Introduction to the No Surprises Act and its Impact on Physician Billing Services

Patients hate surprise bills and soon, they’ll be much less common, thanks to the “No Surprises Act” [1]. But while the bill protects patients it adds new complexities for physicians. In many ways, it shifts the balance of power to commercial health plans, something that could work out negatively for physicians. 

Physicians and their billing staff should familiarize themselves with the No Surprises Act so that they can respond accordingly and make smart decisions going forward.

The No Surprises Act falls under the Consolidated Appropriations Act of 2021 (H.R. 133; Division BB – Private Health Insurance and Public Health Provisions) and is intended to address surprise billing at the federal level. In general, it protects American patients from receiving “surprise” medical bills that come about as a result of gaps in coverage for services like emergency services and care provided by out-of-network providers at in-network facilities, air ambulances included. The goal is that patients are only held liable for in-network cost sharing, leaving providers and insurers to negotiate reimbursement [2]. This is where the complication arises for physician billing. 

Under the bill, providers will work with insurers in an independent dispute resolution (IDR) process in cases where there are disputes about reimbursement. The legislation doesn’t set a benchmark reimbursement amount and requires that both providers and payers support patients in accessing healthcare cost information. If this effort to support patient understanding and management of costs sounds familiar, it should. Hospital price transparency legislation went into effect in January of 2021, and is intended to help patients better understand their responsibilities in settling medical bills. 

These changes go into effect January 1, 2022, when it will become illegal to bill patients at rates higher than in-network cost-sharing due under insurance agreements — the only exception being ground ambulance transportation.

While most physicians agree that supporting patients in this way is a good thing, it’s important to ask where physicians are left in this situation. 

The AMA has taken the stance that the act “favors commercial health plans”. AMA Executive Vice President and CEO James L. Madara, MD sent a letter to Congress stating, 

“As we have stated many times before, the AMA strongly supports protecting patients from the financial impact of unanticipated medical bills that arise when patients reasonably believe that the care they received would be covered by their health insurer, but it was not because their insurer did not have an adequate network of contracted physicians to meet their needs. In these cases, patients should be responsible only for cost-sharing amounts they would otherwise have been subject to if the care had been provided in-network, and these costs should count toward their in-network out-of-pocket maximums and annual deductibles.” [3]

Dr. Madara adds that the complexity of this process will put many physicians in a difficult situation — specifically, physicians in smaller practices that might not have the resources to take advantage of the IDR process to receive fair compensation. And this is coming at a time when physicians are already seeing difficulties. As a result of the COVID-19 pandemic, physicians saw an average drop in revenue of 32% in 2020. At the same time, the Congressional Budget Office (CBO) predicts that there will be “significant reductions” in in-network rates under the 2021 Medicare physician payment schedule.

Physicians will likely want to pay closest attention to the independent dispute resolution component of the bill. Since consumers are being removed from the discussion, providers will likely be picking up the slack. 

The IDR is often described as a “baseball-style” arbitration method. In a review, both the provider and payer will offer a payment amount and the independent arbitrator will choose one or the other, not an amount in between. The idea is to encourage parties to make a reasonable offer and not submit bids that are too high or too low. While this brings elements of market dynamics to the resolution process, it also adds more administration to physicians. To prepare, revenue cycle experts are offering suggestions including: 

Setting up Processes to End Balance Billing

This is especially true for physicians who aren’t familiar with operating in states with balance billing protections. These processes will be new and it will take time to establish practices that ensure your patients are not being balanced billed. 

Getting Ready for Estimates

Providers should be prepared to provide high-quality estimates. Staff will need to be trained to make sure they’re compliant since civil monetary penalties will be on the table.

Don’t Discount the Cost of Arbitration

The arbitration process won’t be free, so providers should have plans in place that help them make smart choices in dispute resolution. 

Keeping Up with the Details

The No Surprises Act is new, meaning details will be emerging over time. Finer points like lists of eligible arbitrators and dispute monetary benchmarks could be on the horizon and should be considered as providers prepare during the rule-making period. 

Physicians who would like to prepare should review the AMA’s summary of the No Surprises Act [4], and contact a third-party partner who can give them more options in improving their physician billing services.