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Plan sponsors are no longer allowed, under the No Surprises Act (NSA), to bill an insurer more than the in-network cost for emergency services. The goal of this new piece of legislation is to reduce surprise medical billing costs for the insured seeking emergency services.
As of January 1st, 2022, the No Surprises Act is in full effect for plan sponsors. See the timeline for implementation and legislation requirements here.
The No Surprises Act could impact plan sponsors financially depending on claims filed. Plan sponsors may see an increase in cost related to self-funded plans and can become responsible for payments that are not covered by the participant.
The silver lining, according to Millman White Papers is that “Plan sponsors do gain a path to reduce liability, either through direct negotiation with the provider or facility through the Independent Dispute Resolution (IDR) process.” They continue, “Additionally, this legislation might reduce the frequency of appeals for plan sponsors.”
Which Plans must comply with the No Surprises Act Impact?
- Group Health Plans
- Health Insurance Issuers
- Federal Employees Health Benefits Programs that start on or after January 1st
- Grandfathered plans
- Non-grandfathered plans for applicable services
Which plans are not impacted by the No Surprises Act?
- Health Reimbursement Arrangement Plans
- Retiree-only plans
- Excepted benefits
- Short-term limited-duration insurance
What does the No Surprises Act mean for plan sponsors / Employers?
Internally, increased governance requirements are similar to those implemented for 401ks as dictated by the 1974 ERISA Act. Employers and plan sponsors will be required to have monthly internal governance meetings of their Boards to review plan coverage. Plan sponsors must know what their plans cover, what their broker fees are and they must provide access to the price comparison tools offered online by insurers.
These increased internal governance requirements place a burden on the employer/ plan sponsor to be knowledgeable about the coverage offered while additionally creating increased liability for failure to implement required internal governance structures, policies, and procedures.
What do Plan Sponsors Need to Know?
New rules for plan sponsors include:
- Public and accurate disclosure for group health plans.
- Review and update provider database at a minimum of every 90 days
- Price comparison tool available through phone and public website for participants that include in-network rates, out of network amounts, prescription rates
- Reporting of prescription drug costs
- Plans must cover emergency services for out of network providers
- Payment or notice of declination of payment to the non-participating provider is expected within 30 days.
- Issue ID cards that include plan deductibles, out of pocket maximum costs, contact information, and plan information
- Provider fee estimation
- Disclosure of broker compensation
- Prohibition of gag clauses
Now that the NSA is fully enacted as federal law, it is expected that plan sponsors have already made changes to their plans.
Who Now Covers Surprise Medical Costs?
Before the No Surprises Act, the insured individual was liable for any “surprise costs” that arose after receiving emergency services. With the new regulations, any surprise billing that arises is the responsibility of the medical establishment providing the care and insurance provider to negotiate payment. Fees for surprise billing will be based on the No Surprises Act’s new term called the Qualifying Payment Amount (QPA).
What is the QPA?
The QPA finds the median rate for plans in the surrounding location for in-network services.
Institution and Insurer can negotiate to settle on a fair payment, or they can turn to an Independent Dispute Resolution (IDR) entity to decide a fair payment amount. To find fees due, the IDR will collect what the provider and the plan deem fair payment amounts for the out-of-network service. After offers are submitted, the IDR will factor variables such as QPA, market shares, patient information, provider level of expertise, and more to reach a fair decision.
According to KFF, “the IDR will charge a fee for each arbitration and the losing party must pay that fee.” Fees can range from $200-$600 depending on the case.
Can Providers ask Consumers to Waive Rights?
There is one exception to the No Surprises Act, and that is for providers to ask patients to waive their rights under the No Surprises Act. It is allowed if patients give prior written consent and agree to be billed more by out-of-network providers. However, there are exclusions to what providers can ask plan holders to waive rights to.
Consent waivers are not allowed for the following services:
- Emergency services
- Unforeseen urgent medical needs during non-emergent care
- Ancillary services
- Services provided by a hospitalist, or assistant surgeon
- Out of network provider services if there is not an in-network provider available
- Diagnostic service
Plan holders must give consent voluntarily and cannot be persuaded to waive their rights.
For more information read our article about everything you need to know about the No Surprises Act.