The No Surprises Act: An overview
What is the No Surprises Act?
The NSA provides individuals and families covered by group and individual health plans protection against unexpected, high-priced medical bills for services delivered at in-network facilities by out-of-network (OON) providers.
The law establishes an independent dispute resolution (IDR) process for payment disputes between plans and providers. It also creates dispute resolution opportunities for uninsured and self-pay individuals who receive a medical bill that’s substantially higher than the good faith estimate (GFE) they’d previously received from the provider. The federal government estimates the law will impact about 10 million medical bills each year.
Why this law was necessary
Prior to implementation of the NSA, if an individual had health insurance and received care from an OON provider or an OON facility, even unknowingly, their health plan wasn’t obligated to cover the entire OON cost. That frequently left the patient with higher costs than would have been the case had they received care from an in-network provider or facility.
As an example: A person had surgery at an in-network facility but unwittingly received care from an OON anesthesiologist. Along with any OON cost-sharing the patient might owe, the OON provider — unless prohibited by state law — could also balance bill, or “surprise bill,” the patient for the difference between the billed charge and the amount paid by the patient’s health plan.
What About Existing State Laws?
Prior to passage of the NSA, 18 states already had comprehensive balance billing consumer protections, while 15 more had less robust consumer safeguards. The most substantial state rules include both emergency and inpatient settings, apply to all types of insurance, protect consumers from balance billing and extra provider charges, and incorporate either an adequate payment standard or dispute resolution process for resolving provider-payer reimbursement disputes.
However, state balancing billing laws, for the most part, cover only fully-insured members and don’t apply to self-insured benefit plans or members. Because self-insured plans cover about 67% of workers with employer-based coverage, the NSA was created to extend protections to this population.
It’s important to note that the NSA supplements state billing laws and does not supersede them. The NSA essentially creates a floor for consumer protections against surprise bills from OON providers and related, higher costsharing responsibilities for patients. As long as a state law provides at least the same level of safeguards as the NSA, the state law applies.
What the NSA stipulates
If a person receives health coverage through their employer, a health insurance marketplace, or an individual health insurance plan purchased directly from an insurance company, the NSA:
- Bans surprise bills for most emergency services, even if received from an OON provider and without prior authorization.
- Bans OON cost sharing such as coinsurance and copayments for most emergency and some nonemergency services. Individuals cannot be charged more than the in-network cost-sharing amounts for these services.
- Bans OON charges and balance bills for certain additional services such as anesthesiology, radiology and pathology furnished by OON providers as part of a patient’s visit to an in-network facility.
- Requires providers and facilities to provide patients with an easy-to-understand notice explaining applicable billing protections and contacts if they’re concerned a provider or facility may have violated the protections. Patients must also be informed that patient consent is required to waive billing protections. A patient must receive notice of and consent to being balance billed by an OON provider.
The federal government estimates the No Surprises Act will impact about 10 million medical bills a year.
Covered non-emergency services
To qualify as an NSA-covered non-emergency service, these three conditions must be met:
- The care setting must be in-network
- The patient’s visit must have started in 1 of 4 nonemergency services settings:
- Hospital outpatient department
- Critical access hospital
- Ambulatory surgical center
- The items and services furnished to the patient in connection with non-emergency services include all provided until the patient’s departure from the facility where the visit for non-emergency services was initiated
Importantly, it’s the patient’s location in an in-network care setting during the visit, not the provider’s location, that determines whether non-emergency services are subject to the NSA’s balance billing prohibitions.
For example, telehealth or lab services from an OON facility would still be covered by the NSA if the patient visit occurred at an in-network care setting. Items and services provided in connection with a visit for non-emergency services covered by the NSA are the same as those listed above for emergency services.
OON claims processing and payments
Under the NSA, payers are required to make an initial payment or a denial of payment within 30 days of submission of a clean claim. They must also send the payment notice directly to the provider. Historically, some payers have paid the patient directly if a provider was OON, a practice which often resulted in collection headaches for providers. Receiving payments directly from the payer should decrease a group’s overall accounts receivable days.
How payment disputes are handled
If the provider disagrees with the amount offered by the payer, both parties must engage in an open negotiation period to reach an agreement regarding the total OON rate. The open negotiation period begins the day the initiating party sends the open negotiation notice to the other party.
When arbitration is initiated
If open negotiations don’t produce an agreement between the parties by the end of 30 business days, either party may then initiate the federal IDR process. This must be done during the four business days beginning on the 31st business day after the start of the open negotiation period. The initiating party must provide a written Notice of IDR Initiation to the other party, as well as to the U.S. Departments of Treasury, Labor, and Health and Human Services (HHS), via the federal IDR portal.
