Publications

11.30.2021

As an initial matter, we would point out that the No Surprises Act applies to ALL healthcare providers and suppliers.

General Background

With the goal of imposing greater consumer protections to address surprise medical billing, the No Surprises Act was signed into law as part of the 2021 Consolidated Appropriations Act. The No Surprises Act limits out-of-network cost sharing under certain circumstances where surprise medical bills frequently occur. Rules implementing these protections have been published in recent months and provide greater detail into how the law will operate and affect the applicable parties. The rules will be effective January 1, 2022.

The No Surprises Act has 3 general components: (1) a prohibition on surprise billing, (2) additional protections for uninsured or self-pay individuals, and (3) disclosure requirements applicable to all providers and facilities. This article addresses these rules as they pertain to healthcare providers only. For applicability of the rules to health plans and health insurance issuers, feel free to reach out directly. For purposes of clarification, references in this article to “individual” mean either a participant, beneficiary, or enrollee in a plan or coverage.

1. What is Surprise Billing?

Group health plans and health insurance issuers (“Carriers”) typically negotiate specific reduced fees for the items and services to be received by individuals enrolled in that Carrier’s insurance coverage. Those providers and facilities that agree to those reduced rates are considered “in-network,” and have agreed to accept those reduced fees as “payment in full” for the applicable item or service. By contract, the in-network providers and facilities are prohibited from billing the individual any amount above the agreed upon contractual rate. Individuals enrolled in those insurance plans are thus incentivized to utilize in-network providers and facilities due to the lower rates and protection from additional fees. In contrast, providers and facilities that have not agreed to the Carrier’s reduced fees are considered “out-of-network.” Historically, out-of-network providers and facilities have not been limited in the amount they can charge for the item or service offered to the individual. Although the Carriers will typically cover some of the out-of-network fees charged to the individual, the fact that the out-of-network provider or facility is not under contract with the Carrier arguably allows the provider or facility to charge the individual for any amount not covered by the Carrier. This is what is known as “balance billing.”

Surprise billing frequently occurs where an individual chooses an in-network provider or facility and unknowingly has an out-of-network provider involved in their care; thus, the patient is stuck with additional (above contract) costs related to the out-of-network provider’s involvement in their care. This can happen with non-emergency services as well, but tends to more frequently occur in the emergency services realm where a patient usually does not have a choice of provider.

Items and Services Covered; General Rules

The new surprise billing rules provide that, in the case of emergency services, an out-of-network facility or provider must not bill, or hold the individual liable, for emergency service payment amounts that exceed the individual’s cost-sharing requirements for such services. Cost sharing is defined in the rules as the amount an individual is responsible for paying for a covered item or service under their specific insurance coverage.

Similarly, in the case of non-emergency services performed by out-of-network providers at in-network facilities, the out-of-network provider must not bill, or hold the individual liable, for items or services furnished that exceed the cost-sharing requirements for such items or services.

Note that there are no specific prohibitions as they relate to non-emergency services performed at out-of-network facilities (presumably under the assumption that individuals will know whether they have selected an out-of-network facility).

Payment and Independent Dispute Resolution Process

Following submission of an invoice from an out-of-network provider or facility covered by the No Surprises Act, Carriers are required to pay (or deny payment to) providers or facilities directly within thirty (30) days of the provider or facility transmitting the bill for services. Payment by Carriers to out-of-network providers and facilities will be based a calculation set forth in the rules (the “Qualified Payment Amount”). The specific details on how the Qualified Payment Amount is calculated are beyond the scope of this article; however, it is generally based on the median fee for such item or service under all plans that Carrier maintains in that specific insurance market, adjusted by the consumer price index as applicable. Regardless, if the provider or facility believes that the payment (or denial of payment) amount is improper, the provider or facility can challenge the determination through an independent dispute resolution (“IDR”) process established by the regulations whereby providers and facilities can further negotiate the payment amount.

Once the claim is paid or denied, the provider or facility has thirty (30) business days to challenge the payment or denial and seek an informal resolution with the Carrier. Within four (4) business days of the end of the informal process (assuming the parties have failed to come to agreement), either party may initiate the IDR process. To initiate this process, the challenging party must submit a written notice of initiation of the IDR process to the other party and the Secretary of HHS using the form found here.

