The No Surprise Act to Address Surprise Medical Billings and New Plan Obligations

On December 21, 2020, bipartisan congressional leaders agreed on a $900 billion COVID-19 relief package, which included the “No Surprise Act” (“the Act”). The Act, which labor advocates supported, seeks to address the issue of “surprise” medical billings, i.e., large, unanticipated out-of-pocket expenses that insured patients incur through no fault of their own.

The Act would require health plans to hold patients harmless from surprise medical bills. Under the Act, patients must be made aware of a provider’s network status and estimated charges 72 hours prior to certain service delivery, and patients must provide their written consent for the out-of-network care. Otherwise, the cost of the services would be subject to limitations under the Act. Any services provided without the proper notice and consent for out-of-network emergency care and other certain ancillary services would be limited to what the patient’s in-network costs would have been. This is true even for services provided by out-of-network providers at in-network facilities. Patients are also to be held harmless from surprise air ambulance medical bills, and subject only to the in-network cost-sharing amount for out-of-network air ambulances. Providers may be subject to civil monetary penalties of up to $10,000 or a state enforcement action if they violate these surprise billing prohibitions.

In the event of a billing issue regarding out-of-network claims, health plans and providers are expected to enter into a 30-day negotiation period to settle their claims. Patients cannot be forced in the middle of a billing dispute between a provider and the plan.  If negotiations are not fruitful, the parties may go to a binding arbitration process, known as Independent Dispute Resolution (“IDR”), where one offer prevails. 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, but may act on the claims that occur during that 90-day period afterwards.

Health plans should be aware of the new transparency requirements imposed by the Act.

  • Group or individual health plans must include on their plan, or insurance identification card issued to the enrollee, the amount of the in-network and out- of network deductibles and the in-network and out-of-network out-of-pocket maximum limitations.
  • In addition, the Act bans so-called gag clauses in contracts between providers and health plans that prevent enrollees, plan sponsors, or referring providers from seeing cost and quality data on providers.
  • It also bans gag clauses in contracts between providers and health insurance plans that prevent plan sponsors from accessing de-identified claims data that could be shared, under Health Insurance Portability and Accountability Act (HIPAA) business associate agreements, with third parties for plan administration and quality improvement purposes.

The No Surprise Act creates new obligations, which must be incorporated before its effective date, January 1, 2022.

For more information, please contact your trust fund counsel.

By Bisma Shahbaz | February 19, 2021

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