The No Surprises Act: Implications for States

JoAnn Volk and Sabrina Corlette, Georgetown University Center on Health Insurance Reforms

In the waning days of 2020, Congress enacted a $900 billion COVID-19 relief package and government funding bill (H.R. 133). Included in the measure is the “No Surprises Act”, which contains new protections for consumers from surprise medical bills from out-of-network providers. The new law establishes, for the first time, comprehensive protections in the states without their own balance billing laws and for the nearly 135 million people in self-insured plans beyond the reach of state regulators.

The provisions are extensive and include requirements for related protections regarding provider directories, continuity of care, health care cost transparency, and protections for uninsured individuals. Summaries of the No Surprises Act can be found here and here. This expert perspective summarizes provisions that have particular implications for state regulators.

Summary of Balance Billing Protections in the “No Surprises Act”

The new federal balance billing protections apply to care received in emergency settings and in in-network facilities from out-of-network providers. The protections also apply to air ambulance, but not ground ambulance services. Patients would be responsible for cost-sharing no greater than what they’d pay for in-network care, and their cost-sharing would apply to their in-network deductible and out-of-pocket limit. Providers and facilities would be barred from sending patients a bill for amounts other than cost sharing that exceed the amount paid by the health plan or insurer.

Where patients receive care to which the balance billing protections apply, the health plan or insurer can, within specified timeframes, negotiate the payment amount with the out-of-network provider or facility. If that fails, either party can request arbitration through an independent dispute resolution (IDR) entity that can consider various factors in determining the payment amount, including:

• The provider’s level of training, experience, and quality of care;
• Market share of the non-participating provider or facility; or
• The acuity of the patient or complexity of the services provided.

The IDR must consider the insurer’s median in-network rate when deciding the appropriate payment amount. However, it is barred from considering the provider’s billed charges, usual and customary charges, or the rates paid under government programs such as Medicare and Medicaid. The IDR must select one party’s offer (called “baseball-style arbitration”) and the decision would be binding on the parties. The losing party is assessed for the arbitration cost.

These protections do not apply where a patient has knowingly and voluntarily agreed to receive care from certain out-of-network providers. Providers can request that a patient provide signed consent to receive non-emergency care out-of-network. However, this does not apply when there is no in-network provider available, for urgent or unforeseen care, or for providers in designated specialties (e.g., anesthesiology, pathology, radiology and neonatology, and others that may be identified in federal regulations).

These balance billing protections take effect with plan years beginning on or after January 1, 2022.

Primary Responsibility for Enforcement Falls to States

As with the Affordable Care Act and other major laws under the Public Health Service Act, states are the primary enforcers of the provisions that apply to insurers and fully insured group health plans, with the federal government enforcing in states that fail to substantially enforce the law. The Department of Labor would enforce the provisions as they apply to self-funded group health plans.

The law takes a similar approach with regard to enforcement of provisions that apply to providers: states may enforce the provisions but the federal government will do so where a state fails to substantially enforce the law. States may also notify the Secretaries of Labor, HHS and Treasury, as applicable, of any violations and actions taken.

Considerations for States That Have Their Own Surprise Billing Laws

More than half of all states have enacted their own balance billing laws, including 17 states that have comprehensive protections in law. In general, the federal law applies the same framework for interaction with state law as applies under HIPAA and the ACA. State laws can be more protective, as long as they do not prevent the application of federal law.

The federal law defers to state law on the issue of how to resolve payment disputes between insurers and out-of-network providers. Thus, payment dispute mechanisms in the 17 states with comprehensive protections and potentially those with partial protections, to the extent they rely on arbitration, a specified payment amount, or a hybrid approach, would remain in effect for state-regulated plans. Further guidance on the exact terms of the deferral to state law may be provided through federal rulemaking later this year.

