The No Surprises Act (NSA) was enacted as part of the 2021 Consolidated Appropriations Act and its major provisions went into effect January 1, 2022. It’s now been a year since the NSA went into effect, and it’s worth reviewing the protections once again. While employers will have little to no involvement of the NSA process, it will be in the best interests of employers, especially those with self-funded plans, to have a general understanding of how their third party administrator (TPA) handles NSA claims, their approach to the arbitration process, and its impact on claims cost.
Certain states, like California, have had a level of protection against surprise billing for some time which fully insured plans in the state must follow. The federal NSA regulations address state specific balance billing protections by giving state laws control over medical claims subject to the NSA if they meet certain requirements.
The CA Department of Managed Health Care (DMHC) issued an all plan letter providing an overview of CA’s anti-balance billing law AB 72 and the applicability of the NSA. For fully insured plans governed by CA laws, AB 72 will continue to apply, notwithstanding the NSA, in the areas of out of network emergency services and non-emergency services by out of network providers at in network facilities. With regards to out of network air ambulance services, the CA DMHC has clarified that plans must follow the NSA.
The NSA is intended to eliminate so-called surprise bills in three specific areas:
Out of Network Emergency Services
Non-Emergency Services by Out of Network Providers at In Network Facilities
Out of Network Air Ambulance Services
|NSA Provisions Common to All Categories|
|Additional Provisions: Out of Network Emergency Services|
|Additional Provisions: Non-Emergency Services by Out-of-Network Provides at In-Network-Facilities|
|Additional Provisions: Out-of-Network Air Ambulance Services|
- IDR Process. Most of the NSA process happens behind the scenes between the insurance carrier/TPA and the out-of-network provider; the employer usually has little to no involvement in the process. Nevertheless, it can be beneficial for employers, especially those with self-funded plans, to understand the IDR process as it may affect the plan’s costs.
|· Step 1. Plan makes an initial payment to the out-of-network provider (or denies the claim) within 30 days.
· Step 2. Once initial payment is made, either the plan or the provider may initiate a 30-day open negotiation period to determine the final payment amount.
· Step 3. If open negotiation does not result in an agreed upon payment amount, the plan or the provider may initiate the IDR process within 4 business days of the end of the open negotiation period.
· Step 4. The plan and provider jointly agree on a certified IDR entity or, if they do not agree, the agencies select the entity randomly.
· Step 5. The certified IDR entity attests it has no conflict of interest and verifies the federal IDR process applies to the claim.2
· Step 6. The plan and provider submit their proposed payment amounts to the IDR entity along with supporting documentation and explanation.
· Step 7. The certified IDR entity issues its decision setting the final payment amount. The IDR entity must select one of the proposed payment amounts submitted by the parties – it cannot issue a compromise decision or come up with its own figure.
1 Self-funded plans will always use the federal IDR process, unless the claim originates in a state with a state IDR process that allows self-funded plans to opt-in to that process and the plan has opted in. Fully insured plans in a state with a state IDR process must use the state process for claims originating in that state. For a list of states with a state IDR process and whether self-funded plans can opt into the process see here: Chart for Determining the Applicability for the Federal Independent Dispute Resolution (IDR) Process (cms.gov) and here: Chart Regarding Applicability of the Federal Independent Dispute Resolution Process in Bifurcated States (cms.gov)
2 Due to the large volume of claims submitted in 2022 that were determined not to be eligible for the federal IDR process, the agencies have initiated pre-eligibility review procedures whereby they collect data regarding the eligibility of the claim to forward to the certified IDR entity along with technical assistance and recommendations regarding eligibility, although the certified IDR entity itself is still responsible for making the eligibility determination.
- IDR Fees. There are two fees the plan and provider must pay to access the IDR process:
- An administrative fee ($350 in 2023) that is paid to the federal agencies to initiate the process. This fee is collected by the certified IDR entity in connection with Step 5 This fee is non-refundable even if the parties later come to an agreement.
Note: The Agencies recently released guidance amending the 2023 fee from $50 to $350 per party for disputes initiated during the calendar year beginning January 1, 2023.
- A certified IDR entity fee ($200-$700 for single claims in 2023) that is paid to the entity making the IDR determination. This fee must be paid at the time each party submits its proposed payment amount at Step 6. The prevailing party will have their fee returned to them, i.e., the loser pays. If the parties come to an agreement before the IDR entity renders a decision, each party has half of the fee refunded to them.
The NSA does not prohibit the TPA/carrier from passing these fees on to the plan sponsor. Most carriers will likely just build these fees into their premiums. Some TPAs may build these costs into their overall fees; others may charge a separate fee each time the IDR process is invoked on behalf of the plan. Some TPAs may also charge additional fees for the time and expense of submitting IDR claims and responses, separate and apart from the IDR fees themselves.
- Role of self-funded plan sponsor. While an employer with a self-funded plan will rarely be directly involved in the IDR process itself there are various ways the IDR process may impact the plan:
- Does the TPA regularly decline to participate in the IDR process? This will generally result in the plan paying the out-of-network provider’s payment amount, which may drive up costs.
- Does the TPA regularly “lowball” the out-of-network providers resulting in unnecessary IDR claims and fees, which may also drive-up costs?
- How many IDR claims are there each year? How many of those claims result in rulings in favor of the TPA vs. the providers?
- How does the TPA handle the IDR fees and expenses? Are they charged back to the employer? Built into the annual TPA fees? Added to the claims cost?
- In some cases, the TPA may seek the plan sponsor’s input or even defer to the plan sponsor to decide whether to pursue IDR or simply pay the out-of-network providers preferred payment amount.
