In my last Fontenotes, I explained the No Surprises Act and why it is excellent news for the public. People insured through their employer or who have purchased private health plans individually can no longer receive “Surprise” medical bills.
Uninsured patients also gained protection– they must receive an estimate of anticipated costs in writing (and consent) before the treatment is provided. The uninsured now also have access to Dispute Resolution over these expenses. (Sending patients Surprise bills, also called “Balance Billing,” is prohibited by Medicare, Medicaid, TRICARE, the Indian Health Services, and the Veterans Health Administration, so the No Surprises Act did not need to reach those populations.)
This change is enormous for patients and their families. (Surprise medical bills contributed to two-thirds of all bankruptcies filed in America between 2013 and 2016).
However, The No Surprises Act isn’t good news for providers who balance bill; they will need to alter their business practices and face a loss of income (for some, the loss will be significant).
Insurance companies are also at risk under this new federal law; if their insured beneficiary received medical care- shouldn’t they have to pay for it- at least in part?
The question of who would carry the debt: Insurers or Providers, was behind the ferocious lobbying on Capitol Hill for two years predating the law.
The pendulum of who won that fight swung toward providers in December 2020 when President Trump signed the law and returned to the insurance industry through rules and regulations interpreting the law by the Biden Administrative Executive Branch.
The struggle over these two interpretations of how to resolve out-of-network bills is where the answer to the question “who loses?” lies.
The Sliding Scale: Regional Standards or Baseball-Style Arbitration
It was always clear that a federal independent arbitration process [IDR] would be needed to resolve payment disputes between providers and insurers after the No Surprises Act.
In working toward designing this new inevitable intermediary, the insurance industry fought hard for the right to negotiate out-of-network bills through regional benchmarks based on the plan’s median in-network reimbursement for the service in question. Standardizing the resolution of disputed bills would bring the predictability of costs the insurance industry has always desired, thereby reducing premiums. (It would also allow insurers to negotiate lower payments with medical providers who currently send patients surprise bills, most commonly anesthesiologists and surgical assistants and emergency care.)
In contrast, providers fought equally hard for a baseball-style arbitration process allowing the IDR entity to establish final reimbursement between amounts suggested by both parties, allowing for more case-by-case analysis and resolution.
When the legislative dust settled, Congress chose to direct federal officials (i.e., HHS, DOL, DOT, and OPM, all who must implement the law through Rules & Regulations) to build an IDR “baseball-style” system. However, in addition to the competing prices submitted for a bill, Congress also said the arbitrator “must consider the qualifying payment amount (i.e., the insurer or plan’s median in-network rate), information on certain ‘additional circumstances,’ and any additional information that the parties provide or that the IDR entity requests.” [quote]
The predominance of the Baseball-type model was the “win” providers celebrated in December.
The “Interim Final Rules” Slide Back Toward Benchmarks
The Final Interim Rule released on September 30th focused primarily on the IDR process (the Agencies have released three Interim Final Rules, one proposed Rule, and Guidance). In the rule, the weight of factors to be considered by the arbitrator emphasizes the benchmark advocated by the insurance industry, not the case-by-case “baseball” approach that providers prefer. The benchmark now given prominence is the qualified payment amount [QPA], which is “the payer’s median contract rate for the same or similar service in a geographic area.” [quote] Both approaches were included in the list of factors to be considered by the IDR under the No Surprises Act; what changed was the order of importance of those considerations.
Specifically, “federal officials directed IDR entities to presume that the QPA is the appropriate payment amount unless a party submits credible information about additional circumstances that clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate.” [quote]
It now appears that insurers scored the win in the final rule-making process, and providers are calling “Foul” – both physicians and hospitals.
Two pending suits challenge the prominence of “regional benchmarks” in the IDR process (one lawsuit led by the Texas Medical Association (TMA) and the other by the Association of Air Medical Services (AAMS)). The legal challenges bring forth important questions about Congressional intent, proper process under the federal Administrative Procedures Act (APA), and other central legal distinctions (described excellently here in Health Affairs). The American Medical Association (AMA) and the American Hospital Association (AHA) joined forces in a similar legal challenge in December.