The federal law also defers to states that have an “All Payer Model Agreement,” such as exists in Maryland, to determine the amount to be paid by an insurer to an out-of-network provider or facility. However, the federal arbitration regime would apply to self-funded plans regulated through the Department of Labor. For the five states that permit self-funded plans to opt in to the state-level payment dispute process, federal guidance will be needed to clarify whether such programs conflict with the federal regime.

It is less clear how this framework will be applied to other provisions of state balance billing laws, for example, the notice requirements and any protections that apply in emergency settings after a patient has been stabilized. States with their own surprise billing protections will need to evaluate whether their state laws conflict with, or provide equal or greater consumer protections than the federal law on these specific provisions, as applicable.

Additional provisions:

Funding for APCDs

The law makes available grants to states to establish or improve existing All Payer Claims Databases (APCDs), providing funding for grants of $2.5 million over three years per state. The law includes provisions intended to make it easier for self-insured employers to voluntarily participate in state APCDs. The Department of Labor will establish a standardized reporting form for voluntary reporting of claims data by group health plans and will provide guidance to states on a process to obtain data from group health plans using the standardized reporting form. The Secretary may prioritize state applications for APCD funding if they demonstrate that they will use the reporting format for self-insured group health plans and with the option for employers to request tailored data reports from those APCDs that receive federal funds. The law also gives employers the option to request tailored data reports from those APCDs that receive federal funds.

Provider Directories

Group health plans and insurers must ensure provider directories are current and accurate, with regular verification of provider contract status and updates required at least once every 90 days. Providers are required to submit regular updates to group health plans and insurers to assist with their verification and update process, including notice of material changes to their provider directory information.

Continuity of Care Protections

Group health plans and insurers would be required to allow “continuing care” patients, including those in an active course of treatment or who have a life-threatening illness, to continue to see their provider with in-network cost-sharing if the provider’s contract is terminated. These protections apply for a continuing care patient for up to 90 days.

Opportunities for States to Engage in the Federal Policy Process

The Secretaries of the Departments of Health, Labor and Treasury must draft regulations to implement multiple provisions of the new law, including:

• Creation and maintenance of the IDR system;
• Criteria for providers who wish to bundle multiple claims for submission to the IDR;
• Criteria for the certification of IDR entities;
• Required forms and language for notice and consent to waive protections when using out-of-network providers;
• A complaint process for patients; and
• A new patient-provider dispute process for uninsured individuals that contest bills substantially exceeding the provider’s good faith cost estimate.

States may wish to engage with the federal agencies responsible for drafting regulations to implement the law. For those states that do not currently have their own balance billing protections, it will be important to ensure a strong federal-state partnership to provide effective oversight and enforcement of insurer and provider compliance with the law. For states that have enacted balance billing laws, it will be important for federal regulators to understand how those laws operate in order to mitigate disruption or confusion for regulated entities and consumers. In addition, federal officials may seek information on how state laws have worked, and the impact they have had, especially from those who use IDR processes.

Health Equity Considerations

States may also wish to identify opportunities for the federal rulemaking process to advance health equity. For example, it will be important to ensure that communications about patients’ rights are understandable to all consumers, regardless of English proficiency, health literacy, or socioeconomic background. Additionally, because protections from balance billing cannot be waived if no in-network provider is available, the content and delivery of patient notices and consent waivers will need attention, particularly for people who live in communities with provider shortages. States can also help ensure that the fee to access the dispute resolution process for uninsured individuals is not a barrier to participation, and that the process takes into account the significant structural inequities between uninsured patients and providers, particularly for patients of color.

Advisory Boards

There are also opportunities for states to participate in advisory committees established by the new law. An Advisory Committee on Ground Ambulances and Patient Billing, which will make recommendations for state policymakers within their authority and for Congress, will include a state insurance regulator representative. The Advisory Board on APCDs must also include a state APCD representative.

The “No Surprises Act” extends protections to millions of consumers across the country and states have the opportunity to build on these protections to promote financial stability and reduce health care costs. For more information on the “No Surprises Act” and other measures included in the COVID-19 relief package and government funding bill, see the SHVS webinar and SHVS summary of the bill.