The No Surprises Act Takes Effect: Get Your IDR On

 In Blog, Government Compliance & Investigations, Health Care

Providers who are out-of-network for a patient’s insurance policy often provide services to the insured patient in emergencies or at in-network medical facilities. When this happens, patients are often surprised when they receive a bill from the out-of-network provider for the portion of their services that exceeds the amount paid for by the patient’s insurance plan. This practice is often called “balance billing” and has been a complaint of patients and unpopular with policymakers for some time.

On July 13, 2021, the Office of Personnel Management and other federal agencies published the first of their rules implementing the provisions of the No Surprises Act (Act). The goal of the Act is to restrict surprise billing for patients in employment-based and individual healthcare plans who obtain (1) emergency care; (2) non-emergency care from an in-network facility from out-of-network providers; or (3) air ambulance services from an out-of-network provider. The Centers for Medicare and Medicaid Services (CMS) has provided convenient fact sheets regarding the requirements of the Act and its implementing regulations.

The rule also requires that healthcare facilities like hospitals, ambulatory surgical centers (ASCs), and physician practices provide notice to patients regarding potential out-of-network care in the limited situations in which balance billing is still permitted.

Briefly, a plan is now (1) required to cover emergency services without prior authorization and regardless of the provider’s network status; and (2) limited in cost-sharing for out-of-network services. The rule also requires that healthcare facilities like hospitals, ambulatory surgical centers (ASCs), and physician practices provide notice to patients regarding potential out-of-network care in the limited situations in which balance billing is still permitted. CMS has produced a Model Disclosure Notice Regarding Patient Protection Against Surprise Billing for healthcare facilities required to provide notice, though one size may not necessarily fit all.

So, what happens if there is a dispute between the parties to a service regarding the appropriate out-of-network rate? In the agencies’ second set of rules implementing the Act, Requirements Related to Surprise Billing; Part 2, they lay out the details of an independent dispute resolution (IDR) process. The highlights of the IDR process include:

  • A 30-day “open negotiation” period in which the parties try to determine a payment rate.
  • Absent a negotiated rate, the joint selection of a certified independent dispute resolution entity to resolve the dispute.
  • Submission of offers of payment and supporting documentation by the parties to the IDR entity.
  • Based on the paper submissions alone, the IDR entity issues a binding determination selecting one of the parties’ offers as the out-of-network payment amount.

The parties’ failure to negotiate a payment rate can be costly. Regardless of the difference between the parties’ proposed rates, both parties must pay an administrative fee of $50 to use the IDR arbitration process. The administrative fee will be dwarfed by the attorney’s fees incurred in assembling their submissions, particularly in complex cases. On top of that, the non-prevailing party is responsible for the IDR entity’s fee. The agencies estimate that the average IDR entity fee will be approximately $400 per case, though it may vary depending on geographic location, the nature of the dispute, and whether the case presents a single disputed rate or a “batched determination.” While these numbers may not seem high, they can add up over time if numerous disputes arise.

Especially early in the life of the Act and the IDR process, it is important for parties subject to the new law to obtain knowledgeable healthcare regulatory counsel to assist in preparing the notices and disclosures required by the Act and oversee the process for ensuring compliance. This includes hospitals, ASCs, physician practices, and healthcare practices providing specialty services, such as diagnostic imaging. Parties should also be ready to identify healthcare litigation counsel to assist in preparing IDR submissions and serve as possible IDR arbitrators. Early disputes in this process and their results will guide the agencies when they examine the efficacy of the process and the costs involved before any future rulemaking.

We continue to monitor developments in the healthcare space. Subscribe to the SRVH blog and follow us on Twitter and LinkedIn for future updates. Contact the lawyers in our Government Compliance & Investigations group with any questions or concerns.

Chris Sabis is a healthcare and procurement fraud lawyer specializing in Government Compliance and Investigations, Healthcare, and Litigation.


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