No Surprises Act is Flawed: Doctors

They support the concept but not the proposed resolution process for payment disputes.

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June 2022 – The Journal of Healthcare Contracting

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The No Surprises Act of 2020 has gotten off to a rocky start since it went into effect on January 1. Few people oppose the concept, that is, protecting patients from receiving bigger-than-anticipated bills from their provider following a procedure, or totally unanticipated bills from out-of-network providers (e.g., emergency room physicians, orthopedists, radiologists) who participated in their care.

Rather, the primary point of contention has been the process by which payment disputes between out-of-network providers and commercial payers will be resolved regarding claims filed on behalf of people covered by group and individual health plans.

The No Surprises Act protects people covered under group and individual health plans from receiving surprise medical bills when they receive most emergency services, non-emergency services from out-of-network providers at in-network facilities, and services from out-of-network air ambulance service providers. (People covered by Medicare and Medicaid already have these protections.) It establishes an independent dispute resolution (IDR) process for payment disputes between plans and providers. It also provides dispute resolution opportunities for uninsured and self-pay individuals when they receive a medical bill that is substantially greater than the “good faith estimate” they receive from their provider.

Before the No Surprises Act, people with health insurance who received care from an out-of-network provider or an out-of-network facility, even unknowingly, would often be on the hook for the difference between the billed charge and the amount paid by their health plan. (This practice, called “balance billing,” is banned in some states.) An unexpected balance bill from an out-of-network provider is now considered a surprise medical bill.

For people without insurance or who self-pay, the No Surprises Act assures they will get a good faith estimate of how much their care will cost prior to delivery of the service. For services provided in 2022, patients can dispute a medical bill if final charges are at least $400 higher than the good faith estimate, but they must file a dispute claim within 120 days of the date on their bill.

Enforcement of the “good faith estimate” requirement will expand over time, according to legal firm Reed Smith. In the current first phase, providers must provide such an estimate inclusive of their own charges. Effective Jan. 1, 2023, however, they will have to include co-provider estimates, such as out-of-network emergency services. In “Phase 3,” whose effective date has yet to be determined, good faith estimates – including provider and co-provider estimates – will be required for all patients regardless of their insurance status.

Doctors object

Under the law, once a patient with insurance initiates a dispute over payment, the matter is paused pending resolution. Generally, the IDR process will follow a “baseball-style” approach, following these steps, according to the American College of Emergency Physicians:

1. The out-of-network physician submits claim to the patient’s insurer. The patient is only responsible for any costs as if they were provided in-network, and is now out of the middle.
2. Physician/group can dispute the amount during a 30-day open negotiation period.
3. If that fails, either party can take the dispute to IDR using an online portal. They select an arbiter from a pre-vetted list of IDR entities. Both parties must pay the IDR fee upfront – $200 to $500 for one claim; $268 to $670 for “batched” claims of similar services with the same insurer. (The “winner” of the dispute will be refunded its fee.)
4. Each party submits offer for reasonable payment within 10 days. Those offers must include the Qualified Payment Amount (calculated as the median in-network rate), information on the physician’s training and experience, and a description of the complexity of the procedure or the medical decision-making associated with it.
5. The impartial reviewer evaluates submissions from provider and insurer, then chooses one of the two payment amounts within 30 business days.
6. The “loser” makes the other side whole and pays for the IDR fee within 30 calendar days.

The regulations as implemented allow arbiters to assume that the correct amount for an insurer to pay the doctor is the median amount usually paid for that service in that geographic area. Doctors’ groups argue that the text of the law precludes such a presumption and that other factors must be given equal weight, including the provider’s training, quality of outcomes, patient acuity or complexity of services provided, and teaching status and case mix of the facility where services were provided.

In February 2021, a federal judge in Texas ruled in favor of the Texas Medical Association, deciding that the No Surprises Act implementation did indeed give unequal weight to the Qualified Payment Amount (QPA), tilting the process unreasonably in favor of insurance companies. While a relief to doctors’ groups, several are still jittery.

Physicians’ stance

Share Moving Media received e-mailed comments about the No Surprises Act from the American Association of Orthopaedic Surgeons (AAOS), American College of Emergency Physicians (ACEP) and American Society of Anesthesiologists (ASA).

Douglas W. Lundy, MD, MBA, FAAOS, Advocacy Council Chair, American Association of Orthopaedic Surgeons

“AAOS believes that the patient protections afforded by the No Surprises Act are vital to improving access to care. While the manner in which the law was interpreted and subsequently finalized by the Departments is beyond the scope of the legislation that was passed with the support of AAOS, we remain committed to ensuring that our patients have access to the care they need and are held harmless for financial burdens that extend beyond their in-network cost-sharing.”

Despite the February ruling in favor of physicians in the Texas Medical Association’s lawsuit, Lundy said that AAOS remains concerned with aspects of the IDR process. For example, the four-business-day time frame for initiating IDR following the end of the open negotiation period may be unreasonable should circumstances beyond the control of the physician to meet the deadline arise, he said. “Likewise, we are concerned that the timeline for the parties to jointly choose an IDR entity may not be sufficient to determine the appropriate IDR entity to oversee a payment determination. Underlying these matters is a concern that there needs to be disclosure of the IDR entity’s record if the Departments detect a pattern of consistently favoring one side or the other.

“We encourage the Departments to consider the long-term impacts that the Provider-Patient Dispute Resolution process may have on self-pay and uninsured patients, particularly the underrepresented communities it is, in part, intended to serve. While the monetary threshold to access the provider-patient dispute resolution process was carefully considered during rulemaking, the time patients will have to spend going through the process may prove prohibitive or exclusionary.”

Laura Wooster, senior vice president, advocacy and practice affairs, American College of Emergency Physicians

“Emergency physicians have consistently advocated in support of solutions to stop surprise bills, promote transparency, and protect patients since earnest discussions about this issue began in Congress four years ago,” she said. “The ruling in Texas is a strong step in the right direction and one of the clearest indications to date that policy granting unequal weight to the qualified payment amount (QPA) directly contradicts the language in the No Surprises Act. It also reaffirms the congressional intent of the law as noted in a November 2021 letter to the Administration signed by more than 150 members of Congress.

“As HHS assesses its legal options and revises its guidance on IDR implementation, ACEP is hopeful that the department changes the policy permanently so that insurers are discouraged from narrowing networks, canceling contracts and pursuing tactics that make it harder for patients to access lifesaving emergency care.”

Randall M. Clark, M.D., FASA, president of the American Society of Anesthesiologists

“The ASA has long maintained that patients should be held harmless when there are disputes between physicians and insurers,” he said. “We have had the ability to put that into effect in many states for more than 20 years.” However, even with the favorable outcome of the current lawsuits, “the overall process will likely drive down physician payment over time. Insurers will have the ability to eliminate any contracts above the median, creating an immediate effect on at least half of physician contracts.

“It won’t matter in the future if physicians are in network or out of network. Health insurers will be able to treat both groups exactly the same. Physicians will have little to no leverage to negotiate contracts above whatever an insurer calls the ‘median,’ which itself is subject to manipulation by the insurers.”

The public should recognize that “the federal government is now regulating contracts between private parties in a way that has never been done before. This extends beyond asserting the parameters of how contracts should be managed, which one could argue is very appropriate, and now extends into what one private party pays another. This is unprecedented, in our opinion, and fraught with hazard.”