No Surprises Act Poses Challenges to Physicians and Medical Groups

The NSA, which became effective on January 1, 2022, has two substantial components: (1) the law prohibits “balance billing” for items and services provided in certain healthcare settings; and (2) the law requires a provider to furnish a patient who is self-pay or uninsured with a GFE of the anticipated cost of certain healthcare items and services to be provided.

Balance Billing Prohibitions

“Balance billing” means charging an insured patient the difference between an institutional or individual provider’s full charges and the insurer’s out-of-network payment for the item or service.

The NSA prohibits both balance billing and charging patients more than the applicable in-network cost-sharing amounts.  The NSA’s balance billing protections apply to items and services received at hospitals, ambulatory surgery centers (ASCs), freestanding emergency departments, and, for some states, in urgent care centers if the urgent care center is licensed by the state.  The prohibition applies to out-of-network emergency services and post-stabilization services, and also to out-of-network providers providing non-emergency services at in-network facilities.  Patients may waive the balance billing protections for post-stabilization and non-emergency services through a complex notice and consent process.

However, the balance billing protections cannot be waived for emergency medicine, anesthesiology, pathology, neonatology, and items or services furnished by assistant surgeons, hospitalists, or intensivists.  The balance billing protections also cannot be waived for the professional and technical component of laboratory and radiology services provided to hospital and ASC patients.

Payors must pay out-of-network providers the “out-of-network rate,” which is one of the following:  (1) payment determined under a state’s All-Payer Model (this applies to very few states); (2) if the All-Payer Model does not apply, the amount determined by state law; or (3) if there is not an applicable state law, the amount determined through negotiations between providers and payors or the independent dispute resolution process.  Under the third approach, the payor makes an initial payment, and then the provider and payor can negotiate for 30 days.  If the parties cannot agree on payment, then the payor or provider can initiate the IDR process.  The IDR arbitration entity reviews documentation and the parties’ proposals, and then issues a final determination within 30 days.  The payor must then provide payment according to the amount determined by the IDR arbitration entity within 30 days after it issues the determination.

To the extent physicians and medical groups wish to balance bill patients for services provided in the facilities where the NSA balance billing protections apply, they must work with the facilities (1) to understand the process for identifying which patients are out-of-network for the physician or medical group; and (2) to pursue the notice-and-consent process with the patients. 

Texas Medical Association Lawsuit

Multiple lawsuits about various aspects of the NSA are making their way through courts across the country.  In the first successful challenge to the law, the Texas Medical Association claimed that the Interim Final Rule (IFR) implementing the IDR process conflicted with the NSA’s statutory text.  Under the NSA, the qualifying payment amount (QPA) is the payor’s 2019 median in-network rate for the same or similar item or service by the same or similar specialty in the same or similar geographic area.  Instead, the IFR had required IDR arbitrators to choose the proposed payment amount offered closest to the QPA (unless a party provided evidence that the QPA is materially different from an appropriate rate).  The United States District Court for the Eastern District of Texas agreed with the Texas Medical Association that the IFR was not consistent with the text of the NSA.  The Departments of Health and Human Services, Labor, and the Treasury (which are charged with crafting the implementing regulations) issued a memorandum stating that the Court’s decision invalidated pieces of the IFR, so IDR arbitrators are no longer required to choose the proposed payment amount closest to the QPA.  However, the Departments did not indicate new regulations would be issued.

Good Faith Estimate for Self-Pay and Uninsured Patients

The other major requirement of the NSA is the provision of a written GFE to a self-pay or uninsured patient.  A GFE must be provided for any item or service scheduled three or more business days in advance of the appointment. 

The requirement applies to a healthcare provider, including a physician or other healthcare provider who is acting within the scope of practice of the provider’s license or certification under state law.  This definition is broad, and means the GFE requirement likely applies to all types of medical practices and clinics.  The GFE must include items or services reasonably expected to be provided in conjunction with the primary item or service. 

A patient may take a provider to dispute resolution if the amount the provider actually bills is $400 or more higher than the GFE.  This does not give providers much leeway for predicting costs, because often a provider may be estimating based on very limited information gathered when the patient simply scheduled an appointment.  In addition, a provider who does not timely furnish a proper GFE may face disciplinary action and monetary penalties for failure to meet the requirements of the NSA — up to $10,000 per violation of this law.

The requirement to provide GFEs became effective on January 1, 2022, and there are a number of additional requirements related to GFEs, such as deadlines for provision of the estimates and required notice related to availability of the GFE. 

Beginning in 2023, the GFE also must include estimates from co-providers, which are those providers who typically provide items or services in conjunction with the main item or service.  For individual physicians and medical groups this means not only might they be providing GFE estimates for self-pay and uninsured patients themselves — but if they are co-providers, they could be required to provide information to convening providers for inclusion in those other providers’ GFEs. 

Good Faith Estimate for Insured Patients:  Regulations Pending

In addition, potentially beginning next year, facilities and providers also will need to provide GFEs to payors for items and services that will be provided to insured patients.  The payor will use this information to issue an estimate of benefits to the beneficiary.  Although the three Departments have not yet promulgated rules related to this requirement, a number of facilities and individual providers already are anticipating the difficulty of generating the information needed in the time required, and then securely transmitting it to the payors.  One of the reasons the Departments delayed issuing regulations related to this requirement is the need to understand better the technological requirements for secure transmission of the GFEs between providers and payors.

Tackling the NSA

The NSA is a complicated statute with which physicians and medical groups must comply.  In addition, as the Departments issue new regulations and guidance, providers must stay abreast of the latest requirements.  To avoid exposure for NSA violations, physicians and medical groups should be mindful of the notice-and-consent process for balance billing, and ensure that patients who have not given consent are not balance billed for out-of-network services.  In addition, physicians and medical groups must be sure that they have implemented systems to provide GFEs to self-pay and uninsured patients.  The providers also should maintain documentation that supports each GFE.