Surprise Billing in Healthcare: The No Surprises Act Takes a Stand for Patients

Surprise Billing in Healthcare: The No
Surprises Act Takes a Stand for Patients
Mikki Fazzio, RHIT, CCS
Content Integrity Consultant,
Principal

© 2021 Health Catalyst
Proprietary. Feel free to share but we would appreciate a Health Catalyst citation.
Surprise Billing in Healthcare
On January 1, 2022, Requirements
Related to Surprise Billing; Parts I and
II under Title I, the No Surprises Act,
will take effect.
These rules lay the groundwork to
protect patients against surprise billing
in healthcare and promote price
transparency.

Surprise Billing in Healthcare
The Departments of Health and Human Services
(HHS), Labor, and Treasury, along with the Office
of Personnel Management (OPM), will issue the
No Surprises Act legislation, which impacts
healthcare providers and facilities, ambulance
services, group health plans, health insurance
issuers, and Federal Employees Health Benefits
program carriers.

Fighting Surprise Billing in Healthcare: The
Background and Purpose of the No Surprises Act
Surprise billing occurs whenever a patient
unknowingly receives medical care from
out-of-network providers.
This interaction results in higher prices for
medical services that would otherwise be
cheaper if rendered by providers inside the
patient’s health plan network.
In emergency situations, response teams
usually bring the patient to the nearest
emergency department, whether that facility
is in or out of network.

Even when a patient chooses an in-
network facility in a non-emergent
situation, they usually don’t realize if a
provider involved in their care is out of
network (e.g., an anesthesiologist or
radiologist).
These situations tend to lead to a
transaction known as “balance billing,” in
which the out-of-network provider bills the
patient for the difference between the
charge and the amount the patient’s
insurance paid.

Because the patient doesn’t have the option
to choose an in-network provider in these
cases, the expense is typically unexpected
and unmanageable.
Traditionally, providers have billed an
out-of-network patient directly for services
rendered.
The provider and the patient’s insurance
company don’t have any contractual
agreement, leaving the patient and
insurance company to settle payment
disputes.

According to the Centers for Medicare
and Medicaid Services (CMS), in
2016, 42.8 percent of emergency
room bills resulted in out-of-network
charges, even when a visit was to an
in-network hospital.
While Medicare and Medicaid both
prohibit the use of balance billing,
commercial and employer-sponsored
plans do not.

The No Surprises Act aims to establish
new protections from surprise billing in
healthcare and excessive cost-sharing for
patients receiving healthcare services.
Effective January 1, 2022, the out-of-
network billing process will shift from
patients to providers.
This transition intends to remove the
burden of surprise billing from patients.

What Does the No Surprises Act
Mean for Providers?
Complying with the Act will require
providers to make some major
process changes.
Working with payers rather than
patients for payment will be a new
practice for many providers.

Mean for Providers?
For emergency out-of-network cases and
out-of-network providers seen at an in-
network facility (such as anesthesiologists
and radiologists), the Act will limit patient
billing to an amount no greater than the
patient’s in-network obligation according
to their insurance plan.

Mean for Providers?
Because out-of-network providers don’t
typically have established contract rates
with insurance companies, the Act will
require to provider to bill the health
insurance first to see if services are
covered under the patient’s specific plan.

Mean for Providers?
The Act requires insurance companies to
first check if there is an applicable All-Payer
Model Agreement under section 1115 of the
Social Security Act or if there is a state law
that determines the total payment for that
out-of-network service.
In the case of a state law, the Act calculates
cost sharing from that state law amount.

Mean for Providers?
For example, if the patient’s obligation is
20 percent for an in-network provider,
the plan could take the state law amount
allowed for that medical service and
require 20 percent of that amount from
the patient.
If there is not an All-Payer Model
Agreement or law, insurance companies
must calculate the median in-network
payment for that medical service based
on their contracts with other providers
within the same geographic region.

Mean for Providers?
The No Surprises refers to this metric as
the qualifying payment amount (QPA).
Once the out-of-network provider
receives an initial payment or denial
notice from the insurance plan, the
provider has two choices:
Accept the initial payment
plus the in-network patient
cost-sharing amount as
full payment.
Engage in direct
negotiation with the
insurance company.

Negotiating or Resolving Payment
The Act allows 30 days for providers and
insurance companies to negotiate payment.
If the negotiation is unsuccessful, either party
can initiate the Independent Dispute
Resolution (IDR) process.
Under the IDR, the parties jointly select a
certified independent dispute resolution entity
who has no conflicts of interest with either
party to resolve the dispute.
If the parties can’t agree on a certified
independent dispute resolution entity, the
Departments (HHS, Labor, Treasury, and
the OPM) will select one.

Both parties will then submit their offer
representing the cost they think the plan
should pay for the services provided,
along with supporting documentation.
The certified dispute resolution entity
will issue a binding determination.