The IDR process requires the parties to agree on an IDR entity that is certified by HHS, if there is no agreement on the IDR entity, an appropriate entity will be appointed by HHS to oversee the dispute resolution. After selection of an IDR entity, the parties have ten (10) business days to make an offer for payment which will include a percentage of the qualifying payment amount. The IDR entity will then select one of the offers within thirty (30) days of being appointed. This offer will be considered the out-of-network payment rate. The party whose offer was not selected will be responsible for the IDR fees.

When selecting an offer, the IDR entity must determine which offer represents the best value of the items and services; there is a presumption that weighs in favor of the Qualified Payment Amount being the market payment rate. This presumption can be rebutted by credible evidence, however. In addition, the IDR entity can consider the following: (i) the level of experience, and quality and outcome measurements of the provider or facility that furnished the item or services; (ii) complexity of furnishing the item or service; (iii) the parties’ respective market share where the item or service is provided; (iv) whether there was a good faith effort on the providers’ or facilities’ part to enter into network agreements with the Carrier; (v) prior contracted rates agreed to by the parties in the previous four (4) plan years; and (vi) any other information requested or submitted to the IDR entity from/by the parties.

Exceptions

As with most rules in the healthcare industry, there are exceptions to the rule.

Emergency Services Exception

The prohibition on balance billing as it applies to emergency services furnished by out-of-network facilities or providers listed above does not apply if all of the following are met:

• the attending emergency physician or provider determines that the individual is able to travel using nonmedical or nonemergency transportation to a participating provider or facility within a “reasonable travel distance”;[1]
• when notice and consent requirements are met (as discussed below);[2]
• the individual is in a condition to receive the information referenced above and to provide informed consent to receive such services; and
• the provider or supplier satisfy any additional State law imposes requirements.

It is important to note that, even if these requirements are met, an out-of-network provider or facility will always be subject to the prohibition with respect to items or services furnished as a result of unforeseen, urgent medical needs that arise at the time the item or service is furnished.

Non-Emergency Services Exception; Notice and Consent Requirements

The prohibition on balance billing as it applies to non-emergency services furnished by out-of-network providers at in-network facilities does not apply if the notice and consent requirements described below are met. Additionally, these notice and consent requirements apply to emergency services furnished by out-of-network facilities and providers in order to avoid the prohibition on balance billing. 

The notice form must be provided to the individual not less than 72 hours prior to the date the individual is furnished the items or services unless the items or services are furnished on the day of the appointment. If they are furnished the day of, then the notice must be given at least three (3) hours before furnishing such items or services. The notice must contain the following on a form specified by HHS:

• state that the provider or facility is an out-of-network provider or facility;
• include a good faith estimate amount that the out-of-network provider or facility may charge according to the good faith estimate requirements (discussed below);
• provide that prior authorization or care management limitations may be required in advance of receiving care; and
• clearly state that signing the consent is optional and that the individual may instead seek care from a participating provider or facility.

The consent form must be signed by the individual on a form specified by HHS which acknowledges that the individual has been provided the notice above, informed that payment of a charge may not accrue toward certain insurance deductibles or out-of-pockets, states that by signing the consent the individual may be balance billed, and document the time and date the individual received the notice and signed the consent. The Centers for Medicare & Medicaid Services (“CMS”) have published form notice and consent documents which can be found here. According to CMS, using these forms will be deemed a good faith attempt at compliance with the law.

It is important to note that, even if these requirements are met, an out-of-network provider at an in-network facility will always be subject to the prohibition with respect to the following:

1. Ancillary Services: defined as – items or services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology, whether provided by a physician or non-physician practitioner; items and services provided by assistant surgeons, hospitalists and intensivists; diagnostic services, including radiology and laboratory services,; and items and services provided by a nonparticipating provider if there is no participating provider available to furnish such item of service at such facility; and
2. items or services furnished as a result of unforeseen, urgent medical needs that arise at the time the item or service is furnished, regardless of whether the nonparticipating provider satisfied the notice and consent requirements asset forth above.

2. Uninsured or Self-Pay Individuals Protections, Good Faith Estimates, and the Patient-Provider Dispute Resolution Process

Individuals that are uninsured or engage in self-pay are provided additional protections under the No Surprises Act. “Convening” providers and facilities are under the obligation to determine if individuals are uninsured or self-pay. “Convening” providers and facilities are the providers or facilities that receive the initial request for a good faith estimate from an uninsured or self-pay individual and are responsible for scheduling the primary item or service being provided to such individual. Once the individual has been identified as uninsured or self-pay providers and facilities must inform such individual of the availability of a good faith estimate of the expected charges upon scheduling items or services for the individual.

