDR process, the mediator considers various factors to determine the appropriate payment amount, so health plans should approach arbitration thoughtfully and strategically.

Before arbitration, payers should consider engaging in good-faith negotiations with providers to resolve the dispute amicably. A settlement agreement reached through negotiation can help avoid the need for arbitration and the associated costs and time commitments.

If the case goes to arbitration, payers should gather and present relevant documentation and evidence to support their position in the arbitration process. This may include information about in-network rates, data on average payments for similar services, and any contractual agreements or fee schedules. Insurers should also utilize expertise — they would be wise to engage experts, such as legal counsel or healthcare consultants, who have experience in arbitration and can provide guidance on navigating the process effectively.

Once the arbitrator decides, health plans must comply with the decision and pay the determined amount to the provider. It is essential for payers to promptly implement the arbitration outcome — that way, they maintain trust and comply with the requirements of the No Surprises Act.

How Payers Can Minimize Impact

One of the most important actions that health plans can take to respond to the No Surprises Act is improving their communication with patients to provide information about their rights under the law. This includes developing clear and understandable materials that explain the Act’s protections against surprise billing, out-of-network cost-sharing requirements, and available dispute resolution processes, as well as providing access to information about network coverage and out-of-network providers frequently used by the plan.

Insurers may also need to update their billing systems and processes to comply with the Act effectively. This could be adjusting their systems to calculate and apply in-network cost-sharing amounts accurately and ensuring that out-of-network charges are appropriately limited when surprise billing is prohibited.

Another way that payers can take action is by developing partnerships and negotiation strategies with providers. Insurers should focus on building strong provider networks that offer comprehensive coverage and align with the needs of their members — this means building partnerships with providers willing to negotiate fair reimbursement rates and collaborate in delivering high-quality care.

Additionally, payers need to enhance their provider network management processes. This involves ensuring that their network directories are current and accurate, providing clear and accessible information to patients about in-network providers, and regularly monitoring and updating their networks to maintain compliance with the Act’s requirements.

Compliance will be easiest when health plans and providers collaborate. Both parties must understand the Act’s provisions jointly, share information and best practices related to compliance and work together to implement necessary system changes and processes. Regular communication and collaboration on compliance matters can help address potential challenges proactively.

The future of payers and the No Surprises Act

When it comes to payers’ compliance with the No Surprise Act, the importance of adaptability and proactive strategies cannot be understated. But achieving compliance with the law shouldn’t be seen as a burden — it should be viewed as an opportunity for payers. They can take the lead in helping to develop an equitable, patient-focused healthcare system.

Clarify Health can help health plans spearhead this charge with its no-code query engine for faster access to price transparency intelligence. The engine allows payers and providers to instantly query 500+ terabytes of enriched price transparency data and generate reports on market prices in seconds.