Facts and FAQs About the No Surprises Act

The No Surprises Act (NSA), signed into law in December 2020, becomes effective January 1, 2022. This legislation addresses a growing concern among Americans: receiving an unanticipated bill for medical services because a facility or provider were out-of-network for their health insurance plan.

A KFF Health Tracking Poll found that “two-thirds of Americans say they are either “very worried” (35%) or “somewhat worried” (30%) about being able to afford unexpected medical bills.” In addition, “16% of insured adults ages 18-64 say they have received a “surprise” bill related to care received from an out-of-network provider.”

Health plans will need to make adjustments to billing practices, copay calculations, member communications, and dispute resolution processes to be compliant with the new legislation. Members are likely to welcome the additional protections and transparency that come with this law. Health plans should begin thinking now about a communications strategy to engage members and notify them of the upcoming changes.

In the interest of ensuring health plans aren’t surprised by any of the provisions of the Act, we’ve prepared this overview to address the most common questions. Health plans are encouraged to review the AMA’s summary of the NSA legislation for a complete understanding of the compliance requirements.

Q. What problems are this legislation designed to fix?

Consumers were receiving surprise medical bills due to unanticipated out-of-network medical expenses. These types of expenses can arise during emergencies, when patients don’t have a say in where they receive treatment, or in non-emergency situations where, although the hospital or medical facility may be in-network, some providers the patient doesn’t choose, like anesthesiologists, may not be.

Q. How does the law address the surprise medical bill issue for consumers?

The No Surprises Act contains key protections to hold consumers harmless for surprise bills.

1. Health plans must cover surprise bills at in-network rates.

Private health plans must cover surprise medical bills for emergency services and out-of-network provider bills for treatment at in-network hospitals and facilities.

2. Balance billing is prohibited.

Out-of-network providers are not allowed to bill patients for costs above the applicable in-network cost sharing amount for surprise bills resulting from an emergency treatment. This also applies to out-of-network providers, like anesthesiologists, who render non-emergency services at an in-network hospital or other facility.

3. Out-of-network providers cannot send patients bills for excess charges.

The onus is on out-of-network providers to determine a patient’s insurance status and the applicable in-network cost sharing for the medical bill.

4. Oversight and enforcement activities are required.

For private health plans, enforcement of the No Surprises Act is similar to the rules for the Affordable Care Act (ACA). States regulate non-group health plans and fully-insured employer-sponsored plans and the federal government provides oversight and enforcement for self-insured group health plans.

Enforcement for healthcare providers and facilities also begins with the states. Where a state fails to enforce the provider requirements, the federal government may enforce the requirements.

Q. Are there any changes to the types of services covered?

Yes. The legislation also includes provisions to help ensure access to pediatric, obstetrical, and gynecological care. Pediatricians must be able to serve as a child’s primary care provider. Also, plans must allow members to access obstetrical and gynecological care without going through an approval process.

Q. Are there any other NSA provisions health plans must comply with?

Yes. The law is designed to help consumers get upfront information about how their health plan will work and to promote understanding and transparency of healthcare prices in general.

Health plans must provide an advanced explanation of benefits.

Members can ask for information about their coverage before services are provided. Prior to a scheduled service, members can request information on whether a provider/facility participates in-network and for an estimate of what the plan will pay and what the patient’s obligation will be. The plan must respond in writing within three business days.

Health plans must provide continuity of coverage when a provider leaves the network.

Members must be notified when a provider/facility that is providing ongoing care leaves the plan network. Plans may also need to provide transitional coverage at in-network rates for up to 90 days or until treatment ends, whichever is earlier.

Health plans must maintain accurate provider network directories.

Provider directories must be verified and updated at least every 90 days and plans must respond within one business day to member queries about whether a provider or facility is in-network. If a member relies on incorrect information in a directory, the services must be covered with in-network cost sharing applied. Providers and facilities are also required to provide timely updates to health plans about changes to their directory information.

Health plans must disclose information about broker commissions.

Plans must disclose to the member if broker and consultant commissions are paid for enrollment. This applies to individual health insurance plans, including short-term limited duration insurance, and group health plans. This disclosure must be made before the member completes plan selection.

Q. Which health plans does the law apply to?

The law applies to nearly all private health plans offered by employers. It applies to comprehensive individual and group health plans, including fully insured plans sold through the individual and groups markets, as well as self-funded plans (often referred to as “ERISA” plans).

Q. How is the patient’s in-network cost-sharing obligation determined?

There is a prescribed process for calculating patient cost-sharing under the NSA law that introduces two new concepts: the “recognized amount” and the “qualifying amount.”

The qualifying amount is based on historic rates between the plan and the provider. Or, if unavailable, an independent database of historic payment rates for such items and services. The qualifying amount will likely apply in most instances unless a state has its own surprise medical billing law.

The recognized amount is based on either: the amount required under any state surprise medical billing law that applies to that patient situation and service; the amount established through an all-payer rate setting model, such as Maryland uses; or the qualifying payment amount.

In other words, the qualifying payment amount is used for determining patient cost-sharing unless another state law or policy applies. Then, the patient’s cost-sharing obligation is calculated from the recognized amount.

Q. How does the surprise medical bill dispute resolution process work?

The law permits access to an independent dispute resolution process (IDR) for disputes on a medical bill between health plans and providers.

The first step is a 30-day negotiation period on the payment amount. If no agreement is reached within 30 days, each party submits a final offer and an IDR entity acts as an umpire, determining which offer is most reasonable. The IDR’s decision is binding, and the losing party must pay the cost of the arbitration process.

In conclusion, the No Surprises Act is a huge step forward in patient protection. As health plans prepare for implementation in January, clear communication with members will be necessary to a smooth transition. Forbes.com makes the following recommendations:

  • Make the information on cost estimates and explanation of benefits easily digestible for consumers.
  • Design the journey with the consumer in mind so that cost estimation tools and obtaining proof of consent are personalized and easy to use.
  • Engage with and communicate with consumers so they understand why some services are priced differently and the charges they are responsible for when out-of-network providers are involved for nonemergency cases.

Clarity’s Accelerate Member Engagement offering can help health plans apply these recommendations. AME helps maximize the value of a plan’s communications spend by transforming basic member communications into promotional pieces that improve member engagement. A leading marketing industry authority estimates that certain key transactional communications are viewed by 97% of existing customers for an average of 2-5 minutes at a time.

Given the scope and impact of the NSA, health plans will need to ensure members get the message and understand the changes to their coverage. Clarity is happy to help as plans navigate this latest evolution in patient care.