The No Surprises Act protects patients from the most pervasive types of surprise out-of-network bills. The law applies when a patient receives emergency care (including by air ambulances), some post-stabilization services after an emergency, and non-emergency services at in-network facilities (unless a patient consents to treatment by an out-of-network provider). Patients that receive these types of care from an out-of-network provider will only be responsible for the same amount of cost sharing that they would have paid if the service had been provided by an in-network provider. Health care providers and facilities are banned from sending balance bills to patients to collect a higher amount.

The No Surprises Act was enacted in December 2020 and went into effect on January 1, 2022. With just a year between enactment and the law’s effective date, the Biden administration moved swiftly to implement the law by issuing several interim final rules, one proposed rule, and guidance. But federal officials have not stopped there and have continued to issue new guidance, answer questions, and establish new processes. This article summarizes recent federal guidance on the No Surprises Act.

Scope Of The Protections And Good Faith Estimates

The No Surprises Act does not apply to every possible surprise out-of-network bill and is limited to emergency care, post-stabilization care, and some types of non-emergency care. As a result, balance bills can still be sent by providers or facilities that provide non-emergency care that is not covered under the definitions included in the No Surprises Act (e.g., outpatient mental health providers or services delivered in a physician’s office).

That said, other parts of the No Surprises Act—such as the requirement to provide patients with a good faith estimate of expected charges—apply to providers even if the law’s ban on balance billing does not. This requirement applies when a patient schedules health care services—or requests the information (even without scheduling care). Here, the law’s definitions are broader. “Facility,” for instance, includes any state- or locally-licensed health care institution (e.g., hospitals, critical access hospitals, ambulatory surgical centers, rural health centers, federally qualified health centers, labs, imaging centers, etc.). 

HHS confirms this distinction and the types of physicians that are covered under the law in frequently asked questions issued on December 22, 2021. Any physician or other provider may be subject to the No Surprises Act. But a provider who never provides care related to a health care facility or emergency facility would generally not fall under the No Surprises Act’s ban on balance bills. These physicians can continue to balance bill patients if they provide out-of-network care. However, that same provider may still need to provide patients with a good faith estimate of expected charges before care is provided.

Independent Dispute Resolution Process

The No Surprises Act includes an independent dispute resolution (IDR) process to resolve payment disputes between payers and out-of-network providers. This process can be initiated only if the parties are unable to negotiate a payment rate amongst themselves. The law uses “baseball-style” arbitration: each party offers a payment amount, and the IDR entity selects one amount or the other with no ability to split the difference. The decision is binding, although the parties can negotiate or settle. 

(Note that the federal IDR process does not apply in all instances. The No Surprises Act defers to some state laws on balance billing, known as specified state laws. A specified state law provides a method for determining the amount that should be paid to an out-of-network provider. As a result, state laws that set a payment standard, require IDR, or use a hybrid of both are generally not displaced by the No Surprises Act and will continue to apply. In general, these state laws—which exist in nearly half the states—will apply only to fully insured health insurance plans except in the few states that allow self-funded group health plans to opt into the state-level process and protections. There is also a special rule for states with all-payer models.)

Certified IDR Entities

Federal officials are responsible for establishing and overseeing the process, but IDR determinations will be made by a certified IDR entity. Certification criteria were adopted in an interim final rule issued in September 2021. To be certified, IDR entities and their personnel must be able to, for instance, comply with conflict-of-interest standards, have sufficient expertise and staff to ensure that decisions are made in a timely manner, comply with audit and reporting standards, and comply with federal confidentiality and privacy requirements. IDR entities will be certified for a five-year period, although certification can be revoked under certain circumstances. The Biden administration began accepting applications from prospective IDR entities beginning on September 30 and has certified IDR entities on a rolling basis.

As of January 25, 2022, the Departments of Health and Human Services (HHS), Labor, and Treasury had certified 10 IDR entities, all of which will be available to administer the federal IDR process on a nationwide basis. Many of the entities have relevant experience because they participate in the external review process established under the ACA (discussed below) or manage state IDR processes. In addition to the $50 fee for each party participating in IDR, each entity has its own fee schedule. For 2022, fees for a single determination had to fall within $200 to $500 for a single determination and $268 to $670 for batched determinations. The fee schedule for the currently certified IDR entities range from $299 to $500 for a single determination while batched fees range from $450 to $670.

