The No Surprises Act - Part 1 - Background

Season #1

Did the No Surprises Act come as a surprise to you in 2022? If so, we've got all the details you need to know. This first episode will provide the background to the No Surprises Act, including why it was enacted.

Hello, and welcome to Revenue Cycle Decoded where we are cracking the code on revenue cycle topics.

Today, we're going to talk about the No Surprises Act, and if you have been in healthcare for any length of time, you have probably been hearing about the No Surprises Act. It's no surprise because it is a big deal. Now if you're still asking yourself "what is the No Surprises Act," it's time to learn because this Act actually went into effect on January 1, 2022 - that's this year! So, let's get started talking about the background and then in future videos we'll dive deep into the details of the Final Rules so you'll understand what's required and what you need to do to be in compliance.

Now, group health plans and insurers contract with providers and facilities to provide services to the plan members and those providers and facilities are considered to be in-network, or participating, because they agree by contract to accept a certain amount for their services. There are also nonparticipating providers. These providers are not contracted with the plan and so they can charge higher amounts than the contracted rates that plans have negotiated with participating providers and facilities. These providers are out of network.

So, what happens if a patient receives care from a nonparticipating provider even if the patient was at a participating facility and particularly if the patient had no opportunity to choose the provider, for example, in surgery from an anesthesiologist? Well, in this case, the plan could decline to pay all together or the plan could pay an amount less than the bill charges and require greater cost sharing than if the patient had received to care from an in-network provider. In fact, sometimes the costs paid for that out of network provider wouldn't even count towards the patient's deductible or out of pocket maximums. So, in this case, the patient may get a surprise medical bill and these bills could be quite shocking and, in some cases, outrageous.

Balance billing is equal to the provider's billed charges minus the amount that was paid by the plan and the amount collected from the patient's cost-sharing portion. Now, this is perfectly legitimate. For example, if you work for a primary care physician and you bill your patient's plan, there may be a cost-sharing portion, the patient's coinsurance, left over after the plan pays its part and you would bill the patient for the difference.

A surprise medical bill happens when the patient receives an unexpected bill from the health care provider or facility that occurs when a patient receives medical services from a provider or facility that, usually unknown to the patient, is a nonparticipating provider or facility with respect to the individual's coverage. This could happen if the patient received care at a participating or in-network emergency room but was treated by an emergency room physician who is out of network with the patient's plan. It can also happen if the patient is in surgery or receives other services at in network facility and receives care from a provider who is not in network such as an anesthesiologist or a radiologist reading x-rays; or if the patient receives care from an air ambulance company that is nonparticipating with the patient's plan. In all of these situations, the patient had little or no opportunity to choose an in-network provider but was stuck with the costs from receiving services from the out of network provider.

Some of the consequences of these surprise medical bills are devastating. For example, it raises healthcare costs for everybody, but it also exposes patients to significant financial risk. It leads to confusion about medical bills. Patients can certainly be confused when they're receiving a bill from an out of network provider and not understanding why they weren't billed at in-network rates, especially if they went to an in-network facility. Surprise medical bills can also lead to medical debt and even medical bankruptcy and create significant financial hardship, especially in communities exposed to poverty and other social risk factors.

Before the No Surprises Act, there were some patient protections put into place, for example, the Public Health Services Act required that group health plans or health insurance issuers offering group or individual Health Insurance coverage had to cover emergency services without requiring prior authorization and without regard to whether the Health Care provider was in-network and they can't impose any administrative requirements or limitations on benefits for out of network emergency services. In addition, they were required to pay a reasonable amount quote unquote before a patient became responsible for balance billing. However, this Act did not prohibit balance billing and it only applied to emergency services. And let's just say those reasonable surprise bills -- well, from a patient perspective, they weren't so reasonable.

Now, many states have also enacted surprise medical billing rules, and in fact, right now over 50% of the states have some protections in place to protect patients from surprise medical bills but the laws vary dramatically. Some states offer very little protection, while other states offer comprehensive protection, with a lot of states somewhere in between, and this patchwork of consumer protections is limited in its ability to address surprise medical bills from out of state providers and typically only applies in individual and group Health Insurance coverage, not self-insured group health plans sponsored by private employers.

Enter The No Surprises Act. Congress recognized that this was a problem for patients and for healthcare costs overall and so The No Surprises Act was put into place to protect participants, beneficiaries, and enrollees in group health plans and group and individual Health Insurance coverage from surprise medical bills when they receive emergency services, nonemergency services from nonparticipating providers at participating facilities, and air ambulance services from nonparticipating providers under certain circumstances.

Now looking at this list, you may think this doesn't apply to you but wait and see as we dive down into the final rules and you'll find out that, in some cases, yes, it does. In our next video, we are going to dive deep into the No Surprises Act Final Rule Part One. We'll give you all of the details so that you can understand what's required and what you need to do to be compliant.

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