On December 28, 2020, the Consolidated Appropriations Act, 2021 (“Appropriations Act”) was passed into law. The Appropriations Act included the No Surprises Act (“Act”), which seeks to protect patients from surprise medical bills in situations where patients have little or no control over who provides their care, including nonemergency services provided by out-of-network providers at in-network facilities, emergency services provided by out-of-network providers and facilities, and air ambulance services. The Act, a rare piece of bipartisan, bicameral legislation, has been a long time in the making, and has undergone multiple iterations. Particularly during the public health emergency, the issue of surprise medical bills is especially pertinent, as the COVID-19 pandemic has increased the occurrence of surprise bills in a time where people are less likely to be able to shoulder the unexpected costs.

Key Terms

Establishing Guidelines for Out-of-Network Services Charges

The Act sets standards for the ways in which plans and providers decide what rates will be used for nonemergency services provided by out-of-network providers at in-network facilities, emergency services provided by out-of-network providers and facilities, and air ambulance services. In general, insurers and self-insured employers have favored the use of a benchmark payment standard, while providers preferred arbitration.

In the final version of the Act, the providers won out. Unless the state has a specified law that determines the price for an item or service that a health plan or issuer must pay, the plan will send either an initial payment (at an amount determined by the plan) or a notice of denial to the provider, and the parties have 30 days to initiate open negotiations. The negotiations may last for 30 days. If the parties cannot reach an agreement within 30 days, either party has four days to notify the other and the Department of Health & Human Services (“HHS”) of intent to initiate the Independent Dispute Resolution (“IDR”) process created by the Act.

In the IDR process, each party may propose a payment amount. The arbitrator will then select one amount or the other; the arbitrator does not have the ability to split the difference. There are a number of factors that the arbitrator may consider in making a decision, but the provider’s usual and customary charge or the billed charge are not among them. Arbitrator decisions are binding on the parties. Note, however, that the parties may continue to negotiate amidst the IDR process, until the arbitrator makes a decision. Multiple cases may be batched together in a single arbitration proceeding to encourage efficiency, but those batched cases would have to (1) involve the same provider or facility, (2) involve the same insurer, (3) involve treatment of the same or similar medical condition, and (4) occur within a single 30-day period.

The Act is designed to deter overuse of the IDR process, in that the losing party is responsible for paying the administrative costs of arbitration (whereas, if the case is settled before arbitration, the costs would be split equally unless otherwise agreed), and the party that initiates the arbitration process is prohibited from taking the same party to arbitration for the same item or service for 90 days following a decision.

Establishing Guidelines for Out-of-Network Services Cost-Sharing

Nonemergency Services Provided by Out-of-Network Providers at In-Network Facilities

The Act prohibits billing patients out-of-network cost-sharing amounts for services provided by a nonparticipating healthcare professional at a participating facility. Instead, patients may only be billed for the cost-sharing that would have been charged for an in-network healthcare professional.

The Act allows for some exceptions to this protection, but only if a patient knowingly and voluntarily agrees to use an out-of-network provider. Some providers may request that a patient sign a consent waiver, but this exception is constructed narrowly, and does not allow provides to request a consent waiver if: (1) there is no in-network provider available in the facility; (2) the care is for unforeseen or urgent services; or (3) the provider is an ancillary provider that a patient typically does not select (e.g., a radiologist, anesthesiologist, pathologist, neonatologist, etc.). For providers who are eligible to ask a patient for a consent waiver, the provider must generally notify the consumer in writing 72 hours before services are scheduled to be delivered. This notification must include a good-faith cost estimate and identify available in-network options for obtaining the service.

Emergency Services Provided by Out-of-Network Providers and Facilities

Comparable to nonemergency services, the Act provides that, for emergency services provided by a non-participating provider or non-participating emergency facility, there can be no cost-sharing that is greater than the requirement that would apply if the emergency services were provided by a participating provider or a participating emergency facility. Instead, the cost-sharing is determined as if the charge for the emergency services was either (1) the amount specified by state law, (2) a qualifying payment amount, or (3) an amount determined under an All-Payer Model Agreement entered into by the state. The “qualifying payment amount” will be determined by a methodology forthcoming in HHS regulations.

Further, insurers offering group or individual health insurance coverage that provide or cover emergency services must cover such emergency services without the need for any prior authorization determination and without regard to any other term or condition of such coverage.

Air Ambulance Services

For air ambulance services, if furnished by a non-participating provider, the services must be covered if provided by a participating provider, and patients must incur the same cost-sharing for the air ambulance services that would apply had the services been furnished by a participating provider. Additionally, the cost-sharing for out-of-network air ambulance services must be counted toward any in network deductible or out-of-pocket maximums applied under the plan or coverage (and in-network deductible and out-of-pocket maximums must be applied) in the same manner as if the cost-sharing payments were made for items or services furnished by a participating provider.

Importantly, the Act declined to extend these same protections to ground ambulance services.

Other Consumer Protection Provisions

The Act also includes the following additional consumer protection requirements to increase transparency for all patients to better understand their cost-sharing liability ahead of time:

• Transparency Regarding In-Network and Out-Of-Network Deductibles and Out-Of-Pocket Limitations: Plans must include cost-sharing and contact information on any physical or electronic plan or insurance identification card issued to participants, beneficiaries, or enrollees.

• Maintenance of a Price Comparison Tool: Plans must offer price comparison guidance by telephone and provide a price comparison tool on the website of the plan that allows an individual enrolled under the plan or coverage to compare the amount of cost-sharing for which the individual would be responsible.

• Provider Directory Information: Plans must establish a database and disclose on its website each provider and facility with which it has a contractual relationship for furnishing items or services, including contact information for each provider and facility.

• Disclosure of Billing Protections: Plans must disclose, on a public website and in applicable explanations of benefits, the requirements and prohibitions against surprise billing, any state law requirements regarding surprise billing, and contact information for the appropriate state and federal agencies when a provider or facility has violated such prohibitions.

Industry Reactions

The No Surprises Act has been lauded by patient advocacy groups. A group of 31 organizations, “representing millions of patients and consumers across the country” released a statement applauding the Act, calling it “a significant step toward the goal of ending surprise medical billing and is an improvement for patients over the status quo.”

However, providers are not as convinced. The American Hospital Association (“AHA”) released a lengthy letter, recognizing the importance of the legislation, but calling for significant changes to the Act. In particular, the AHA was concerned about the “burden on all parties”, the “unworkable” billing processes, and the “duplicative and costly” transparency provisions. One particular concern not addressed in the final language of the Act – Congress did not heed the AHA’s call to include protections for surprise ground ambulance bills.

The American Medical Association (“AMA”) also voiced concerns. AMA Executive Vice President and CEO Dr. James Madara noted that the complexity of the process is such that many

physicians—particularly those in smaller practices—may not have the resources to take advantage of the IDR process to obtain fair compensation for their services. The Association of American Physicians & Surgeons echoed this sentiment, calling the Act “a surprise attack on patients’ access to independent physicians.”