How arbitration works
Payment disputes are resolved by an independent arbitrator or IDR entity who is authorized to employ “baseball style” arbitration, such as choosing 1 of 2 offers. When selecting between the provider’s requested payment and the plan’s offer, the IDR entity is required to consider the qualifying payment amount (QPA), the training and experience of the provider, the market share of the plan and provider, any contract history, quality of outcomes, patient acuity, prior contract history between the two parties, and the services provided.
The QPA is defined as the lesser of the provider’s billed charge or the plan’s median contracted rate for the same or similar service in the geographic region where the service is performed as of Jan. 31, 2019, adjusted for inflation. This last point is significant, given that some Optum competitors have mistakenly reported that in preparation for the NSA, some payers attempted to lower provider rates in order to drive down the QPA.
The resolution process is not settled law
On Feb. 23, 2022, a federal judge vacated portions of the NSA’s IDR process in response to a suit brought by the Texas Medical Association. The suit argued that the final rule unlawfully created a presumption in favor of the median in-network rate, and in so doing, skewed the IDR process in favor of insurers. The judge agreed and ruled that all previously enumerated variables, including the QPA, training, market share, outcomes, services provided, and contract history must be considered fully and equally by arbitrators when determining an appropriate price. HHS and other federal agencies have said they’re reviewing the ruling to determine next steps and that they’ve withdrawn guidance documents that refer to “the portions of the rule that the court invalidated.”
Who pays for arbitration
The IDR implementation rule imposes a “loser pays” model wherein the administrative costs of arbitration become the responsibility of the losing party. This approach is designed to encourage settlement and deter overly aggressive positions on either side.
At present, 10 organizations have been selected to handle arbitrations. Each party to arbitration must pay an administrative fee of $50 in addition to the costs of resolving a dispute, which reportedly range from $299 to $500 per claim. The rule requires that both sides pay the administrative and IDR fees upfront with their respective IDR submissions.
The prevailing party will then receive a refund of the resolution fees within 30 business days of the arbitration award. In the case of batched claims, the party with the fewest determinations in its favor is considered the nonprevailing party and is responsible for the IDR resolution fee.
Given the significant costs involved, disputing a payment may not be worth the time and money for some providers, even if numerous claims are batched during the same arbitration session. Optum predicts that many disputes ultimately will be resolved by providers and payers agreeing to enter into a participating provider agreement.
Optum NSA recommendations
- Contact your Client Service Manager for any specific questions regarding the NSA. For example, under what circumstances, if any, could an office visit fall under the NSA’s patient balance billing prohibitions? Also, if the patient’s health plan does not respond to the OON provider within a given time frame, can the provider bill the patient the full amount for the service without violating the NSA’s patient balance billing prohibitions?
- Any groups that are OON with specific commercial payers should compare the allowed amounts for 2022 for services, year over year. For example, by being OON with Payer X — which historically has resulted in reimbursement approximating 180% of the Medicare fee schedule — is your group now being reimbursed at 120% of Medicare, and if so, what is the projected annual impact to the practice?
- Be aware of the numerous steps associated with the open negotiation and IDR processes, including any notice requirements and the associated timelines. Also, understand the requirements for batching claims.
- Speak with your Client Service Manager for any changes in NSA provisions, as well as any updates concerning the provisions that have been delayed. Delayed provisions include:
- The requirement of providers to provide a GFE for insured members to payers. Payers will also be responsible for providing an Advanced Explanation of Benefits to patients so patients can better predict their out-of-pocket expenses.
- The requirement in which the convening provider or facility, the entity that receives a GFE request from an uninsured or self-pay individual, coordinates all related estimates. For example, for a knee surgery, an orthopedic surgeon’s office would need to consider anesthesia, assistant surgeons, prescription drugs and durable medical equipment to create the consolidated estimate.
- Consider using consultants from Optum if your group decides to pursue a participating provider agreement with a payer.
1. FAQs and flowcharts, Change Healthcare Technology Enabled Services division, Business Integrity Unit
2. Document related to the Open Negotiation Notice, CMS
3. Document related to the Notice of IDR Initiation, CMS
4. “No Surprises: Understand your rights against surprise medical bills,” CMS
5. “Overview of Public Health Service (PHS) Act Provider and Facility Requirements,” CMS
6. “FAQs About Affordable Care Act And Consolidated Appropriations Act, 2021 Implementation Part 49”
7. Memorandum Regarding Continuing Surprise Billing Protections for Consumers, Department of Labor
8. “Evidence on Surprise Billing: Protecting Consumers with the No Surprises Act,” Assistant Secretary for Planning and Evaluation, Office of Health Policy