These good faith estimates must be delivered in writing and orally to such individuals. Upon an individual’s request for a good faith estimate, the provider or facility must contact all co-providers and facilities that are expected to deliver care within one (1) business day and request that they provide good faith estimate information. The good faith estimate itself must contain the following:

• the patient’s name and date of birth;
• description of the primary item or service;
• itemized list of item(s) or service(s) expected to be furnished for, or in conjunction with, the primary item or service;
• applicable codes associated with the items or services (e.g., diagnosis, service, etc.);
• The name, location, NPI, and Tax ID Number of each provider or facility represented in the estimate;
• a list of items or services that will require separate scheduling; and
• certain disclaimers.[3]

Additionally, good faith estimates are considered a part of the patient’s medical record; therefore, they must be documented and secured accordingly.

Providers and facilities will be deemed to be in compliance with these requirements even if the provider or facility makes an error or omission in the calculating or providing the estimate. Nevertheless, providers and facilities may be subject to the patient-provider dispute resolution (“PPDR”) process if the billed charges are substantially in excess of the good faith estimate. In order to utilize the PPDR process, the total billed charges must be at least $400 or more than the total amount of expected charges listed on the good faith estimate (i.e., “substantially in excess” of the total billed charges).

If this requirement is met, then the uninsured or self-pay individual has 120 calendar days from receiving the initial bill of the excess charges to initiate the PPDR process by providing notice to the Secretary of HHS. Once received, HHS will require the individual to submit an administrative fee to the entity chosen by HHS who will be overseeing the dispute (the “SDR entity”). Once the SDR entity receives the notice from HHS, the SDR entity will notify the individual and the provider or facility that the request has been received and is under review. This is the first communication providers or facilities will receive regarding the dispute.

Once the SDR entity reviews the initial notice from HHS and determines that the eligibility criteria for the PPDR process is met, then it will notify the provider or facility to provide the following information to the SDR entity within (10) business days:

• a copy of the good faith estimate provided to the uninsured or self-pay individual;
• a copy of the billed charges provided to the uninsured or self-pay individual; and
• if applicable, documentation demonstrating the difference in billed and actual charges was for medically necessary items or services based on unforeseen circumstances that could not reasonably have been anticipated.

Once this information is received, the SDR entity will make a determination on the amount to be paid within thirty (30) business days of receipt of the information. All forms related to the PPDR process can be found here.

3. Provider and Facility Disclosures (applicable to ALL providers and facilities)

Each provider and facility must make certain information publicly available, post such information on its website, and provide individuals such information. This includes providers and facilities that may not fall under the balance billing prohibitions above. The information to be provided includes the following:

• a statement that explains the requirements of the No Surprises Act as they apply to providers and facilities;
• a statement that explains State law requirements if applicable; and
• a statement providing contact information that an individual can contact if he/she believes that requirements have been violated.

These disclosures must be made no later than the date on which payment is requested from the individual or the date the claim is submitted for payment. Here is a link to the CMS Model Notices revised for Nebraska and Iowa. For notices to be used in other states, please reach out directly.

4. Additional Information

CMS recently launched a website that provides guidance regarding the No Surprises Act for consumers, providers, and facilities. Providers and facilities can consult this website to reference specific forms to use, fact sheets regarding the rules, and other guidance.

With the effective date of these rules quickly approaching, it is important for providers and facilities to understand their obligations. Additionally, they should be sure to determine if any state laws regarding surprise billing may overlap the requirements imposed by the No Surprises Act. If you have any questions regarding this rule, please contact any member of the Koley Jessen Health Law Practice Group.

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^{* The information contained in this document is provided for informational purposes only. It should not be construed as business, legal, accounting, tax, financial, investment or other advice on any matter and should not be relied upon for such.}

[1] There is currently no definition for what is a “reasonable travel distance.” The decision regarding what is a reasonable travel distance is determined by the treating provider or emergency physician

[2] If the notice and consent is being provided in conjunction with emergency services furnished by an in-network facility by an out-of-network provider, the notice must include a list of in-network providers at the facility who are able to furnish the items or services. When notice and consent is being provided by an out-of-network facility,  it must include a good faith estimate of the charges.

[3] See 45 C.F.R. § 149.610(c)(1)(vi) – (xi).