Detailed Guidance For Certified IDR Entities And Disputing Parties

With IDR entities now certified, federal officials issued detailed 42-page guidance to further clarify the process to be used by these entities. This December 2021 guidance is not fully summarized here but helps clarify agency expectations and how the federal IDR process should work. Additional guidance may be issued in the future in response to specific questions or scenarios submitted by certified IDR entities.

The guidance for certified IDR entities outlines and addresses the specific steps that the parties must take before initiating IDR—from sending an initial payment to selecting an offer. The guidance also instructs IDR entities on how to consider the IDR factors, how to use the federal IDR portal, and how to maintain compliance with confidentiality standards, recordkeeping requirements, and the certification revocation process. With respect to consideration of the IDR factors, the guidance reiterates the standards included in the interim final rule from September, including examples from the rule’s preamble.

This was followed in January 2022 by similar guidance for the disputing parties. While some of the content is the same as for certified IDR entities, this guidance additionally addresses issues such as state law versus the federal IDR process; steps that parties must take before initiating the IDR process; how to address a perceived conflict of interest by an IDR entity; guidance on how to submit information to support each party’s offer; and the “cooling off” period before the next IDR process can be initiated.

Qualifying Payment Amount

The so-called “qualifying payment amount” (QPA) is central to the No Surprises Act and important for both patient cost sharing and the IDR process. The QPA is defined as the median of all a plan or insurer’s contracted rates from January 31, 2019, for a given item or service in that geographic region, increased for inflation. Recognizing that it could be challenging to calculate the QPA, the agencies were directed to clarify and define several components of the QPA and to issue implementing regulations by July 1, 2021. The QPA methodology is further summarized in a presentation issued by HHS in December 2021.

Separately, the Internal Revenue Service (IRS) addressed how payers should increase the QPA for 2022. As noted above, the QPA for items and services provided in a given year is based on the median contracted rate as determined on January 31, 2019, and inflated forward to that year. For 2022, the QPA is increased by the percentage increases in the CPI-U for 2019, 2020, and 2021.

Per the IRS guidance, this amount is about 6.5 percent for 2022. As an example, if the median contracted rate for a certain service was $12,480 as of January 31, 2019, the QPA for the same service provided in 2022 would be $13,289. The QPA for 2023 or subsequent years will be adjusted annually according to the CPI-U (rather than medical price growth). It is worth watching inflation changes over time, since the QPA will affect the amount that millions of patients owe in cost sharing for out-of-network services.

Enforcement Letters

HHS created a dedicated web page with industry-facing content about the No Surprises Act and broader Consolidated Appropriations Act of 2021. This page hosts prescription drug and health care spending data, resources on the QPA methodology, a survey of states to ask about enforcement authority, and letters to each state on how the No Surprises Act and broader protections will be enforced.

The enforcement letters—which are addressed to governors and insurance commissioners—explain each state’s role in enforcing these new federal protections on insurers and providers. They also address whether the state has a specified state law (or will use the federal IDR process) to resolve out-of-network payment disputes, whether the state’s external review process will apply for No Surprises Act issues, and whether a state’s patient-provider dispute resolution process meets minimum federal standards. These letters are complex, and we are working to develop new resources for The Commonwealth Fund that better explain each state’s role in enforcing these critical new protections.

External Review

On December 30, 2021, HHS issued new guidance for states, plans, and insurers on external review processes as they relate to the No Surprises Act. The Affordable Care Act required non-grandfathered group health plans and insurers offering group and individual coverage to comply with state external review processes so long as those processes met certain standards. External review is available for certain adverse benefit determinations (e.g., claims denials for medical necessity) and final internal adverse benefit determinations that do not meet criteria for expedited review. Many states have external review requirements that satisfy minimum federal standards. For states that do not, plans and insurers are required to implement an effective federal external review process.

The No Surprises Act expanded the scope of federal and state external review processes to include any adverse determination by a plan or insurer under the new law. As such, federal and state external review processes will be available to dispute determinations over whether a plan or insurer complied with the No Surprises Act’s cost-sharing and other protections (such as a plan or insurer’s conclusion that a patient’s care did not qualify as emergency services). Because the No Surprises Act applies to grandfathered health plans, external review for No Surprises Act-covered matters extends to those plans as well. The availability of external review of No Surprises Act claims began on January 1, 2022. Additional information about how the Biden administration implemented these changes is available here.

The December 30 guidance explains these new protections and addresses instances where a state external review process meets federal standards under the Affordable Care Act but cannot accommodate the new requirements under the No Surprises Act. If a state’s process cannot address No Surprises Act issues, HHS offers two options.

