When the No Surprises Act (NSA) went into effect in 2022, it heralded a new era of federal consumer protections. This bipartisan effort protects patients from unexpected healthcare expenses. Whether it’s because a patient received care from out-of-network hospitals, doctors, or other providers they did not choose, surprise medical bills are all too common. One-third of patients between 18 and 64 reported unexpected medical bills in the years before the NSA. About 20 percent of all emergency room visits result in surprise charges, and as much as 16 percent of in-network hospitalizations for non-emergency care include surprise bills from out-of-network providers (such as anesthesiologists).
Considering patients often do not have a choice in receiving care from these specialists, the NSA is an essential piece of legislation. The No Surprises Act minimizes surprise billing and makes the cost of care more transparent. It gives patients access to preliminary good faith estimates of care costs. Few will argue this isn’t a necessary improvement to the healthcare system, as far as patients are concerned. However, the implications for health plans and providers are decidedly less rosy.
Administrative burdens have long plagued providers. Payers have struggled to keep up with increasing provider updates, and the compliance consequences of the NSA only tighten the screws. Failing to comply with the NSA could be catastrophic for many health plans. Without automated tools to manage the overwhelming volume of provider updates, health plans could face crippling penalties.
New Requirements for Health Plans
The NSA details a set of strict requirements health plans must now adhere to. Health plans must establish a verification process that guarantees their provider directories are kept up-to-date or face hefty federal and state fines. Here are the NSA verification requirements for health plans:
- Establish a verification process and removal process for unverified providers
- Verify and update provider information every 90 days
- Update payer databases within 48 hours of receiving updated provider information.
- Respond to all requests regarding a provider’s network status within 24 hours.
On the surface, these stipulations seem reasonable. Patients need access to the latest provider data to make informed decisions that protect their health and finances. The administrative reality is much harder to reconcile. Tracking hundreds of thousands of in-network providers is a cumbersome task, to say the least. Many existing provider databases rely on outdated tactics such as data-scraping and cold-calling to gather information. And with NSA penalties looming, the potential for human error stemming from these tactics is too great.
NSA Compliance or Bust
Failure to comply with provisions of the No Surprises Act could subject insurers to significant fines of up to $100 per day for each individual affected by a violation. Penalties of up to $10,000 can also be levied against providers. If you’re a health plan with tens of thousands of members, that’s a $100 fine per impacted member per day for something as simple as an error in your member directory. That also doesn’t take into account the additional state fines since each state can set its own penalties.
As daunting as it may sound, payers are left with little choice but to get their data in order. Accurate provider directories are now non-negotiable, and any payer organizations that are unprepared to meet the NSA verification requirements have to rethink their entire administrative infrastructure.
The Value of Automation
Administrative waste is not a new issue in healthcare. Streamlining administrative work could save the healthcare industry $250 million every year. Despite the cutting-edge technology available, organizations remain mired in an outdated, siloed approach that relies on incompatible systems to exchange data. Thanks to the NSA, this old-fashioned approach is slow, complex, and costly – in more ways than one.
Organizations that commit to tools to automate directory updates not only benefit from ensuring NSA compliance but can reduce spend on administrative tasks. It may have been possible for the industry to ignore the slow, quiet (albeit costly) leak caused by administrative waste, but the NSA has laid bare the substantial need throughout the industry for a payer solution that solves compliance issues and automates data management.
Providers and payers need a sophisticated infrastructure that facilitates the seamless exchange of critical information, creating a single source of truth and eliminating inefficient information silos. An automated provider data exchange could simplify transactions between payers and providers so they can stay compliant with the No Surprises Act through real-time provider directory updates. This will free up administrators to focus on other, more impactful tasks such as direct patient care.
The No Surprises Act is an important development in healthcare. Patients deserve transparency and the freedom to choose who treats them. Payers and providers are feeling the pressure now, but this moment presents a great opportunity. By taking an agile, automated approach to handling the NSA requirements, they not only vastly reduce the likelihood of fines but will do away with much of the painful administrative waste eating at their bottom lines and keeping them from focusing on treating patients.
Eric Demers is the CEO of Madaket Health. He believes we can transform healthcare delivery through the power of data and interoperability. With more than 25 years of global healthcare experience, Eric has built and scaled leading technology and service companies, from early stage to Fortune 100. He is highly sought-after for speaking and consulting on international health, having advised global entities and governments on critical issues facing healthcare. A growth-minded leader, Eric has founded three companies and exited two. Eric previously served in strategy-focused executive roles at IBM, Accreon, MEDecision and Orion Health. He is a graduate of Brandeis University and The George Washington University School of Medicine and Health Sciences.