Navigating the New Era of Price Transparency and the No Surprises Act

By Michael Haas, Rick Kes and Matt Wolf, RSM US LLP Health Care Senior Analysts

For decades, patients have struggled with the complexity of health care bills and charges for services received. Effective Jan. 1, 2022, all health care providers are required to make information on patients’ rights regarding balance billing publicly available, both in their facilities and on their websites. This disclosure must include the requirements under the law, any state-level protections that may apply, and contact information for state and federal government agencies that patients can contact to report violations. This legislation, referred to as the No Surprises Act (NSA), protects consumers with most types of private health insurance coverage against certain surprise medical bills. The new law addresses surprise medical bills in three circumstances:

• When an enrollee receives emergency or post-stabilization care at an out-of-network facility or from an out-of-network provider.
• When an enrollee uses air ambulance emergency transport services (but not ground ambulance services).
• When an enrollee receives nonemergency care at an in-network facility but is treated by an out-of-network health care provider without proper notification and consent.

In these scenarios, the law guarantees that consumers’ costs are limited to in-network cost sharing and bans providers from sending patients balance bills for any amounts beyond that cost sharing. The NSA seeks to address certain care situations that can be confusing and financially burdensome for patients. Despite the good intentions, the law has created some additional challenges for the health care ecosystem, particularly providers.

Managing provider expectations

With the rollout of the NSA, organizations are not allowed to balance bill patients for out-of-network services. In situations where balance billing is prohibited:

• Cost sharing for insured patients is limited to in-network levels and amounts.
• Out-of-network providers and out-of-network emergency facilities cannot bill or hold liable participants, beneficiaries, or enrollees who received emergency services for a payment amount greater than the in-network cost-sharing requirement and cost-sharing is generally based on the median of contracted rates payable to in-network providers or in-network facilities. 

Over the first year of the NSA’s rollout, this has caused some strain on both the provider servicing the patient and the payer organization. The revenue for the expected service is reduced because the provider was out-of-network.

Before the NSA, provider organizations only had to have relationships with the payer organizations with whom they contracted. There was no need to establish working relationships or processes with any payer for whom the provider was out-of-network. In other words, the provider’s bill was a matter for the patient and their insurer to handle. As of Jan. 1, 2022, patients have been (for the most part) removed from the medical billing process; provider organizations must create relationships with a variety of new payer organizations. In addition, because each health plan has its own compliance and claims submission processes, provider organizations continue to navigate these processes to ensure they get paid for services as quickly as possible. 

Providers may also need to adjust their billing and rate expectations when working with new payers. The NSA has not yet set minimum payment rates for services and items delivered, so provider organizations and health plans will need to work together to establish rates that are acceptable to both parties. By establishing these rates proactively, health care providers can avoid a potentially lengthy provider-payer dispute resolution process down the road. 

Health care providers and provider organizations are required to share “good faith estimates” of the total expected charges with the patient’s health insurer or, if the patient is uninsured, the patient themselves. The NSA also establishes a patient-provider payment dispute resolution process for uninsured patients whose final bill is substantially higher than the good faith estimate they received beforehand. Such independent dispute resolution aims to promote voluntary negotiations.

How to track provider networks?

An organization will need to know which providers are in or out-of-network if they intend to balance bill a patient. As a proactive measure, organizations can identify patients who require notification and consent for billing. An organization should consider options for identifying when providers are in or out-of-network, including:

• Create networks to manage when a provider is in or out-of-network (which includes neighboring hospitals and organizations where the patient can be referred)
• Develop or implement a solution to track, validate and register providers:
  • Configure outreach and provider information
  • Facilitate periodic review of provider directory information
  • Provide proof of compliance
  • Or, consider alternative options that offer less robust support
• Create rules that contain a list of payers or plans for a set of providers that are out of network
• Create a notification and consent estimate letter for e‐signature. Patients can electronically sign these consent forms online to meet time guidelines before services

Building good faith estimates practices

The core feature of the NSA protects consumers who receive emergency medical care and those obtaining non-emergency medical services at in-network facilities from balance billing by non-network doctors, a helpful policy to many patients. Finding a network facility during a medical emergency is not feasible. The NSA’s rule requires insurers to charge network cost-sharing for emergency care administered at non-network facilities. Enlarging that requirement to include bills from non-network physicians who provide care in a hospital’s emergency department is consistent with the existing policy. This helps close any loopholes for balance billing.