First, states can refer No Surprises Act issues to the federal external review process. This process is administered by MAXIMUS, a federal contractor, and the guidance includes additional details about this process (e.g., parties will be notified of a determination within 45 days). Allowing use of the federal process for No Surprises Act issues only—as opposed to requiring updates to state external review processes to allow for consideration of these issues—will help avoid unnecessary disruption to existing external review processes. States that refer will still be considered to have an effective state external review process under the ACA that they can use for non-No Surprises Act issues.

Second, plans and insurers can opt to use an independent review organization. Those that want to do so must update existing contracts, plan documents, and determination notices to inform enrollees about how to request external review for No Surprises Act issues.

These federal options will be available until a state changes its laws or expands the scope of its contracts to accommodate No Surprises Act issues. Once those changes have been made, the state’s external review process would be used for any No Surprises Act-related matters.

Notice And Consent Forms

There are narrow circumstances when patients can be asked to waive their protections under the No Surprises Act. Patients can never be asked to waive their protections for emergency care. However, there are limited circumstances when a patient can knowingly and voluntarily agree to use certain types of out-of-network providers for non-emergency care. Patients who waive their protections agree to pay full billed charges. The notice and consent exceptions are further summarized here, and HHS addressed these exceptions in frequently asked questions issued in December 2021.

Even in non-emergency settings, providers cannot ask a patient to waive their protections 1) if there is no in-network provider; 2) for unforeseen, urgent medical needs; or 3) for ancillary services. Ancillary services are defined to include care related to emergency medicine, anesthesiology, pathology, radiology, and neonatology; care provided by assistant surgeons, hospitalists, and intensivists; and diagnostic services (including radiology and laboratory services). This means these types of providers—or, in some instances, the providers that offer these types of care—can never ask a patient to sign a consent waiver to be balance billed for services covered by the No Surprises Act.

HHS summarizes these protections in frequently asked questions. An out-of-network provider that wants to provide non-emergency care to a patient at an in-network facility must provide notice and obtain consent to send a balance bill. (Again, this option is not available to providers that offer ancillary services.) If a patient does not consent, the provider is not required to provide the services. However, if the provider chooses to provide the care anyway, the patient cannot be balance billed.

Providers and facilities must use standard written notice and consent forms created by HHS and tailor that document to each individual patient. In general, notice and consent must be given at least 72 hours in advance of a scheduled appointment (or at least 3 hours in advance if the appointment occurs less than 72 hours after scheduling). Emergency standard notice and consent forms were issued alongside the September rule and will remain in use until March 31, 2022. In November 2021, HHS published revised model notices and forms that will replace the current emergency forms. HHS pointed to these new forms in frequently asked questions issued in December 2021.

Good Faith Estimates For Uninsured And Self-Pay Patients

On December 21, HHS issued a separate series of frequently asked questions on good faith estimates for uninsured and self-pay individuals (i.e., a patient who has, but will not use, their insurance). Uninsured and self-pay patients should be receiving good faith estimates from a range of providers since this requirement went into effect beginning on January 1, 2022. Good faith estimates should reflect true expected charges, meaning the cash pay rate (inclusive of any expected discounts or adjustments, such as a hospital’s financial assistance policy) or the amount that would have been charged to a plan or insurer if the patient were insured.

The No Surprises Act requires good faith estimates for insured patients as well. For these patients, the provider or facility must notify the plan or insurer of the expected charges, and the plan or insurer must use that information to prepare an “advanced” explanation of benefits that will then be sent to the patient. These requirements notwithstanding, federal officials delayed enforcement of the good faith estimate requirement (and the advanced EOB requirement) for insured, non-self-pay patients. Additional information about implementation of the good faith estimate requirement for uninsured, self-pay, and insured patients is available here and here.

Scope Of Good Faith Estimate Requirements

The December 2021 guidance confirms that the good faith estimate requirement applies to all providers and facilities that schedule items or services for an uninsured or self-pay individual (or where a patient requests this information before care is even scheduled). The guidance notes that “no specific specialties, facility types, or sites of service are exempt from this requirement” and goes on to define “health care provider” and “health care facility” for purposes of the good faith estimate requirement. A particular service or type of care (such as emergency care) may not be subject to the good faith estimate requirement because it is not typically scheduled in advance. But, in general, patients should receive a good faith estimate for care scheduled at least three days in advance. This includes when there is a set price for the service.

