Compliance with the No Surprises Act (NSA) remains a top priority for employee health plans as plan sponsors and administrators need to respond to new federal healthcare regulations, administer/comply with the Independent Dispute Resolution (IDR) process and stay abreast of litigation challenges to the IDR process.
The intent of the NSA is to protect plan participants and empower them to be better consumers of health care with information, tools and resources. Health plans are now subject to new disclosure requirements, and, once regulations are issued, plans will have to provide detailed information about expected out-of-pocket costs for scheduled services in the form of an Advanced Explanation of Benefits (EOB).
Each of these changes provide an opportunity for employers to respond strategically – to meet NSA requirements, and leverage NSA provisions such as the Transparency in Coverage final rules. A strategic response can lower risk, reduce costs and achieve savings. It can (re)position participants to take a healthcare consumerism approach – one that puts them in the “driver’s seat.” Multiple strategies enable plan administrators to take advantage of price transparency, capitalize on cost containment initiatives and reveal the true cost of provider health services before participants receive care. This insight has potential to transform utilization of health services, putting the economic purchasing power and decision making in their hands.
Fully optimizing plan value requires a holistic approach to plan design, as well as initiating changes to ensure the most effective strategies are implemented to meet NSA requirements and to support the ’health and wealth’ of participants.
A Strategic and Compliant Approach
More than a year ago, the U.S. healthcare system marked a turning point with the passage of the NSA to address concerns about “balance billing.” Introduced as part of the Consolidated Appropriations Act (CAA), the NSA applies to participants in employer-sponsored health plans and serves to protect them from “surprise” billing for certain emergency services and care received from out-of-network providers at in-network facilities.
As with health reform, most plan sponsors amended their plans to comply with the NSA. A “compliance only” approach adds to administrative burdens and increases the cost of coverage by treating certain out-of-network expenses as if incurred in-network. Because most plan sponsors failed to strategically address NSA, the opportunity to improve outcomes and lower participant and employer-paid costs, to gain a competitive advantage, continues to be available.
One of the best strategic responses to NSA compliance is the adoption of Reference Based Pricing (RBP), a health benefits cost management option that avoids unreasonable or excessive provider charges. RBP “done right” minimizes NSA compliance via a strategic response that will reduce health care costs for both the plan sponsor and participants, today and tomorrow.
RBP uses Medicare pricing multiples as a pricing benchmark to establish reasonable payments for providers’ services. Broadly, this creates a ceiling for payments and establishes a standard of integrity and transparency. Because the NSA has no bearing on initial payments to the provider, cost containment strategies such as RBP remain effective under the new provisions. Because most RBP plans don’t use traditional network providers, NSA should have minimal impact. In fact, the NSA will likely increase interest in RBP models because they often eliminate excessive charges shouldered by employers and employees.
However, plan administrators should be prepared to address restrictions of the legislation by adopting RBP plans that prioritize the patient. In response to the NSA’s new protections, many providers will respond by attempting to ameliorate any reduction in billed charges. And, because more expenses will be paid in-network, patients are most likely to feel the impact of a compliance-only response once it shows up as a future increases in costs, and in turn, increases in deductibles, copayments, coinsurance and/or employee contributions.
Cost increases can be moderated by emphasizing a RBP model that negotiates billed charges on a per-item basis. Providing patients with a strong repricing mechanism will further empower the transparency and protection afforded to them by the NSA.
Adoption of a “pure” RBP plan design, one that does not contract with providers (or only contracts with primary care physicians) should remain mostly unaffected by NSA since there is no Qualified Payment Amount (QPA) – a NSA required reimbursement rate that is usually substantially higher than the RBP maximum covered charge. A “pure” RBP structure avoids unreasonable or excessive provider charges – potentially lowering both the cost of coverage and employee point of purchase cost sharing.
Transparency in Coverage requires health plans to disclose negotiated rates for in and out-of-network rate history and drug pricing information. The goals are the same in terms of prompting healthcare consumerism – ensuring participants have access to the information necessary to incorporate financial criteria into their decisions regarding medical services. This puts healthcare price information in the hands of consumers and other plan stakeholders, and ensures participants are empowered with the critical information they need to make informed health care decisions.
The mandated provision of an online tool needed to access pricing information through their health plans requires real-time, cost estimates for covered services and items, including pharmacy. Paper versions must be available upon request. Initially, for plan years beginning on or after Jan 1, 2023, the online tool must provide cost estimates for 500 shoppable services. In the future, for plan years beginning on or after Jan. 1, 2024, the online tool must provide cost-share estimates for all covered services.
“Advanced” Explanation of Benefits
Once regulations are issued, the NSA mandates that providers must give patients an advanced notice of the provider’s network status and a good faith estimate of costs for scheduled services. The Advanced EOB requirement, part of the NSA transparency rule, is designed to give advance notice to participants of how a claim for future, scheduled medical services might be processed – and, most importantly, what the plan expects to pay and how much the participant will pay out of pocket for a particular test or procedure.
The NSA requires health plans and insurers to provide an Advanced EOB when requested in advance of treatment. The requirement applies whether these non-emergency scheduled medical services are to be delivered in or out-of-network. The Advanced EOB must be issued within certain timeframes after the provider submits to the plan or insurer a Good Faith Estimate of charges for each service.
Because the Advanced EOB is the only document that would give a participant sufficient information to make an informed decision on pending treatment, a forward-looking, strategic response to NSA compliance would prompt plan sponsors and their claims administrators to deploy an innovative version of the Advanced EOB now, before regulatory guidance is issued – to gain an additional competitive advantage.
Christine Cooper is the CEO of aequum LLC and the Co-Managing Member of Koehler Fitzgerald LLC, a law firm with a national practice. Christine leads the firm’s health care practice and is dedicated to assisting and defending plans and patients.