How Does the New Surprise Billing Rule Affect a Medical Billing Company?

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In life, there are good surprises and bad surprises. In medical billing, bad surprises tend to prevail. Historically, one of the biggest surprises has been unexpected out-of-network charges.

Surprise billing is most frequent in the context of emergency room charges. Patients who choose to be treated in an in-network facility expect their treatment to be covered by insurance. They often fail to realize, however, that their treatment may include ancillary services by out-of-network providers that are not covered by their insurance plan.

Examples of ancillary services include services provided by anesthesiologists, radiologists, and critical care physicians. Since those specialists provide services within a covered facility, patients often expect their services to be covered by their insurance. Patients are often shocked when they are billed for services delivered by out-of-network providers within a network facility.

Even if an insurance plan covers the ancillary service, it might only pay the rate that the plan pays to in-network providers. Service providers who want to collect their full rate might bill the patient for the difference. Some states prohibit “balance billing,” but many state legislatures follow the lead of medical industry lobbyists and condemn pro-patient legislation as “anti-business regulation.”

Patients confronting a medical emergency have little opportunity to protect themselves from surprise billing. They rarely have time to ask whether each service they receive is covered by their insurance plan. Nor are they in a position to search for more affordable providers. When life and health are on the line in an emergency, patients take what they are offered.

No Surprises Act

The No Surprises Act took effect on January 1, 2022. The Act is intended to eliminate some of the most common medical billing surprises. The Act protects patients who have individual or group health insurance when they receive:

1. most emergency services;
2. non-emergency services from out-of-network providers at in-network facilities; and
3. services from out-of-network air ambulance service providers.

Medicare and Medicaid patients are already protected from surprise billing. The No Surprises Act provides a measure of similar protection to consumer who have private insurance. The law covers most consumers who receive group insurance from an employer, consumers who purchase insurance from a Health Insurance Marketplace, and consumers who purchase insurance directly from an insurance company.

For insured patients, the Act:

1. bans surprise uninsured bills for most emergency services, including billings from out-of-network providers without the patient’s prior authorization);
2. bans out-of-network cost-sharing (like out-of-network coinsurance or copayments) for most emergency and some non-emergency services;
3. bans balance billing, in the absence of consent by the patient, for certain services (including anesthesiology or radiology) furnished by out-of-network providers during a patient’s visit to an in-network facility; and
4. requires healthcare providers and facilities to give patients a notice explaining the applicable billing protections and who to contact if a patient suspects that a provider or facility violated the protections.

The Act generally requires the patient’s own insurance plan to cover emergency services wherever they are provided, subject to the patient’s usual co-pay requirements. The protection applies to true emergency services, not to a patient’s decision to seek non-emergency treatment in an emergency room.

The Act also prohibits providers from billing for out-of-network services that are provided within a network facility unless the provider has first explained that the service is not covered by insurance and obtained the patient’s consent to incur that expense.

When the No Surprises Act conflicts with state law, the better law controls. In other words, if a state law provides more protection than the No Surprises Act, the patient receives the protection of the state law. The No Surprises Act describes the minimum protections that patients must receive, while placing no ceiling on the protections that states can offer.

Uninsured Patients

Patients who do not have insurance also benefit from the No Surprises Act. Before providing services to an uninsured patient, a healthcare provider must give the patient a good faith estimate of the cost of the services. The good faith estimate requirement also applies to insured patients who are not using their insurance, perhaps because they are receiving services that are not covered by their insurance plan. 

The good faith estimate requirement does not necessarily prevent the provider from charging more than the estimate. However, if the charge exceeds the estimate by more than $400, the patient has the right to dispute the bill, provided the dispute is filed within 120 days of the billing date.

The dispute process uses a third-party arbitrator to review the good faith estimate, final bill, and any justification submitted by the provider for the excess charge. The consumer must be a non-refundable $25 administrative fee to initiate the dispute resolution process. If the arbitrator decides in the patient’s favor, the $25 fee is deducted from the bill.

While the dispute resolution process is pending, the provider cannot attempt to collect the bill. The provider cannot refer or threaten to refer the bill for collection and no lawsuit may be filed to collect it. Nor may late charges be assessed.

Medical Billing Disputes

In addition to departures from good faith estimates for uninsured services, patients may dispute billings for emergency services or out-of-network services that should have been provided pursuant to the No Surprises Act. The dispute mechanism is described in the patient’s insurance policy or plan documents. It may be described as a right to “appeal” a charge. Denial of payment should be accompanied by a notice that explains the insurer’s external review process.

Providers also have arbitration rights under the No Surprises Act. When an out-of-network provider submits a billing to an insurer that is covered by the Act, the insurer must decide how much of the bill it will pay. If it pays less than the billed amount, the provider can submit the dispute for arbitration. Both the out-of-network provider and the insurer make a “best offer” and the arbitrator decides which offer to accept. The arbitrator makes that decision by taking into consideration several factors, including the health insurer’s historical median in-network rate for similar services.