The legal challenges bring forth important questions, but ultimately the court may find that the No Surprises Act is sufficiently ambiguous to allow for different weighing of factors in resolving billing disputes.
With due respect for the legal process, as a practical matter, providers should be looking now at the current No Surprises Act IDR Rules; there will be very little time to get in compliance if these challenges fail (Congress set a one-year timeline for implementing the No Surprises Act for January 1, 2022).
If You Are Reading This as a Provider
The impact of the No Surprises Act will vary significantly depending on your field of practice and your business patterns.
Some of you work entirely within the context of insurance and never provide out-of-network care, or you may exclusively serve Medicare, Medicaid, TRICARE, Indian Health Services, or Veterans Health Administration populations, in which case the law isn’t relevant to you.
You might sporadically provide services beyond a patient’s coverage; for example you might be a popular surgeon the patient picks even though you aren’t within their insurance plan or have a patient who wants your care without the knowledge of their insurance company. Any provider reading this could be caring for an uninsured patient. In each of these circumstances, your office must understand the new requirements to provide these patients with notice that you don’t participate in their network, to provide a written good faith estimate of the cost of their care, and to obtain the patient’s written consent, all within the designated time before treatment is initiated.
A minority of providers have more frequent balanced billing and need to adjust their practices accordingly. For some, this may be the impetus to become an in-network provider; for others, prior negotiations with insurance companies for frequently billed services may avoid future disputes and the initiation of the IDR process. (This would be smart given the losing party must pay the entire cost of the IDR.)
However, for a small slice of the health care industry, this new law has catastrophic consequences, predominantly private equity firms that have purchased provider practices and moved them out of network for the purpose of balance billing to create a “robust business model.”
Wherever you fall on this spectrum, the Centers for Medicare & Medicaid Services (CMS) has a new No surprises Act website with comprehensive training tools and resources for providers, which provides instructions you will need to get started on these changes (if you haven’t done so already- this law went into effect January 1st!)
If You Are Reading This as a Patient
Rest assured; this law is nothing but good news for you! CMS has information for you (“the Consumer”) on their website and this handy guide. Go back and read Fontenotes Number 114 for more details and references- that’s all about the “Happy Side” of the No Surprises Act- Happy for You!
Want to Know More?
1. To understand the basis for the current suits against the released IDR Rule, you have to dive into the Federal Administrative Procedure Act [APA]. Although it is a mind-numbing read, I assign this every semester to my students at Trinity because you can’t live in this world of Government regulation without understanding it. Equally important, the APA outlines our rights as Americans from Governmental overreach, and for that reason, I think it should be required reading for all of us! Here is your very own copy [link]. Happy Reading!
2. This “Want to Know More” bears repeating from Fontenotes No. 114:
Publicized cases of extreme air ambulance bills such as the $36,000 charge for a 34-mile trip from a hillside where a child fell to a pediatric hospital in Roanoke, Virginia, in April 2018, or the $52,112 for a 20-mile transfer of a Coronavirus patient from one hospital to another in Philadelphia in 2020, outraged the public, and rightfully so.
However, in recent years states attempting to regulate the air ambulance industry ran into an insurmountable problem (for a state legislature, that is). Air ambulances (both fixed-wing and helicopters) are covered under The Airline Deregulation Act of 1978, which was intended to encourage more competition. That old, arcane law forbids states to regulate prices for any air carrier, which applies to air ambulances. [Source]
Some states tried to circumvent the Federal barrier, such as a 2019 attempt by Wyoming to turn air ambulances into a public utility so the state would have the ability to regulate them. The vehicle to achieve that status change was a Medicaid waiver to CMS; the waiver was denied in January 2020.
When Congress has looked at the issue, such as through a Department of Transportation’s Air Ambulance and Patient Billing Advisory Committee in 2019 (required as an alternative when a bill to alter industry control died in the House of Representatives), the industry successfully pleaded that their charges to patients and families (i.e., “balance billing”) are “critical to their business model.”
The impasse between the public, state legislators, and the federal protections has infuriated many of us (my husband and I paid for a similar air ambulance bill in 2017).
Literally, nothing could stop this industry except an Act of Congress.
Well, with the No Surprises Act, Congress just stopped them in their tracks. Thank You.