HLTH 1005 Week 10 No Surprises Act Policy Update Example

Policy Update: The No Surprises Act and Out-of-Network Bills at In-Network Facilities, in Force Since January 1, 2022

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Walden University

HLTH 1005: Context of Healthcare Delivery

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Month Day, Year

Policy Update: The No Surprises Act and Out-of-Network Bills at In-Network Facilities, in Force Since January 1, 2022

The Change

Since January 1, 2022, federal law has protected most people with private health coverage from surprise bills after emergency care and after certain treatment given by clinicians outside the patient's network inside a hospital or surgery center that is in the network. The protections come from the No Surprises Act, which Congress included as one division of a large year-end spending law (Pub. L. No. 116-260), and it is carried out through rules issued jointly by the Departments of Health and Human Services, Labor and the Treasury. This update explains what the law replaced, who made the change and under what authority, what it requires, and who gains and who absorbs the cost. Every claim below is tied to the January 1, 2022 effective date unless another date is given.

What It Replaced

Before 2022, a patient with private insurance who went to an in-network hospital could still be treated by clinicians who were not in the patient's network, such as an anesthesiologist, a radiologist or an emergency physician employed by a separate group. Those clinicians could bill the patient for the difference between their full charge and what the insurer paid, a practice called balance billing. Patients usually had no way to choose these clinicians and often did not know they were out of network until the bill arrived. About half of the states had passed their own protections, but a state statute had no power over employers that pay claims from their own funds, since federal law governs those plans, and many workers are covered that way. A study of commercial claims found that anesthesiologists, pathologists, radiologists and assistant surgeons working at in-network hospitals billed out of network in a meaningful share of cases, and that the ability to do so also raised what these specialists were paid in network (Cooper et al., 2020). The earlier arrangement was under pressure because the bills were large, unavoidable for the patient and widely reported.

Who Made the Change and Under What Authority

Congress passed the No Surprises Act in December 2020 as part of a year-end spending law. The law directed the three federal departments to write rules putting it into effect. The first interim final rule, published in July 2021, set out the core consumer protections (Requirements Related to Surprise Billing; Part I, 86 Fed. Reg. 36872). Enforcement is shared: the departments enforce the rules for health plans, and states may enforce them for insurers and providers they regulate, with the federal government stepping in where a state does not.

What the Law Requires

Emergency care. For emergency services, health plans must cover out-of-network care as if it were in network, without prior authorization, and the patient's share is capped at what an in-network visit would have cost. Out-of-network emergency providers and facilities may not balance bill the patient.

Scheduled care inside a network facility. Out-of-network clinicians who treat a patient at an in-network hospital or ambulatory surgical center may not balance bill for certain services, including anesthesia, radiology, pathology, laboratory and emergency medicine, and they cannot ask the patient to waive this protection for those services. For some other services, a clinician may ask a patient to sign a notice and consent waiving the protection, but only in advance and under strict conditions.

Settling payment disputes. Instead of billing the patient, an out-of-network provider and the plan negotiate payment. If they cannot agree, either can take the dispute to an independent dispute resolution process, in which an arbiter chooses one party's final offer.

Uninsured and self-pay patients. Providers must give a good faith estimate of expected charges to anyone paying without insurance, whether they have no coverage or decline to use it, and patients may dispute a bill that is substantially higher than the estimate.

Who Gains and Who Absorbs the Cost

Patients gain the clearest benefit: protection from bills they could neither foresee nor avoid, and cost-sharing limited to in-network amounts in the situations the law covers. They do not gain protection from every high bill. Ground ambulance services, for example, were left out of the law's balance billing protections.

Out-of-network clinicians absorb most of the cost. They lose the ability to bill patients directly in covered situations and must negotiate with plans. Specialties that relied on out-of-network billing, such as some emergency medicine and anesthesia groups, now receive what negotiation or arbitration produces.

Health plans gain bargaining strength, since clinicians can no longer threaten to bill patients, but must pay for the dispute process and its outcomes. The rules for how arbiters should weigh offers have been the subject of repeated litigation brought by provider groups, and several parts of the dispute process have been revised since 2022. Some of these details may change again, which is why the effective date of every claim matters.

Everyone with insurance may feel the effects indirectly. If the law lowers what plans pay out-of-network clinicians, premiums may rise more slowly; if arbitration awards are high, the opposite could happen. Early evidence on these effects is still developing, and our textbook notes that the effects of major payment changes often take years to measure (Shi & Singh, 2022).

Why It Matters for an Administrator

For anyone working in hospital or practice administration, the No Surprises Act changed daily work. Registration staff must give good faith estimates to self-pay patients, billing offices must stop balance billing in covered situations and contract managers must think about network status for every hospital-based specialty. Someone who had surgery at an in-network hospital after 2021 and then received an anesthesia bill from a group outside the network should be told that federal protections likely apply, and how to file a complaint if they were billed anyway.

Patients can file complaints about possible violations through the federal No Surprises Help Desk or with their state insurance department, and billing staff who understand the law can often resolve a mistaken bill before it reaches that stage.

References

Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1182 (2020).

Cooper, Z., Nguyen, H., Shekita, N., & Scott Morton, F. (2020). Out-of-network billing and negotiated payments for hospital-based physicians. Health Affairs, 39(1), 24-32. https://doi.org/10.1377/hlthaff.2019.00507

Requirements Related to Surprise Billing; Part I, 86 Fed. Reg. 36872 (July 13, 2021).

Shi, L., & Singh, D. A. (2022). Delivering health care in America: A systems approach (8th ed.). Jones & Bartlett Learning.