While organizations cannot control what patients come to their organization during an emergency, they can provide good faith estimates (GFE) to out-of-network and uninsured patients before receiving services. The guidelines must provide written notice of the costs within 72 hours of the item or service being delivered and obtain consent from the patient. At a minimum, the written notice must contain: 

• Notification that the provider is out-of-network
• A GFE of the charges that will be incurred for the item or service
• A list of in-network providers at the facility (if the facility is in-network)
• Information on prior authorization or other care-management requirements
• A clear statement that consent is optional and that the patient can choose an in-network provider instead, if they wish

This method is a helpful way for patients to understand their costs, which has been elusive in many cases when patients seek to receive services. Health systems and organizations also continue to educate front line staff and implement tools so patients can get the information they need before receiving the services. Another benefit after the GFE is completed: the advanced explanation of benefits is the follow-up and must be provided to a covered individual no later than one business day after receiving the GFE. It must state in “clear and understandable language” a full explanation of the benefits described in the GFE received by the patient. For services provided in 2022, you can dispute a medical bill if your final charges are at least $400 higher than your GFE and you file your dispute claim within 120 days of the date on your bill.

Organizations are currently navigating expected costs. GFE also allows organizations to project possible revenue and what services patients are seeking out at their organization.

Navigating revenue challenges

In 2023 health care organizations are challenged with addressing high interest rates, increasing labor costs and patient payment disputes. According to the Kaiser Family Fund, one in five insured adults have received a surprise medical bill prior in 2020 and at least 18% of emergency department visits resulted in a surprise medical bill (varies between states). And, likely as a result, payers and providers are often challenged with using the independent dispute resolution (IDR) process far more than the government expected to resolve disagreements about payment for items and services covered by the NSA. From April 15 through Sept. 30, 2022, payers and providers initiated over 90,000 disputes through the federal IDR portal. This volume is significantly more than expected. Disputes were frequent among ancillary providers, especially those practicing in the fields of radiology, anesthesiology and pathology. 

As a way to bridge these disagreements, the NSA has created an independent dispute resolution process. This process is a hybrid of federal and state enforcement. The federal government will enforce the law where states are unable or unwilling to enforce. In some states, the state dispute process will determine payments from payors instead of the federal process. In general, arbitrators rely on contractual terms to determine whether a party is in breach and specify a monetary settlement. 

However, the hybrid enforcement model creates complexity. For example, California and New York, two of the largest health care markets in the country, have two distinct approaches to dispute resolution. New York requires insurers and out-of-network physicians to submit to binding arbitration and directs arbiters to base their decisions on the amount the doctor charged the patient. California took a different approach, requiring non-network doctors to accept payments tied to in-network reimbursement rates. 

The difference between these two methods produced vastly different outcomes. According to a study by Health Affairs, the New York arbitration approach increased out-of-network payments for nonemergency out-of-network services by 24%, while the California process decreased them by 25%. 

To add further uncertainty and complexity to enforcement efforts, lawsuits have been brought against the law in some states, such as Texas. The suits generally claim it’s unfair that while they can only collect the qualified payment amount (QPA) for the same services, they were once getting paid more for that same service. When state law does not set the out-of-network reimbursement and the parties cannot agree on an amount, the new federal IDR process must be used to determine the payment owed by the health plan to the provider. Now that the patient has been removed from the billing process and providers are working directly with the payer and the IDR, organizations continue to discuss the inconsistencies of how this law is interpreted. 

The QPA is central to the NSA and important for both patient cost sharing and the IDR process. According to the Centers for Medicare & Medicaid Services, the QPA for a given item or service is generally the median contracted rate on Jan. 31, 2019, for the same or similar item or service, increased for inflation. The Internal Revenue Service recently announced that for items and services provided on or after Jan. 1, 2022, and before Jan. 1, 2023, the combined percentage increase to adjust the 2019 median contracted rate is 1.0648523983. It is worth watching inflation changes over time, since the QPA will affect the amount that millions of patients owe in cost sharing for out-of-network services.

The IDR process will likely pressure out-of-network physicians in affected specialties to join networks. By joining a network, such physicians would be able to negotiate their rates. Those who remain outside the network would be required to accept an arbiter’s determination and cannot balance bill their patients. If the QPA—linked to the median network rate, adjusted by the average pace of overall inflation—drives those decisions, then out-of-network doctors will have to accept reimbursement that may be less than half the amount of in-network doctors.

Going forward

Provider organizations continue to be challenged by lower reimbursements and complex regulation, including price transparency. In a time when the patient experience is a driving factor for success in a saturated industry, health care organizations need to continue to be strategic while managing their margins. Dealing with prolonged dispute resolution processes while receiving lower reimbursement for the same services, while also simultaneously managing high interest rates and rising labor costs, may put too much pressure on some organizations. 

Providers and health care facilities must publicly disclose patient protections against balance billing. Ultimately, price transparency is in everyone’s best interest. Patients have been pushing for more insight into health care billing practices for a long time, and fears of unpleasant surprises in their bills have created a negative patient experience and have kept people from seeking the care they need.

All providers (in and out-of-network) will benefit from improved patient relations and fewer disputed bills. When patients know what their treatment will cost, their care satisfaction increases and in turn, providers will realize improvements in their revenue cycle.