Navigating the Legal and Financial Maze: The No Surprises Act Unveiled

Navigating the Legal and Financial Maze: The No Surprises Act Unveiled

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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 No Surprises Act (NSA), enacted on January 1, 2022, as part of the Consolidated Appropriations Act, was designed to protect patients from surprise medical bills for out-of-network services when emergency care is provided.

At facilities that are considered in-network for insured patients, services provided by out-of-network providers are subject to NSA patient billing protections. Cost sharing is limited and balanced billing practices are prohibited under the NSA.

The legislation also provides for an arbitration process for medical providers and insurers to resolve any disputes. Decisions by Judge Jeremy Kernodle, US District Court for the Eastern District of Texas, have significantly impacted the NSA arbitration process and caused federal agencies to issue new rules and guidance, as reported by Bloomberg Law.

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.

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.

The Evolving Legal Landscape of the No Surprises Act

The No Surprises Act has faced many legal challenges since its inception, primarily from healthcare providers who argue that the Act's payment dispute resolution process is unfair.

Legal challenges have led to a series of court rulings that have added new layers of complexity to the Act's implementation.

The O'Neill Institutes' Healthcare Litigation Tracker provides perspective on the interests that have engaged legal challenged to NSA legislation.

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.

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

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?

An Overburdened Federal Dispute Resolution Process

Bloomberg Law reported that a ruling by Judge Kernodle temporarily suspended the arbitration process, as federal agencies update rules and guidelines in accordance with court’s decisions.

According to the Bloomberg Law article, "Kernodle has handled seven of more than 20 No Surprises Act lawsuits that have been filed by providers—more than any other judge". Four cases he has handed down have been in favor of providers. Some lawsuits filed were voluntarily dismissed as Judge Kernodle's rulings apply nationwide.

Back in January 2023, it was reported that Payers and Providers using the NSA's Independent Dispute Resolution (IDR) process experienced more than three times the forecasted volumes that was anticipated by the federal government.

Reviewing Healthcare IT Revenue Cycle Applications for NSA Compliance

Healthcare entities' documented policies, practices, processes, and workflows serve as the basis for configuring automated Healthcare Information Technology (HIT) revenue cycle platforms.

As legal challenges to the NSA are resolved, along with arbitration cases, HIT platforms like Oracle Cerner's Revenue Cycle application, will need periodic updates and validation testing cycles to ensure compliance with evolving NSA rules, guidelines and practices.

Healthcare Consulting Firms Enable Compliance

Healthcare consulting firms are 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 firms that provide free consultations, risk assessments and remediation services for hospitals, medical practices, and payers.

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Posted 
9.2.2022
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