Key Takeaways for Managed Care Organizations as No Surprises Act Goes Into Effect

Few issues have drawn the ire of policymakers, the media, and consumers as much as “surprise billing” – when a patient unexpectedly receives a bill for services from a provider or facility.

These bills usually result from emergency care when stabilization is the top priority regardless of coverage, but they also occur at other facilities when the patient is unaware that some of their care team is out-of-network. And these bills cause enormous stress for families: according to a Kaiser Family Foundation poll, about two-thirds of Americans say they are either “very” or “somewhat” worried about the cost of unexpected medical bills.

After two years of wrestling with the issue, big changes are underway in terms of patients’ rights and provider and payor responsibilities.

In December 2020 Congress passed the Consolidated Appropriations Act, 2021. The law contains the No Surprises Act, establishing objectives and rules for eliminating surprise healthcare billing, patient rights to clear and timely cost estimates in advance of care, provider requirements related to disclosures and obtaining patient written consent for balance billing, and rights and remedies patients have related to dispute resolution.

In July, HHS and other federal government departments issued an interim final rule implementing portions of the No Surprises Act. This interim rule is scheduled to become law effective Jan. 1, 2022.

To protect their organizations, managed care leaders and their contracting organizations must understand how the broad and complex new law may impact operations and take steps to be compliant by the end of this year.

Generally, the rule applies to most emergency services, air ambulance services from out-of-network providers, and nonemergency care from out-of-network providers at certain in-network facilities, including in-network hospitals and ambulatory surgical centers.

Providers have myriad responsibilities. They must publicly disclose details of the new balance billing requirements, any state-level limitations or prohibitions in the state of service, and the dispute resolution process. They must accurately disclose which health plans they participate with. They must provide patients with a good faith estimate 72 hours before the scheduled service or within three hours for add-on cases.

Each out-of-network patient’s cost share must be calculated using in-network provider rates for both the patient’s insurance benefits and allowable amounts (that is, the qualified payment amount which is generally a negotiated or published amount based on in-network payment history). Written consents must be obtained from out-of-network patients. Balance billing is only allowed when appropriate written consent has been obtained. 

In limited cases, a provider or facility can provide notice to a person regarding potential out-of-network care and obtain the individual’s consent for that out-of-network care and extra costs. However, this exception does not apply in certain situations when surprise bills are likely to happen, including specified ancillary services connected to nonemergency care such as anesthesiology or radiology services provided at an in-network healthcare facility. Providers must lend assistance in identifying any out-of-network providers that they work with to avoid surprise bills.

In addition to the numerous provider specific requirements, payers also face an array of requirements and bear a heavy responsibility in supporting cost transparency.

One particularly complex demand is that providers, after confirming the patient’s insurance benefits, provide the payer with the patient’s identity, proposed procedures, and any known diagnoses. This must be done in advance so the payer can provide the patient with an advanced explanation of benefits. There are no details in the No Surprises Act regarding how this would be achieved and whether the prior authorization process will suffice. 

Although the rule has some ambiguity and potentially unrealistic new requirements, the other stipulations follow good business practices that benefit both the provider and the consumer. Managed care organizations certainly want to be aware of and confirm the patient’s benefit plan, communicate financial responsibility, request payment in advance of service or help address affordability concerns for patients who need that assistance, provide modern digital tools and conveniences comparable to other industries, and confirm payer authorizations and responsibilities.

In the last decade, the healthcare industry has endeavored to provide greater transparency and accuracy in patient billing.

In 2016, my company, Clariti, began working on a new patient cost estimator and quote generator tool. Earlier this year, we merged with HST Pathways, a leader in cloud-based technology for ambulatory surgery center clients with the goal of providing the most accurate patient estimates in the industry. Platforms like this will become even more critical to care organizations as the rule becomes law.

Although the new patient protections will cause administrative changes, managed care organizations that prepare now for compliance will provide patients with the accurate information they deserve well in advance of car and increase overall transparency and satisfaction in the healthcare environment.

Scott Palmer was founder and CEO of Clariti Health and is now senior vice president of business development at HST Pathways.