Breaking Down the “No Surprises Act”

In December 2020, Congress signed the Consolidated Appropriations Act (“CAA”) into law. Among other provisions, the CAA includes the No Surprises Act.

The No Surprises Act requires all group health plans, including grandfathered plans, to apply in-network cost sharing to:

  1. Certain out-of-network emergency services that are provided at out-of-network facilities (or provided by an out-of-network provider at an in-network facility).
  2. Out-of-network non-emergency care provided at in-network facilities unless an exception is allowed and the provider follows the defined notice and consent process.

The No Surprises Act also establishes an arbitration system through which health plans and providers can resolve disputes that arise from a health plan’s payment for services that fall under the above provisions.

In short: With limited exceptions, health plans must cover surprise or balance bills at in-network rates.

Here’s what it all means in plain language.

No more surprise bills.

Subject to certain exceptions, out-of-network providers and facilities cannot bill members for charges that exceed the in-network reimbursement amount (thus, “no balance bills”). Members are only responsible for what they would pay for an in-network provider (their deductible, co-pay or co-insurance).

This protection extends to both emergency and non-emergency care and out-of-network air ambulances.

Under the No Surprises Act, the provider would need to bill out for the emergency services as if the services and facility were in-network and without requiring a prior authorization. Any additional costs may be billed to the patient’s health plan. Health plans that cover emergency services must also cover out-of-network emergency services without prior authorization requirements.

For nonemergency services, the No Surprises Act generally prohibits providers from billing patients out-of-network rates for services provided by an out-of-network provider at an in-network facility. In certain circumstances, exceptions to this rule may be allowed for nonemergency services, but only if the provider notifies the patient of the provider’s out-of-network status, provides the patient or the patient’s health plan with an estimate of charges no later than 72 hours before the services are scheduled to be performed, provides the patient with a list of alternative in-network providers for the service in question and obtains the patient’s written consent before the services are rendered.

You can find the full legislative text of the act and all underlying provisions HERE.

What’s a “surprise bill”?

A surprise bill, also known as a balance bill, is when an insured person gets billed unexpectedly for out-of-network services, typically resulting from an emergency or life-threatening situation. Some of the most common surprise bills result from surgical procedures performed by an out-of-network provider even if the member goes to an in-network facility. Instead, the member must be billed using median in-network rates.

New binding arbitration process.

The No Surprises Act includes a new resolution process, also called binding arbitration, to help health plans dispute certain out-of-network claims with providers.

The arbitration process does not include payment or reimbursement benchmarks or standards (such as Medicare or local industry medians); instead, it’s left to the health plan and providers to reach an agreement with an independent arbiter.

Additional CAA provisions: new disclosure and notice requirements.

Group health plans must now provide an advanced explanation of benefits (EOB) before scheduled services occur, and must include specific plan information, including members’ deductibles and out-of-pocket limits, on ID cards and in plan documents.

The health plan must verify and periodically update provider directories and create a system to respond within one business day to member questions about the network status of a provider. Plans must also provide and maintain a price comparison tool to allow members to compare cost sharing for services.

Want more transparency into your benefits? We’re helping brokers and employers demystify the healthcare industry with insights, transparency and more. Get in touch with us or your client experience manager if you have questions about what this means for you and your health plan.

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