On December 27, 2020, H.R.133 — the FY2021 Omnibus Appropriations Bill — was signed into law. Embedded within the nearly 2,200-page bill was the No Surprises Act, a significant piece of bipartisan legislation designed to protect consumers against the bitter pills that come with surprise medical billing.
The No Surprises Act amends ERISA, so its provisions will apply to both self-insured and fully-insured plans. This legislation protects against balance billing in emergency and certain non-emergency situations where patients cannot choose an in-network provider or have little control over their provider choice. In these situations, patients will only be responsible for in-network cost-sharing amounts, including deductibles.
This legislation is a positive step toward protecting patients from the shock, frustration, confusion, and stress that can come from unexpected medical bills. However, it could tell a different story for payers. While patient liability for billed charges is capped at the equivalent of their in-network cost-share — which financially helps patients—the legislation shifts the burden of payment from patient-provider to payer-provider. Because the legislation does not establish fair and reasonable limits on the total amounts billed, there is a potential for more contentious relationships between payers and providers as they work toward resolving the remaining balance.
In short, the No Surprises Act presents key implications for payers. With less than a year until the January 1, 2022 effective date, now is the time for payers to take notice and take action.
The 3 Implications for Payers
Fee negotiation will become a critical part of out-of-network management strategies
The legislation establishes clear protections for the patient’s out-of-pocket costs but does not establish any clear and consistent benchmarks on what a fair and reasonable cost for care should be. Historically, the difference between what a payer deemed reasonable and what a provider expected to be paid was likely to result in a balance bill to the patient. However, the removal of that option doesn’t mean providers will simply accept the payment a payer offers. As the legislation moves the burden of payment resolution from patient-provider to payer-provider, payers and providers will still have to go through the process of arriving at a fair and reasonable cost for services rendered. Thus, it’s reasonable to expect a more aggressive stand against some of the traditional repricing approaches used by payers today.
While reference-based pricing can and should continue to play a role in a payer’s approach to out-of-network costs, its utility in driving to a final discount may evolve. We expect that fee negotiation will need to play a more prominent role in a payer’s out-of-network management strategy due to the process that payers and providers will have to follow to resolve billings for out-of-network services under the No Surprises Act. So, it’s imperative that payers examine the ways they currently handle out-of-network charges and assess the tradeoffs of their existing approaches.
The introduction of a formal arbitration process presents inherent risks
As outlined in the legislation, payers will have 30-days from the receipt of a claim to make an initial payment to an out-of-network provider. If the provider is unwilling to accept the payer’s initial payment as full reimbursement, the parties will have an additional 30-days to negotiate a settlement on their own. Once the negotiation period has expired, providers will have the ability to request, subject to the conditions outlined in the bill, a review through an independent dispute resolution (IDR) process.
While the legislation provides general guidance on how the IDR process should work, many of the specifics are still to be determined and some are questioning if arbitration will ultimately favor providers. Will the individuals serving in the arbiter role have relevant healthcare expertise that can be used to navigate the nuances that exist in healthcare billing and contracting? What data and information can and should be considered by the arbiter when resolving a dispute and will they have the domain expertise to accurately apply those references? The answers to these questions will impact outcomes for payers and providers alike.
New risks could emerge around contracting position and brand
The No Surprises Act requires that arbitration statistics be published by the Department of Health and Human Services on a quarterly basis. This is supposed to include the identity of the parties involved, the amount each party offered, and the concluding offer. The publication of arbitration results could erode a payer’s negotiating position with their in-network providers and jeopardize the proprietary nature of their existing provider contracts. Moreover, frequent participation in provider disputes could negatively impact a payer’s brand.
Expion Health: Your strategic partner for navigating the No Surprises Act
At Expion Health, we believe payers can benefit from having a strategy in place that helps avoid arbitration. This means thinking beyond traditional repricing approaches in light of this new environment. With over 30 years of experience, our expert negotiators regularly achieve highly competitive discounts on out-of-network professional and facility charges while fully resolving payment in a way that would avoid arbitration. At Expion Health, we’re fierce advocates for superior, insight-driven, cost-management strategies that drive a fair and balanced outcome for all stakeholders. Contact us for a complimentary evaluation of your current out-of-network cost management strategy.
