Everybody likes surprises, right? Wrong! Obviously, there are a lot of good surprises in life, but when the surprise involves bad news, it’s not nearly as fun. Take a surprise medical bill, for instance. When a health plan member does everything he or she can to follow the rules, like visiting in-network facilities and getting any required pre-authorizations before a procedure, it’s easy to see why the member would be unhappy when a “surprise bill” shows up in the mail.

This often happens, of course, when a hospital-based physician who is not contracted with the patient’s health insurance plan provides a service when the patient is in the hospital. The four most common culprits are pathologists, anesthesiologists, radiologists, and emergency room doctors. These physicians, while they might work in a network hospital, do not actually work for the hospital. They bill separately, and because they often do not participate in the insurance plan’s provider network, they tend to “balance bill” for any remaining charges once the insurance has paid its part.

This practice, understandably, is not very popular among health care consumers because it seems to be out of their control; they often have no say over who treats them when they are in the hospital. And because the consumer is doing everything he or she can to abide by the health plan’s rules, it seems unfair when the provider bills an additional amount for an in-network procedure. That’s why, for years, consumers have complained about surprise billing.

The Rules are Changing

On December 27, 2020, as part of the Consolidated Appropriations Act of 2021, the bill that kept the government open and provided additional COVID relief (and $600 checks for most Americans), Congress passed and President Trump signed into law the No Surprises Act, a bill that protects consumers against the sorts of surprise medical bills described above.

An earlier bill by the same name was introduced during the 116th Congress (2019-2020) but was not brought to the floor for a vote, so lawmakers included it in the omnibus spending bill. This move followed a September 24, 2020 executive order by President Trump calling on Congress to take action on surprise billing by the end of the year. By including the No Surprise Act in the omnibus bill, lawmakers were able to meet the deadline.

In short, as Beth Fuchs and Jack Hoadley with the Commonwealth Fund explain, the No Surprises Act prohibits “surprise bills (including both out-of-network (OON) cost sharing and balance billing amounts) for individuals covered by group health plans and health insurance issuers of group and individual health insurance coverage when: (1) receiving emergency services (and post-stabilization services) furnished by a nonparticipating provider or nonparticipating facility and (2) when receiving non-emergency services, furnished by nonparticipating providers in participating facilities.”

Quick Summary of the No Surprises Act

There’s actually a lot to the No Surprises Act, including new transparency rules and provider directory requirements for carriers, but here, as explained by the Kaiser Family Foundation, is what you need to know about the new surprise and balance billing rules. 

• Health plans are required to cover surprise medical bills at in-network rates: Surprise bills for emergency services as well as non-network bills for services provided at network facilities must be paid at in-network rates. The cost sharing for these services will be “based on the recognized amount, which in most cases will be the median in-network payment amount under the plan for the same or similar services.”
• Balance billing is prohibited: In most cases, non-network ER doctors as well as out-of-network hospital-based physicians who provide services at in-network facilities are not permitted to balance bill the member.
• Patients cannot be billed for excess charges: One very important provision says that patients are not liable for charges above the in-network cost-sharing amount for the services they receive, and providers are not allowed to bill patients for these excess charges. This “puts the burden on out-of-network providers to determine a patient’s insurance status and the applicable in-network cost sharing for the surprise medical bill” instead of billing for the full amount and later refunding “excess amounts when and if patients learn surprise billing protections apply.”

For more information about the No Surprises Act and how it might impact your clients, you may want to take a look at the American Hospital Association’s Detailed Summary of No Surprises Act, a 16-page deep dive into the new law. The Commonwealth Fund and the American Medical Association also have really good summaries.

When Do the Changes Take Effect?

The rules to implement the No Surprises Act still need to be written by federal regulators, and both providers and payers need time to prepare. Congress is giving them a year to do this: “the new law takes effect for health plan years beginning on or after January 1, 2022” according to the Kaiser Family Foundation. It applies to nearly all employer-sponsored health plans, the Federal Employees Health Benefits Program, and individual policies sold through the marketplace.

State Surprise Billing Laws

The new federal law follows a string of recent changes in states across the country to protect consumers from surprise medical bills. As the Commonwealth Fund explains, “33 states have enacted laws to protect enrollees from balance billing,” but “the scope of these protections varies” from state to state. The No Surprises Act will help consumers “who are not currently protected under this patchwork of state laws.” 

What Should You Tell Your Clients?

There’s a lot to the law, so a comprehensive overview probably isn’t the best approach. And we’re still several months away from the new balance billing protections going into effect, so you may want to hold off on providing too many details, but it is a good idea to let your clients know that help is on the way—that, starting in 2022, they’ll be able to receive the care they need in a network facility without worrying about receiving “surprise” balance bills from non-contracted providers. 

In the meantime, you might want to take a look at the Commonwealth Fund article to see what type of surprise billing laws are in force in your state. When you do, keep in mind that state departments of insurance regulate fully-insured plans. Any state-based surprise billing laws may not apply to clients who are covered by a self-insured or level-funded plan.

One final reminder: Like any law, federal regulators will need to create the rules to implement the No Surprises Act, and those may still be a few months away. Those regulations, and the accompanying fact sheets and FAQs, will provide more details that will be helpful in explaining the new protections to your clients. When those are available, we’ll be sure to pass them on.