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The No Surprises Act is designed to help eliminate surprise medical bills for consumers, especially for care from out-of-network providers. Providers and payers must prepare now before enforcement of the new law happens later this year.

The No Surprises Act (NSA) went into effect in January 2022. This federal legislation is one part of a bigger push by government entities to protect consumers from surprise medical bills and promote price transparency in healthcare. While the NSA is now in effect, consumers are largely unaware of the new law with half of consumers saying they knew nothing about it, while one in few knew “a little.”

Regardless of how informed consumers are, providers and payers must comply with the No Surprises Act or face repercussions. The exact requirements and enforcement details of the new law have yet to be determined. However, enough of the law is outlined that providers and payers can start working towards compliance now.

Why Is There a No Surprises Act?

The trends in healthcare payments tell us that surprise bills are a big problem. In fact, almost all consumers reported being surprised by medical bills. Of the reasons for being surprised, more than half of consumers reported getting a medical bill for an amount more than expected. Additionally, half of consumers reported getting a medical bill that they were not expecting in the first place.

A surprise medical bill alone can create payment friction for consumers in healthcare. The amount due on those medical bills adds even more stress for consumers. The price tags of surprise bills average between $750 and $2,600, which shouldn’t come as a surprise when considering that the average deductible is more than $1,500 for an individual. Deductibles for a family health plan are even more.

The friction of surprise bills only adds to the overall stress for consumers in healthcare payments. About half of consumers had out-of-pocket healthcare expenses in the last 12 months with a significant portion of those balances over $1,500. Healthcare costs can also influence whether a consumer seeks medical care at all. Nearly 1/3 of consumers did not seek care due to cost.

What Is the No Surprises Act?

The No Surprises Act is part of a larger push by the federal government to protect consumers from surprise bills. This legislation, in particular, is designed to limit excessive costs due to emergency services from out-of-network providers. It is important to note that this law is different from the federal price transparency rule requiring providers to post prices online so that consumers can research costs prior to making an informed choice.

Instead, the No Surprises Act targets scenarios where consumers have little or no choice in the care they receive, including emergency care and care from out-of-network providers at in-network facilities. If a person is having a life-threatening medical emergency such as a heart attack, there is no time for consideration of healthcare costs. Immediate treatment is a high priority.

However, prior to the No Surprises Act, that person having a heart attack could be charged for receiving care at an out-of-network facility. Even if the facility is in-network with their health plan, the consumer may unknowingly receive care from an out-of-network provider. Often, the provider will charge the consumer the difference between the allowed amount and how much the health plan pays. This is known as balance billing.

The intent of the law is to eliminate situations where consumers cannot reasonably be expected to understand how their care will result in a large bill or to avoid the additional costs of out-of-network care. The effectiveness of the law remains to be determined.

When Exactly Will the No Surprises Act End Surprise Bills?

The No Surprises Act was first introduced in 2019. The law was included in the Consolidated Appropriations Acts of 2021 which has other mandates designed to end surprise bills in healthcare. In this package, the No Surprises Act was officially enacted in December 2020. Though passed in 2020, the No Surprises Act first became effective more than a year later in January 2022.

There are still many unknowns about this law. For example, providers and payers have certain requirements to comply with the law, but the standards for those requirements have not yet been fully defined. Additionally, the law is set to be officially enforced later this year, yet it remains to be seen what, if any, consequences there are for non-compliance.

Essentially, the law has been defined and the intent is there. In instances where there is no opportunity to research care , consumers cannot be charged for out-of-network charges. These facts alone may help the No Surprises Act reduce the incidence of surprise bills for consumers right away. However, until there is enforcement and more is defined , surprise bills may not completely go away anytime soon.

What Do Providers Need to Know About the No Surprises Act?

Under the new law, healthcare providers must give certain patients a cost estimate of care called a Good Faith Estimate. This requirement is sometimes abbreviated as GFE. Unfortunately, which patients need that estimate and what the estimate should look like is unclear.

Providers are voicing concerns about how the Good Faith Estimate will interfere with current processes. Almost half of medical practices reported challenges related to disruptions to workflows when implementing and distributing Good Faith Estimates. Any such disruption will only create further strain on healthcare providers already experiencing staff shortages.

Despite the new federal laws and associated requirements, only 21% of providers are prioritizing price transparency. This could cost providers in the long run. Most notably, there are the costs of non-compliance with federal law. While these costs have yet to be determined, the final price tag could be steep.

Instead of waiting for enforcement to be specified, providers can create processes that meet the intent of the law as the letter of the law is still being defined. New processes must focus on early financial engagement for all patients, and be supported by efficient and secure payment technology. A holistic approach to price transparency is more likely to improve patient experiences and increase payment collections overall for providers.

What Do Payers Need to Know About the No Surprises Act?

The No Surprises Act includes requirements for payers as well. When requested by a member, payers must produce an Advanced Explanation of Benefits to the member before scheduled care. This is also referred to as AEOB. Before the law, payers only sent explanation of benefits after care. Just like Good Faith Estimates, the requirements of the Advanced Explanation of Benefits are still being defined.

Payers are also required to include relevant out-of-pocket costs for in-network and out-of-network care directly on member IDs, such as deductible amounts. This requirement of the law may seem to be a straightforward requirement for payers. However, the requirement also creates an opportunity to increase digital engagement by driving members to plan portals to download new ID cards.

The Potential of No Surprises Act for Healthcare

The reality in healthcare is that consumers are not happy about the payment experience. Half of consumers would switch providers for a better healthcare payments experience. That percentage increases to 74% of consumers when looking at the millennial generation. Surprise bills only contribute to this disconnect.

The efforts to promote price transparency by the federal government may not solve all problems that consumers experience with healthcare payments, but it’s a start. The No Surprises Act, while not perfect, should be viewed as an opportunity to not only improve the consumer journey but also make healthcare payments better.

For example, a new payment dispute process may help to alleviate the burden of resolving surprise bills for consumers. Going forward, payment disputes between providers and payers will follow a formal process defined through the No Surprises Act with a portal hosted by CMS. If a payment amount is not agreed upon in 30 days, the conflict will go through the independent dispute process.

Ultimately, the impact of the No Surprises Act is still unknown. Yet, the new law offers hope that much-needed change is on the horizon.

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