Surprise Billing Law Covers Contract Disputes, Price Transparency

January 06, 2021 - Congress has passed a new law that seeks to eliminate surprise billing, particularly surprise bills that result from contract disputes, inaccurate provider directories, and air ambulatory care.

Surprise billing occurs when a patient receives a medical bill for an out-of-network service delivered at an in-network facility. Frequently, patients are not financially prepared to handle these bills, with around half of adults reporting that they are prepared to cover unexpected medical bills.

At the beginning of 2020, at least three bills in Congress aimed to address surprise billing. Despite the urgency around this issue, a few months later, no laws had emerged from these drafts.

In September 2020, President Trump signed an executive order mandating that the Department of Health and Human Services (HHS) work with Congress to pass legislation on surprise billing before the end of the year. The result was Division BB, Title I of the Consolidated Appropriations Act, 2021 called the “No Surprises Act.”

Through this Act, Congress sought to rectify specific causes of surprise billing as well as pursue other consumer protections, such as price transparency.

Types of care the Act addresses

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According to a summary provided by the House Committee on Appropriations, the No Surprises Act addresses surprise billing for out-of-network emergency care, certain out-of-network ancillary care services provided at an in-network facility, and any out-of-network care provided at an in-network facility without the patient’s informed consent.

The Act states that patients may only pay the in-network cost-sharing amount for the types of care specified. Additionally, in-network cost-sharing payments for out-of-network bills must count towards the patient’s deductible.

Contract disputes surprise billing

At times, surprise billing can occur when payers and providers are locked in a contract dispute. In such scenarios, Congress explained how to navigate negotiations to avoid surprise billing.

Payers and providers have a 30-day period in which to negotiate out-of-network claims. When payers and partners cannot come to a consensus, they may enter the independent dispute resolution (IDR) process. Stakeholders and policymakers have previously proposed this approach as part of the effort to prevent surprise billing.

The Act details how such a situation would proceed.

READ MORE: Inaccurate Provider Directories May Spark Surprise Medical Bills

The IDR entity must consider the market-based median in-network rate alongside a range of factors which the health plan or provider might bring forward including a facility’s case mix, proof of good faith efforts to enter an agreement, prior contracted rates with the exception of public payer rates and billed charges, and more.

“Following IDR, the party that initiated the IDR may not take the same party to IDR for the same item or service for 90 days following a determination by the IDR entity, in order to encourage settlement of similar claims, but all claims that occur during that 90-day period may still be eligible for IDR upon completion of the 90-day period,” the summary explained.

If a provider’s network status changes, the provider must give patients with complex conditions a transition period of up to 90 days. During that period, patients will have continuous coverage at in-network prices from the provider whose network status is changing.

Inaccurate provider directories surprise billing

When an outdated provider directory inaccurately represents a provider’s network status, it can lead to surprise billing for patients. According to a Health Affairs study, over four in ten patients seeking outpatient specialty mental healthcare (44 percent) used a provider directory and, of those, more than half (53 percent) found inaccurate information in the directory.

The new law mandates that health plans maintain provider directories that accurately portray their in-network providers. These directories must be accessible online or within a single business day of inquiry.

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“If a patient provides documentation that they received incorrect information from a plan about a provider’s network status prior to a visit, the patient will only be responsible for the in-network cost-sharing amount,” the summary added.

Air ambulance surprise billing

Patients are responsible for the in-network cost-sharing for out-of-network air ambulances, which counts toward their in-network deductible. Additionally, air ambulance companies cannot send a bill to a patient that is more than the patient’s in-network cost-sharing amount.

Payers and providers have 30 days to negotiate out-of-network claims, after which time they may turn to independent dispute resolution as outlined in the above section. However, the independent dispute resolution process may be different for air ambulance services in rural and frontier regions.

Payers have to submit two years’ worth of air ambulance services claims data to HHS. The department will publish a report on the data and establish an air ambulance quality and patient safety advisory committee.

Consumer protections and transparency

Starting in January 2022—if not before—health plans may be subject to an external review on adverse determinations.

Additionally, health plans will need to send patients an Advance Explanation of Benefits three days prior to a scheduled care service. The Advanced Explanation of Benefits must cover treatment, expected cost, and provider network status.

In order to increase transparency with consumers, payers will have to include both members’ in-network and out-of-network deductibles and out-of-pocket maximums on members’ insurance identification cards

Payers also will have to maintain a price comparison tool in order to offer price transparency to consumers.

Future implications

Payers can expect an HHS report on air ambulance data. They may also watch for a report from the Government Accountability Office (GAO) on the downstream effects of this legislation and on provider network adequacy. Additionally, the Federal Trade Commission and Attorney General will conduct a study by January 1, 2023 on the law’s impacts.

Industry reactions

Some major payer organizations have been reserved in their reactions to the new law.

“While we continue to analyze the bill in all its complexities, we continue to believe strongly that any real solution must be clear and straightforward for consumers, and must protect patients by relying on fair, market-based prices based on locally negotiated rates – without loopholes,” Matt Eyles, president and chief executive officer of America’s Health Insurance Plans (AHIP), said in a statement.

“That’s how to ensure their health care costs remain more affordable. As real-world experiences in both Texas and New York have clearly demonstrated, private-equity firms will continue to find ways to exploit the arbitration process to price gouge patients and raise health care costs for everyone.”

“We remain concerned that a complex arbitration process, which has been ineffective in states that have tried it, holds the potential to raise premiums for everyone,” Justine Handelman, Blue Cross Blue Shield Association’s senior vice president of the office of policy and representation, explained in a statement. “We will monitor arbitration outcomes with an eye toward keeping consumers’ costs down.”