HHS also answers several questions about which individuals currently qualify to receive good faith estimates. An uninsured individual means the person is not enrolled in commercial coverage, a federal health care program, or the Federal Employees Health Benefits (FEHB) Program. A self-pay individual means the person has commercial or FEHB coverage but is not asking for their insurer to cover the specific claim. Good faith estimates are generally not required for those with Medicare, Medicaid, or other federal health care programs. HHS reiterates that it is not taking enforcement action for failing to provide a good faith estimate to insured (non-self-pay) individuals.

Estimates From Co-Providers And Co-Facilities

The guidance also addresses instances when more than one provider or facility is involved in providing care to a patient. In implementing rules, a “convening” provider or facility (i.e., the entity that receives the initial request for an estimate and is responsible for scheduling the primary item or service) was required to coordinate the good faith estimate on behalf of co-providers and co-facilities. Acknowledging that it may take time for providers and facilities to develop systems and processes to collect data from co-providers and co-facilities, HHS will not enforce part of this requirement through December 31, 2022. Put another way, HHS will not take enforcement action against a convening provider or facility that omits expected charges from co-providers and co-facilities. Instead, HHS encourages convening providers and facilities to include a range of expected charges from co-providers and co-facilities.

This will make it even more challenging for patients to receive an accurate estimate of the charges they might face. That could, in turn, lead to more patients taking advantage of the dispute resolution process discussed below.

Providing The Good Faith Estimate

The good faith estimate must be provided in written form, either on paper or electronically based on the patient’s requested delivery method. Providers and facilities can provide a good faith estimate in person, by mail, or electronically (through, say, a provider’s patient portal or via email). If sent electronically, the good faith estimate must be able to be saved or printed. Good faith estimates should be based on the care that is reasonably expected to be provided. If the provider or facility is aware of changes that affect the scope of the original good faith estimate (such as changes to the type, frequency, or duration of treatment), the patient should receive an updated good faith estimate.

The guidance emphasizes that patients must receive a copy of the good faith estimate. This is true even if the patient is expected to have no financial responsibility for the care. For those without internet access, a paper copy should be mailed or delivered in person. For those without a permanent address, the good faith estimate should be provided in person. Even if a patient requests the estimate orally, the provider or facility must still send the written good faith estimate. The paper copy is crucial because this document must be submitted during the patient/provider dispute resolution process discussed below.

Patient/Provider Dispute Resolution Process

The No Surprises Act allows uninsured or self-pay individuals to challenge a bill from a provider or facility if the billed charges substantially exceed the expected charges in their good faith estimate. The dispute resolution process can be used when the billed charges are at least $400 more than the expected charges listed on the patient’s good faith estimate for a specific provider. Additional information about this process is available here.

As it has with the IDR process, HHS has taken several steps to implement the patient/provider dispute resolution process. On December 21, HHS issued separate guidance for providers and facilities, SDR entities, and patients—as well as frequently asked questions on administrative fees.

CFPB Guidance On Debt Collection

On January 13, 2022, the Consumer Financial Protection Bureau (CFPB) issued a new bulletin emphasizing the need for debt collectors and credit bureaus to comply with consumer protections when collecting, furnishing information about, or reporting medical debts covered by the No Surprises Act.

Why is the CFPB involved? The No Surprises Act did not place new explicit requirements on debt collectors and credit bureaus (although the second interim final rule bars providers or facilities from moving or threatening to move a bill into collection during the patient/provider dispute resolution process). But the law’s protections on balance billing—and the medical debt that can often result—have implications for entities regulated by the CFPB that are often tasked with collecting or reporting on debt from unpaid medical bills (including balance bills).

Per the bulletin, existing consumer protection laws—the Fair Debt Collection Practices Act and the Fair Credit Reporting Act—apply when collecting, furnishing information about, and reporting medical debts covered by the No Surprises Act. Debt collectors, for instance, cannot misrepresent to a consumer that they must pay a debt from a charge that exceeds the amount permitted under the No Surprises Act or collect an amount that exceeds what is owed. Debt collectors also cannot make false, deceptive, or misleading representations or use unfair or unconscionable means to collect or attempt to collect any debt. Information furnishers and credit bureaus must provide accurate information on medical debts.

The CFPB intends to investigate claims and take action against companies that attempt to collect or report or furnish consumer information about debts stemming from charges that exceed the amounts permitted under the No Surprises Act.

By Ellish