No Surprises Act: The Intent and the Reality

August 2022

By Brian Herdman, Director

The No Surprises Act (NSA) has created opportunities for insurance companies to leverage the law by pressuring out-of-network providers to accept non-participating rates, and in-network providers to return to the negotiating table.

Countless organizations like Aetna, Blue Cross and Blue Shield of North Carolina and United Health are contacting in-network providers using strong-arm tactics to force them to accept new rate reductions in place of their current contracts, or the providers run the risk of being terminated.

The intent of the No Surprises Act

The point of the No Surprises Act is to ban surprise billing in a range of scenarios. Patients are now protected from receiving bills for emergency services delivered by out-of-network providers or facilities. They are also protected from receiving bills from non-emergency services provided by out-of-network providers at in-network facilities for which patients did not consent.

The Congressional Budget Office projects that the No Surprises Act could reduce commercial insurance premiums by 0.5% to 1%, with savings derived from reduced payment to those specialists who benefited directly and indirectly from the ability to surprise bill.

Where it gets complicated

Since balance billing (when a provider bills a patient for the difference between the provider's charge and the allowed amount) is now prohibited, out-of-network providers are receiving less revenue for services subject to the NSA. Under the No Surprises Act, payers can reimburse based on the median in-network amount for the area, which would be less than the typical out-of-network payment based on charges. Providers have the opportunity to dispute payment decisions by invoking the Independent Dispute Resolution (IDR) process.

During the IDR process according to the No Surprises Act, independent arbiters are supposed to consider several factors equally in reaching decisions about the out-of-network payment.

This includes:

• the Qualifying Payment Amount (QPA) or the insurer’s median in-network rate for a given service in a geographic area
• complexity of procedure
• historical contracted rates for the service
• physician expertise and experience

However, physicians argue that arbitrators are defaulting to the QPA, instead of considering all factors presented, suggesting that portions of the NSA are disproportionately harmful to their industry. This leads, they argue, to a disadvantage in out-of-network arbitration, which could also undermine payment negotiation leverage for in-network physicians. This is because their best alternative to a negotiated agreement with insurers will be lowered from their full-billed charges to the new equilibrium payment under arbitration.

What should you be doing?

It is important to stay proactive and be prepared to negotiate or renegotiate managed care contracts. By modeling your current and proposed contracts you can ensure that you completely understand the impact of any proposed changes.

For additional information about the No Surprises Act, please contact CBIZ at kaconsults.com or 609-918-0990 x169