One in three adults in the U.S. says they or their family have received an unexpected medical bill in the past two years. New legislation that took effect on Jan. 1, known as the “No Surprises Act” (NSA), banned the practice of sending these “balance bills” to consumers; however, experts say that there are still many moving parts, and the law is far from being finalized.
Balance bills occur when you’ve had a medical procedure that involves a provider outside of your health insurance network and then the provider sends a bill seeking to collect the balance owed between the cost of your care and what your insurance plan covers. For example, if you are being treated in an emergency room and that facility is in-network, you may unknowingly be treated by a physician who is out-of-network.
In the past, that physician could send you the balance bill. However, under the No Surprises Act, you pay no more than you would have paid (up to your in-network deductible and out-of-pocket cost) had the services been provided at an in-network facility by an in-network provider. Your insurance plan sends an initial payment or denial notice to the provider, and then both the provider and payer have up to 30 days to begin open negotiations and 30 more days to negotiate. If no agreement is reached by the end of 60 days, an Independent Dispute Resolution (IDR) process begins and an arbitration firm will make a final determination on the reimbursement amount.
However, this legislation and (IDR) process does not solve the underlying cause of balance bills, said Kate McNamara Perreault, employee benefits consultant at BOK Financial Insurance, Inc. “It doesn’t address the reason the providers weren’t in-network in the first place. They didn’t feel the insurance carrier reimbursement amount was adequate compensation for the service provided so they chose not to contract as an in-network provider with the insurance carrier.”
As a result, the No Surprises Act does not reduce costs, she explained. “While it is wonderful that the patient is out of the middle, this legislation has not helped address the root of the problem, which is providers want to bill more than carriers feel is fair for certain services. Thus, employer health plan sponsors are going to see a portion of what would have been paid by a member now being paid by their health plan … which will pass additional costs on to employer-sponsored health plans.”
Road ahead is still unclear
Since the legislation went into effect, at least six legal challenges have been filed by physicians and hospitals across the U.S. One federal judge in Texas struck down parts of the rule implementing the law — including the portion that presumes the median payment that an insurance plan pays to providers in the region to be the qualifying payment amount (QPA). The QPA is a significant factor to be considered under the rule in disputes over bill amounts.
“Meanwhile, further complexity arises in the states that already have surprise billing legislation. The Centers for Medicare and Medicaid (CMS) have issued enforcement letters to states that will clarify what provisions of the NSA the state will enforce, what provisions will be enforced through a collaborative enforcement arrangement and what provisions CMS will enforce, Perreault said. In the 14 states without state-level balance billing laws, the federal law will apply across the board.
However, the No Surprises Act was designed to establish only a federal baseline for consumer protection and defers to some state laws. As a result, how the law will be enforced is much more complicated—and unclear—in states that already had balance billing laws.
In the meantime, BOK Financial Insurance is following these and other developments closely; stay tuned for more updates.