No Surprises Act: Healthcare Entities at Financial Risk

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No Surprises Act: Healthcare Entities at Financial Risk
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What is the No Surprises Act?

On December 27, 2020, the Consolidated Appropriations Act, 2021 CAA, which includes the No Surprises Act (NSA), was enacted. The NSA federal legislation became law in January 2021 under interim rules as part of the U.S. Consolidated Appropriations Act, 2021 (CAA).

The NSA provides Federal protections against surprise billing by limiting out-of-network cost sharing and prohibiting “balanced billing" practices, in many scenarios where surprise bill encountered by healthcare patients were most prevalent.

NSA Final Rule Released

On August 22, 2022, it was widely reported in healthcare industry media, that the NSA final rule had been released. The final rules become effective 60 days after publication in the U.S. Federal Register.

Legal Challenge History

Two significant NSA federal court legal challenges have been defeated, with one of the federal court decisions upholding the NSA as Constitutional. Additional lawsuits, filed by several healthcare professional associations and private healthcare services companies, are working their way through the courts.

On behalf of its medical group practice members, Medical Group Management Association is lobbying decision makers at the Health and Human Services (HHS) and the Center for Medicare and Medicaid (CMS), for additional time to allow medical practices to fully understand the implications of NSA and take appropriate actions to comply with NSA and the final rule.

Provider and Payer Penalties for Non-Compliance

Healthcare organizations, Providers and Payers that are found to be NSA not compliant may receive fines and penalties from the state and federal governments. Each violation can result in a fine up to $10,000.

Additionally, healthcare entities can be subject to a drawn-out federally mandated dispute process and lawsuits.

Prudent healthcare leaders and decision makers continue to take significant actions to comply with NSA and the final rule. Failure to do so can expose healthcare entities and the patients that they care for to significant financial risk.

Overlapping Federal Regulations

While the No Surprises Act provides for personalized good faith estimates and advanced Explanation of Benefits (EOBs) for patients, existing healthcare laws provide overlapping coverage.

For example, the Center for Medicare and Medicaid (CMS) Hospital Price Transparency Rule helps consumers know the cost of a hospital item or service before receiving it. Beginning on January 1, 2021, each hospital operating in the United States is required to provide clear, accessible pricing information online about the items and services they provide.

The CMS Transparency in Coverage final rule was released on October 29, 2020. The intent of the final rule is to reduce the secrecy behind health care pricing and put health care price information in the hands of consumers and other stakeholders, in support of informed health care decision making.

What Healthcare Entities does the NSA Affect?

According to the Arizona Dept. of Insurance and Financial Institution website, the NSA applies to individuals insured under individual and group health insurance plans, student health insurance plans, employer self-funded plans, non-federal governmental plans, church plans, the Federal Employees Health Benefit plans, and to the uninsured.

The NSA does not apply to individuals covered under Short Term Limited Duration plans, critical illness policies, or other limited benefit plans; Medicare, AHCCCS, Indian Health Services, Veterans Affairs Health Care, or TRICARE.

Healthcare Consumer Protection Lawsuits

John Muir Health, California

In September 2022, a class-action lawsuit was filed in California Superior Court by the law firm Hagens Berman, on behalf of an emergency room patient who received emergency care at John Muir Health (JMH).

The Hagens Berman press release and details provided in the proposed class-action suit alleges the health system charged the patient more than $6,000 for a routine drug screening during an emergency department visit. The lawsuit alleges John Muir charges about 10,000 percent of the Medicare rate for a simple urine test, which has a Medicare reimbursement amount of $62.14.

The suit also alleges JMH "charged, and balance billed, Plaintiff $6,095.70 for the Service, which it undertook in connection with her visit to the JHM Walnut Creek Emergency on June 14, 2022." The suit defines the practice of balanced billing as when a patient is billed for the difference between the amount billed by the medical provider for a service and the amount paid by the patient’s insurance for the service.

JMH Response to Lawsuit Allegations

According to Becker's Hospital Review, John Muir Health denied the allegations.

"When a patient in a contracted plan comes to our emergency department, we charge no more than a patient’s deductible and copay or co-insurance," We do not balance bill the patient. When a patient has a deductible, it must be met before insurance will pay the remainder of a bill based on that plan's contract with John Muir Health."

Based on my reading and understanding of the intent of Federal and State laws governing healthcare consumer protection prohibiting balanced billing, how a payor pays a hospital's claims has no bearing on the hospital's price disclosure and billing practices as legislated by law. Payors that mandate payment practices that run contrary to federal and state laws may also be found liable in a court of law.

The JMH statement also cited federal law requiring hospitals treat patients first and discuss payment after treatment to stabilize the patient's condition. "By law, hospitals are not allowed to discuss payment prior to treatment or give out price lists," the statement read.

The intent of the federal CMS Hospital Price Transparency legislation, which became law on January 1, 2021, is to enable patients to know the cost of a hospital item or service before receiving it. Hospital operating in the United States are required by law to provide clear, accessible pricing information online about the items and services they provide.

The CMS Transparency in Coverage Rule, released on October 29, 2020, by the Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury, was intended to "reduce the secrecy behind health care pricing with the goal of bringing greater competition to the private health care industry, and put health care price information in the hands of consumers and other stakeholders, to support informed health care decisions."

Based on the NSA legislation governing patient services delivered in an emergency department, and the prior CMS price transparency legislation, this may be an easy win for the Hagens Berman law firm, its client, and the representative class cited in the suit.

Reviewing Revenue Cycle Policies, Procedures, Practices for NSA Compliance

Healthcare entities' documented policies, practices, processes, and workflows serve as the basis for configuring automated revenue cycle applications embedded in Electronic Healthcare and Medical Record (EHR/EMR) applications.

EHR platforms, like the Oracle Cerner Revenue Cycle application, will need to be updated and tested to ensure compliance with NSA and final rule requirements.

Healthcare Consulting Firms and Service Organizations Enable Compliance

Healthcare consulting firms, service companies and industry associations are actively engaged to assist affected healthcare entities engage solutions to eliminate or significantly mitigate financial risks due to NSA non-compliance.