The No Surprises Act, which took effect on Jan. 1, 2022, establishes new federal protections for patients against out-of-network providers “balance billing” for the difference between the provider’s billed charge and the amount paid by insurance.1 “Patients will now be protected from nearly all surprise billing scenarios,” says Ben Chartock, an associate fellow at the University of Pennsylvania Leonard Davis Institute of Health Economics.
According to a recent analysis, 27% of privately insured patients with heart attacks were at a risk of receiving a surprise medical bill.2 Patients with surprise out-of-network bills for ED visits paid physicians more than 10 times as much as other ED patients, on average, according to the authors another study.3 “Financial costs to patients from surprise bills often represent a ‘second emergency,’” Chartock notes.
The No Surprises Act does not stop all patients from receiving large bills for ED visits. “In 2022, out-of-pocket maximums can exceed $8,000,” says Krutika Amin, PhD, an associate director of the Peterson-Kaiser Family Foundation Health System Tracker in San Francisco.
Many ED patients still have to pay high deductibles and coinsurance premiums. What has changed is ED patients can no longer be billed by out-of-network providers for any amounts over what they would have paid for in-network care. “Before the No Surprises Act protections, the patient would have had to pay their deductibles or coinsurance under their insurance plan, plus any surprise or balance bills,” Amin explains.
Now, the patient will be held harmless for those amounts. “If patients are avoiding EDs from the fear of getting these bills, this will protect them,” Amin says. “For ED visits, the law is clear. They’re not allowed to surprise bill patients.” ED leaders should consider these other implications.
• Billing practices for ED visits will be affected significantly. ED providers will have to bill the patient’s insurance, even if it is not in network, and wait to hear a response before billing the patient. The health plan must respond with a denial or payment in 30 days. The plan will decide how much they are willing to pay and the acceptable dollar amount the provider can charge the patient.
“The law says that providers can’t bill for any balance beyond that amount, even if they don’t feel like they’ve gotten an adequate payment from the insurer,” says Jack Hoadley, PhD, research professor emeritus in the Health Policy Institute at the Georgetown University McCourt School of Public Policy.
• There is controversy over the qualified payment amount (QPA), which is based on the median payment insurers pay in that market and region. According to the interim final rule (IFR), arbiters must begin with the premise that the QPA is an appropriate amount of reimbursement. This “would have arbiters give unequal weight to the QPA, the insurer’s artificially low median in-network rate for reimbursement, rather than a balanced mix of other factors in the process,” according to an American College of Emergency Physicians (ACEP) statement.4
The American Hospital Association and the American Medical Association jointly filed a lawsuit alleging the independent dispute resolution process unfairly benefits the health plans.5 Another lawsuit, filed by ACEP, the American College of Radiology, and the American Society of Anesthesiologists, argues the IFR on surprise medical billing will harm patients and access to care.6
“Regardless of how the litigation plays out, there will still be a dispute resolution process,” Hoadley says. “What the litigation is disputing is the presumption that the in-network rate is the default.”
Surprise out-of-network bills affected about 14% of ED visits overall, and 20% of ED visits that resulted in a hospital admission, according to the authors of a study.7 To the extent arbiters rely on the QPA in making determinations, in-network EDs and hospitals may see their negotiated rates converge to the QPA, says Christopher Garmon, PhD, assistant professor of health administration at the University of Missouri-Kansas City. Since the QPA is the median in-network rate, some EDs presumably will see more revenue, while others will see a reduction. “It’s too soon to tell what the overall effect will be for EDs and hospitals,” Garmon says.
Underpayment for ED visits (based on the QPA) is a valid concern under the No Surprises Act, according to Leslie Howard, Esq., founder and managing partner at Tinton Falls, NJ-based Cohen Howard LLP. “For the out-of-network ED groups, for those doctors, the consequences are much greater,” Howard cautions. “I think it could be very unfavorable to certain doctors providing routine ER care.”
• Emergency physicians (EPs) receiving less reimbursement is likely to trigger additional problems with access to care. The QPA is less reimbursement than many out-of-network EPs are used to. “You may have doctors, ER specialist doctors, that may just cease covering the ER. We have begun to see that as an option for many of our clients,” Howard reports. Consultants such as plastic surgeons who are used to receiving a handsome sum for showing up in the middle of the night to consult on ED cases may now have no incentive to arrive. “Many EPs are just saying they’re not going to show up anymore because it’s not going to be worth their time,” Howard says.
• EPs likely will go through arbitration, frequently seeking additional reimbursement, but face an uphill battle to prevail. The QPA is the rate the arbitrators have to fall back on for out-of-network EPs “unless the doctors can show really almost extraordinary reasons why they should be paid more,” Howard says.
Justifying extra reimbursement for a routine laceration repair is going to be more difficult than if it is a complicated severe trauma case. To succeed in arbitration, the EP must show the case involved unique circumstances, the EP was more highly qualified in some way, prior payments were higher for similar cases, or other similar reasons.
“There is no incentive, right now, for the insurance companies to provide fair reimbursement,” Howard says. “Many providers out there just accept what they get because they don’t have the bandwidth to fight.”
