No Surprises Act: Healthcare Entities at Financial Risk for Non-Compliance

No Surprises Act: Healthcare Entities at Financial Risk for Non-Compliance

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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 were 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 February 7, 2023, Revcycle Intelligence reported that a federal judge ruled in favor of one of four Texas Medical Association’s (TMA’s) legal challenges of the No Surprises Act.

Judge Jeremy D. Kernodle said that the interim final rule “places its thumb on the scale for the QPA, requiring arbitrators to presume the correctness of the QPA and then imposing a heightened burden on the remaining statutory factors to overcome that presumption.”

“[T]he Court concludes that the Rule conflicts with the [No Surprises] Act and must be set aside under the Administrative Procedure Act (‘APA’). Defendants also improperly bypassed notice and comment required by the APA, and thus the Rule must be set aside for this additional reason,” Judge Kernodle added.

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 not NSA 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.

Overburdened Federal Dispute Resolution Process

In January 2023, it was reported that Payers and Providers using the NSA's Independent Dispute Resolution (IDR) process, which is designed to resolve payment disputes concerning NSA covered items and services, experienced more than three times the forecasted volumes that was anticipated by the federal government.

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.


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.

Could a proposed class action lawsuit have been avoided by a compliance review and audit of current billing practices?

How would the investment in risk assessment consulting services compare to the potential cost of a class action lawsuit against this healthcare system, for violating several laws over a period of years, multiplied by many litigants represented in the class?

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.

Contact me to learn more about healthcare consulting firms that provide free consultations, risk assessments and remediation services for hospitals, medical practices, and payers.

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