While the TPA is not necessarily legally required to share this data with the plan sponsor, plan sponsors may want to consider whether it is worth pursuing added language in their TPA agreements requiring the TPA to provide them with information on IDR claims. Employers with access to detailed claims reporting may also want to consider comparing NSA covered claims before and after January 1, 2022 to see if there is a notable increase or decrease in these claims that may be attributable to the IDR process.
- Qualifying Payment Amount. A common term that comes up in NSA discussions is the “Qualifying Payment Amount,” or QPA. There are detailed rules for calculating the QPA, but broadly speaking, the QPA for a given service is the median contracted rate the carrier or TPA pays in-network providers for the item or service in the geographic region where the claim was incurred. The QPA is then used as a benchmark for various purposes in the NSA and IDR process. For example, when determining the amount of cost sharing the participant must pay for an NSA covered claim, in most cases, the QPA will be used as the total charged amount in that calculation. So if an out-of-network provider billed a total of $5,000 for a given service but the carrier determines the QPA for that services was $3,000, then $3,000 would be applied to the participant’s in-network deductible; if the deductible had been met but the plan had an 80%/20% coinsurance, the participant would owe 20% x $3000 = $600; if the service was subject to a 30% co-pay, the participant would owe 30% x $3,000 = $900; etc. The carrier/TPA will often have to provide detailed information about the QPA and how it was calculated at the time it makes its initial payment to the provider in Step 1 Information about the QPA and how the proposed payment amount relates to the QPA must also be submitted to the certified IDR entity in Step 6.Notably the certified IDR entity does not have to select the QPA as the correct payment amount when rendering its decision. The original IDR regulations required the certified IDR entity to begin with the presumption that the QPA was the appropriate out-of-network rate and to select the proposed payment amount closest to the QPA unless a party submitted evidence clearly demonstrating the value of the service was materially different from the QPA. This presumption was challenged in court by a group of providers and was struck down as contrary to the statutory language. The agencies modified the guidance to eliminate this presumption that the QPA was the correct final payment amount, but the guidance still focuses heavily on the QPA in the IDR decision making process. The providers continue to challenge these guidelines as placing too much emphasis on the QPA so it remains to be seen whether the QPA will remain a driving force in setting payment amounts under the IDR process (which would likely favor the plan) or will simply become one more data point to be considered by the certified IDR entity (which would likely favor the providers).
- Notice Requirements. The NSA includes a notice requirement that explains the prohibition on balance billing which must be posted on a public website and included in any EOB (Explanation of Benefits) that includes claims to which NSA applies. The agencies have issued a model notice that satisfies this requirement: Model Disclosure Notice Regarding Patient Protections Against Surprise Billing (cms.gov)The agencies have clarified that employers do not have to post the notice on their own website as long as there is a written agreement with the plan’s insurer or TPA that they will post it on their website.There is no specific format required for this written agreement – it can be included in an ASO agreement; built into the group master contract; even an email from the carrier/TPA announcing or confirming they will post the notice is likely sufficient. The vast majority of carriers/TPAs have posted the notice on their websites.
While there is no obligation to distribute the NSA notice with other required annual notices, there is certainly no harm in doing so to help educate plan participants on the surprise billing protections.
- Waiving NSA Protections, a/k/a Notice and Consent. An out-of-network emergency provider can request a participant to agree in writing to receive ongoing services at their facility and waive ongoing balance billing protection once the participant has been stabilized and can be safely transported to an in-network facility. Likewise, the NSA allows an out-of-network provider at an in-network facility to seek consent from a plan participant to receive services from the out-of-network provider and waive the balance billing protections of the NSA. (There is no similar notice and consent option available for air ambulance services.)The provider is required to provide a written notice to the participant that includes certain specified information including a good faith estimate of the cost of the service to be provided and a clear statement that the participant is not required to receive services from the out of network provider but may instead seek services from an in-network provider where the participant’s costs will be limited to the plan’s in-network cost sharing provisions. The notice must be furnished at least 72 hours in advance of the proposed services, except when the services are scheduled less than 72 hours before the date the services are intended to be provided in which case the notice must be provided at least 3 hours before the services are provided.Note that if the participant does agree to waive the NSA balance bill protections, the IDR process will not apply nor be available to the participant to resolve any disputes with the provider.While employers are not required to provide any particular information to employees concerning this notice and consent process, it may be worth educating employees in plan communication materials or otherwise to be alert for requests by out-of-network providers to waive the balance bill protections of the NSA, given that balance bill amounts can be significantly higher than, and in addition to, cost sharing amounts for out-of-network providers under the plan.
- Air Ambulance Reporting. The NSA includes a provision which requires plans to report certain information about air ambulance services claims to CMS. This will likely be similar to the current drug reporting requirements included in the CAA but is limited to only two years of reporting. Proposed rules were issued in 2021 which were expected to be finalized before the end of 2021 with the first year’s report due March 2023. However, the rules were not finalized and the NSA provides reporting is not to begin until 90 days after the first full year following the issuance of final rules. So the earliest reporting could begin would be March 2024 (with March 2025 being the more likely start date).
The NSA and its balance bill protection measures will hopefully provide significant protections for plan participants and avoid some of the staggering surprise medical bills they have been stuck with in the past when they unwittingly, or out of necessity, used an out of network provider. While employers will generally have little direct involvement with the NSA process, it will often be in the best interests particularly of a self-funded employer to have a general understanding of how their TPA handles NSA claims, their approach to the IDR process and its impact on claims cost. There are generally no specific notice obligations under the NSA for employers; although, employers may consider whether it’s worth educating employees on the NSA process beyond the information the TPA/carrier is required to furnish to employees.
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.