The insurer hopes the EP will give up trying to fight the low reimbursement, given the arbitration is highly likely to go in the insurer’s favor.
“The EPs, as doctors who do more general procedures and not extraordinary procedures, are not going to have incentive to fight,” Howard says. “It will be very hard to overcome the presumption that the payment is too low.”
• It is unlikely there will be any significant enforcement in the first part of 2022 as facilities, practices, payors, and regulators work through the nuances of the law. Violations of the No Surprises Act can result in penalties up to $10,000 per violation.
“But there is a lot of confusion related to the implementation of the No Surprises Act. Both the statute and regulations are incredibly complex, and there are more unanswered questions than answers at this point,” says Danielle Sloane, JD, an attorney in the Nashville office of Bass, Berry & Sims.
Nonetheless, EDs should be making good faith efforts to prevent patients from receiving surprise bills. “In the short term, ED practices should update their website to include a surprise billing disclosure,” Sloane offers.
• Some ED practices that are in network with payors are receiving letters from payors demanding a reduction in their rates. Payers are threatening to terminate their contracts if ED groups do not accept the lowballed rates. “This is a growing unintended consequence of the No Surprises Act,” Sloane observes.
Health plans are taking the position that the government has set the rate, and they are not going to pay any more than that set rate. Some insurers have terminated ED groups that are in network because the QPA rate is lower than their current in-network rate.
“Insurance companies will continue to narrow their networks and kick out in-network doctors. It will be more advantageous to them to do that, since the QPA rate is artificially low,” Howard predicts.
• More states could enact their own laws that meet the standards of the No Surprises Act, but also provide protection for providers to receive fair reimbursement. “Everyone agrees that balance bills have to stop,” Howard says. “But providers are always painted as the overcharger when, in reality, the insurance companies are making billions of dollars and their CEOs are paid millions of dollars.”
Ideally, there would be a good faith negotiation between providers and insurers to result in fair payment. In some cases, New Jersey providers ended up satisfied with reimbursement after the state passed its surprise billing legislation, according to Howard. In terms of overall reimbursement for ED groups and hospitals for ED care, “it’s not necessarily all doom and gloom,” Howard adds. “One positive is that cash flow would improve.”
• The No Surprises Act also carries implications during the “post-stabilization” period, for care provided to patients after they are stabilized in the ED. Under EMTALA, required emergency services include a medical screening exam to determine whether an emergency medical condition exists as well as further treatment necessary to stabilize the patient.
“Under the No Surprises Act, ‘emergency services’ subject to the law’s protections include any additional services rendered after a patient is stabilized that are related to the emergency visit,” says Stephanie Hoffmann, JD, a healthcare attorney in the Nashville office of Bradley.
Health plans are going to want to see out-of-network patients shifted to an in-network facility for additional hospitalization or follow-up treatment. What has changed is the ED patient has to consent to this.
“The law makes sure the patient has a say in it. If the patient wants to stay in the out-of-network facility, then some of these balance billing protections are going to continue,” Hoadley says.
• EDs could face an uptick in patient complaints about “surprise” bills, even if everything was handled above board. “Patients are going to be very easily able to submit their concerns,” Hoffmann says.
ED providers must show a good faith effort to notify patients about out-of-pocket costs and withdraw any inadvertent bills (e.g., the ED entered the wrong insurance information). “The law does have a sort of escape valve, where if you did not know you were violating the law and you withdraw the bill within 30 days, that instance is not going to be penalized,” Hoffmann explains.
Ideally, ED staff educate patients on what to expect from their bill, but this usually is not reality in busy EDs. “There’s not much time for administrative work on the front end in an emergency,” Hoffmann says. “That’s going to remain a challenge.”
REFERENCES
- Pollitz K. No Surprises Act implementation: What to expect in 2022. KFF Issue Brief. Dec. 10, 2021.
- Pollitz K, Rae M, Cox C, et al. Surprise bills vary by diagnosis and type of admission. Peterson-KFF Health System Tracker. Dec. 9, 2019.
- Biener AI, Chartock BL, Garmon C, Trish E. Emergency physicians recover a higher share of charges from out-of-network care than from in-network care. Health Aff (Millwood) 2021;40:622-628.
- American College of Emergency Physicians. ACEP statement on new interim final rule to implement surprise billing legislation. Oct. 1, 2021.
- American Hospital Association. Hospital and physician groups file lawsuit over No Surprises Act final rules that jeopardize patient access to care. Dec. 9, 2021.
- American College of Emergency Physicians. American College of Emergency Physicians, American College of Radiology, and American Society of Anesthesiologists file lawsuit against the federal government’s implementation rules for ‘No Surprises Act.’ Dec. 22, 2021.
- Garmon C, Chartock B. One in five inpatient emergency department cases may lead to surprise bills. Health Aff (Millwood) 2017;36:177-181.
This landmark consumer protection took effect Jan. 1, but litigation from advocacy groups is pending as insurers are jockeying with providers for reimbursement rate advantages.
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