The NSA Roller Coaster
A FLATLINING Explainer
If you have been following the No Surprises Act as I have, you probably feel like you have been on a massive, never-ending roller coaster. There have been more ups and downs on this thing than the Cyclone at Coney Island.
The good news is that we appear to be coming to the end of the ride and everything looks like it’s going to turn out fine.
The spirit of the No Surprises Act is nothing new, that is the principle that we should protect patients from surprise bills from doctors they did not (and often could not) choose. This law was debated and revised for years before it finally passed. The challenge for the lawmakers was that they had to create a way that would fairly compensate the physicians at these hospitals and at the same time, not give them or the insurance companies too much power.
Of course, the biggest problem is how you find a fair payment rate. In the beginning, the payors wanted a prescribed rate such, such as Medicare, and the providers wanted something tied to the average billed charge in the area. After months of negotiation and debate, Congress found a reasonable compromise and passed the No Surprises Act.
The law that was passed and signed in 2020 was fair and struck a good balance without giving either side too much power.
We wanted to give you a run-down of how it is going to work now that the dust has settled.
When does NSA apply?
When a patient has a service at a facility (hospital or ASC) that is contracted with their insurance company, but he or she sees a radiologist, anesthesiologist, or emergency medicine physician that is not in contract with their carrier, the NSA kicks in.
Now, that being said, there are circumstances where a physician from a different specialty provides services that are also not in-network, and this can also trigger the NSA. We expect, however, that this will not be common because the law primarily deals with hospital-based physicians.
How does this benefit physicians?
Firstly, the insurance company must pay the claim at in-network benefit levels. They can no longer force the patient to pay more for the bill by calling the service “out-of-network.”
Secondly, the insurance company must send the payment directly to the provider of care. They cannot send checks to the patient and force the provider to track down and get the payment from the patient.
The insurance company must pay the claim in thirty days; they cannot use delaying tactics anymore.
What does the physician have to do?
The provider of care cannot balance bill the patient for any amount over what the patient owes under their benefit plan (co-pay, co-insurance, and/or their deductible). Physicians under the NSA can no longer balance bill up to (what could be) an inflated billed charge.
How does the payment get determined?
This has been a bit of a messy process and the subject of a number of lawsuits. We won’t give too much background on it at this point in our explainer, other than telling you that an interim final rule from the Department of Health and Human Services was thrown out earlier this year. You can read about that here and below.
The NSA has a mechanism to provide the physician with a reasonable initial payment and a mechanism to challenge that payment and enter a dispute resolution process with a third-party arbiter. Additionally, it provides physicians with some important protections against the insurance companies who (under the now-defunct interim final rule) attempted to use the NSA to lower everyone’s contracted rates. It also creates an incentive for both sides to negotiate a contract. The No Surprises Act was balanced and bipartisan; truly, it was a legislative unicorn.
How does the payment process work?
First, the payor is required to make an initial payment to the provider and to tell the provider what the Qualifying Payment Amount (QPA) is for that service in the market. The QPA is the median contracted rate for that insurance company for that service in that market.
The provider can then accept the payment if he or she decides it is reasonable or they can dispute the payment by notifying the payor.
The payor and the provider can try to negotiate a rate that is acceptable to both. If they cannot reach an agreement, the provider can request Independent Dispute Resolution (IDR). The IDR process is the external third party (mentioned above) that is contracted by the government to arbitrate these payment disputes.
Once the challenge is given to the IDR, the parties will each submit a rate and justification for the rate. The payor can submit anything for justification except what Medicare could pay for the service. The provider can submit anything as justification except for their billed charges.
The NSA stipulates that the provider can request the previously contracted rate plus current year inflation. They can do this as a request for the rate or as justification for their proposed rate. This keeps the payors from terminating existing contracts to try and force lower rates during the IDR process (we’re looking at you BCBS NC).
Once the proposed rates and justifications are sent to the IDR, the arbiter has thirty days to rule. The IDR must pick a winner and a loser; he or she cannot select a rate in the middle. The ruling is final and if the payor owes money to the provider, they must make that payment in thirty days.
After the ruling, the provider cannot submit another dispute on that payor for ninety days. This is called “the cooling-off period” and is designed to give both parties time to negotiate a contract to avoid further disputes.
The loser of the IDR process must pay for the dispute. Right now, it is expected that the cost for the IDR process will be between $500 and $600 per dispute. The provider can bundle multiple claims as part of the dispute.
Overall, our legislators did a good job and passed a bill that protects patients while also protecting providers from insurance companies. Remember, though, that you should never underestimate the government’s ability to mess up their own thing.
What was the deal with the lawsuits?
Last October, everybody was getting ready to implement the law I described above. However, Secretary of Health and Human Services Xavier Becerra stepped in and issued an interim final rule that was supposed to clarify the law. It did not really do that; instead, it effectively scrapped the law and came up with a new one.
The interim final rule gutted the provider protections built into the IDR process and prescribed the QPA as the only rate that could be looked at during the IDR process unless the provider could provide credible evidence that the desired rate was materially different from the QPA. The physician was effectively told that they were guilty until proven innocent beyond a shadow of a down. Please keep your hands and feet inside this car at all times; it is going to get bumpy.
This “clarification” by HHS turned a fair law into a massive cudgel for the insurance companies just ninety days before the law was set to take effect.
Things looked dark. Quickly, groups that represent physicians including the AMA, ACEP, ACR, ASA, and the Texas Medical Society, among others, filed lawsuits in federal court trying to the interim final rule thrown out. They argued that the interim final rule violated federal law because HHS did not follow the necessary process and did not implement a comment period and that HHS does not have the power to change the spirit and intent of a law passed by Congress.
A few weeks after the law went into effect, a federal judge issued a summary judgment agreeing with the plaintiffs on both arguments. He struck down the interim final rule and ruled that the NSA must follow the original language and spirit and intent of the law passed by Congress.
This was a huge win for physicians and patients. It restored the original language of the law which provides patient protections and limits the power of the insurance companies during the IDR process.
With this ruling, we now appear to be approaching the end of this bumpy and scary ride and it looks like everything is going to turn out fine.
We hope you all enjoyed the ride and will come back and visit some of our other attractions in the government theme park. The Midterm House, where politicians jump out and make promises to block or support the administration with policies you don’t really care about will be opening in the summer and the Medicare-for-All Coaster will bring the thrills of the NSA Cyclone and the Midterm House, and we expect that to open in 2024. The best part about that one is we have no idea how it ends or if you will survive.
If you missed this week’s podcast, you can check it out here:
