The Department of Health and Human Services, Department of Labor, Department of the Treasury, and Office of Personnel Management have released the first set of rules from the No Surprises Act, a new law aimed at preventing surprise medical bills. The Act will eliminate balance billing by ensuring patients only pay the deductibles, copayments, and co-insurance that they would have paid for in-network providers.

Background

Surprise billing occurs when a patient receives a bill for the difference between an out-of-network provider charge and the patient’s often limited out-of-network health insurance coverage and benefits. This commonly occurs when a patient is treated by an out-of-network professional or is treated at an out-of-network facility. This can happen during emergency situations such as when a patient is taken to an out-of-network emergency room or is transported by air ambulance. 

But surprise billing can also occur in non-emergency situations, such as an out-of-network anesthesiologist treating a patient at an in-network facility. In this scenario, it is often only after services are provided that the patient is informed and discovers that that the servicing professional was an out of network provider. The patient thereafter is faced with an unexpected “surprise” bill from the out-of-network provider seeking to recover the previously unidentified balance between in-network and out-of-network charges, the amount of which can be substantial.

The No Surprises Act, which was passed on December 21, 2020, as part of the year-end coronavirus economic relief package, aims to protect patients from these unexpected, “surprise” bills.  While the Act goes into effect on January 1, 2022, the interim final rule, which was released on July 1, 2021, is the first implementation step.

Key Takeaways

After full implementation, the patient will be removed from the billing negotiation process between the insurer and the provider. The interim final rule begins to detail how surprise billing payments from insurers to providers will be determined. The rule mandates that the amount be the “lesser of the billed charge or the plan’s or insurer’s median contracted rate, referred to as the qualifying payment amount.” The fact that payment is determined by an insurer’s median contracted rate is likely good news for patients. If, instead, rates were calculated using the mean provider charged rate, large private facilities would have skewed the price higher as they often charge higher rates.

If the insurers and providers disagree on a payment amount, the Act requires them to use an independent dispute resolution process. The dispute resolution process requires a neutral arbitrator collect offers from both the insurer and provider and decide which payment amount is most reasonable. Critically, not included in this rule announcement are details around how exactly this dispute resolution process will work. Health insurers and providers will both be keenly interested in seeing what details emerge. In that regard, stay tuned.