Notably, not all services are eligible for
the IDR process.
This process applies only to those
services for which balance billing was
prohibited in Part I of the Requirements
Related to Surprise Billing rule.
Each step of this process will require new
internal processes—providers need to
begin planning for these promptly.

The Exception to the Rule:
Patient Notice and Consent
The Act does not specify for what types of
cases it will allow out-of-network notice to
the patient.
However, it specifically states that providers
or facilities should not use the exception for
services that are common surprise billing
situations, such as emergency services and
certain ancillary services.
As the Departments haven’t yet specified
the type of services for which they will allow
a notice and consent, providers must watch
for further guidance.

The Exception to the Rule:
Patient Notice and Consent
The Act also requires certain
providers and facilities to make
publicly available, post on a public
website, and provide patients with a
one-page notice on patients’ rights
with respect to balance billing.
The notice must contain the
requirements established under the
Act, any state-level protection laws,
and contact information for state
and federal agencies to report any
potential violations.

The Good Faith Estimate:
Price Transparency
One thing all providers—even those who are
likely to be in network—need to note is the
Act’s new requirements regarding price
transparency.
The rule will require all providers to reach out
to patients prior to a scheduled appointment
to solicit the patient’s insurance information
and then issue a Good Faith Estimate to the
patient’s insurance plan.

Price Transparency
This estimate should include a description
of the services that will be provided and
the provider’s estimated charges.
The insurance plan must then send the
patient an Advance Explanation of
Benefits (EOB) at least three days
prior to the appointment.

Price Transparency
The advanced EOB should include the
following information:
 A description of services to be provided, whether
the provider is in or out of network.
 The contracted rate for services (if the provider is
in network).
 A description of how to access in network care
(if the provider is out of network).
 The provider’s estimate of charges and the
patient’s responsibility total.
 The patient’s status regarding deductible and
out-of-pocket maximum.

Price Transparency
Insurance plans must provide patients with
an up-to-date directory of in-network
providers, an insurance card that describes
the deductibles and out-of-pocket maximum
limitations for in- and out-of-network
providers, and a price comparison tool.

Price Transparency
If the patient is uninsured (or self-pay), the
provider must provide the Good Faith
Estimate directly to the patient within a
specific timeline:
The Act states that if the patient schedules
the services at least three days prior to the
appointment date, the provider must offer
the estimate within one business day after
scheduling.
If the patient schedules the services at least
10 days before the appointment date, the
provider must share the estimate within
three days of scheduling.

Balancing Burden to Providers with
Benefit to Patients
Most providers consider protecting
patients from unexpected and
unmanageable medical bills an
important part of patient care.
However, these process changes will
take time and effort to implement.
If providers do not prepare, they may
experience delays in payment and
financial penalties for noncompliance.

Balancing Burden to Providers with
Benefit to Patients
The No Surprises Act’s ultimate goal
is price transparency, which most
providers agree improves the patient
experience and increases the
likelihood of payment for care.

For more information:
“This book is a fantastic piece of work”
– Robert Lindeman MD, FAAP, Chief Physician Quality Officer

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Mikki Fazzio, RHIT, CCS, joined Health Catalyst in June 2021 as a principal content
integrity consultant. She is responsible for content integrity in the VitalWare® by Health
Catalyst VitalKnowledge™ system, the maintenance of VitalWare’s proprietary crosswalk
information (including CPT to ICD-10-PCS crosswalks, CPT/HCPCS to modifier
crosswalks, and CPT/HCPCS to revenue crosswalks), assisting with responding to
specialized client billing and coding questions and providing educational webinars. Fazzio has 15+
years of experience in the healthcare field. Prior to joining Health Catalyst, she was the Director of
Health Information Management and Clinical Documentation Integrity at Thibodaux Regional Health
System, where she led a team of hospital and professional coders, CDI specialists, EMR specialists,
transcriptionists, scanning technicians, and release of information technicians. Fazzio's main
responsibilities included overseeing the Clinical Documentation Integrity program, decreasing and
sustaining discharged-not-final-billed dollars for facility and professional coding, and case mix index
analysis. She has a degree in Psychology and Health Information Management, as well as certifications
as a Registered Health Information Technician and a Certified Coding Specialist through the American
Health Information Management Association.
Other Clinical Quality Improvement Resources
Click to read additional information at www.healthcatalyst.com
Mikki Fazzio, RHIT, CCS

Other Clinical Quality Improvement Resources
Click to read additional information at www.healthcatalyst.com
Health Catalyst is a mission-driven data warehousing, analytics and outcomes-improvement
company that helps healthcare organizations of all sizes improve clinical, financial, and operational
outcomes needed to improve population health and accountable care. Our proven enterprise data
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Health Catalyst was recently named as the leader in the enterprise healthcare BI market in
improvement by KLAS and has received numerous best-place-to work awards including Modern
Healthcare in 2013, 2014, and 2015, as well as other recognitions such as “Best Place to work for
Millenials, and a “Best Perks for Women.”

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