No Surprises Act explained: Everything you need to know

What is a surprise medical bill?

When a patient undergoes emergency medical treatment or transportation, they are not usually in a position to choose their provider. They cannot elect for in-network care or review the out-of-pocket costs for out-of-network providers under their insurance plan. Even in situations where a patient is treated within an in-network hospital, sometimes their physician might source external ancillary services that are part of their care but that do not fall under their in-network coverage.

When this happens, the service provider bills the insurance company, which then determines how much of the balance it will cover. The remaining sum is then passed onto the patient, in what's known as balance billing -- which results in a surprise medical bill. This term refers to the unexpected cost of care that the patient is now expected to pay, which they couldn't have agreed to or approved in advance.

There are several main types of service that can result in a surprise medical bill, including the following:

Emergency care from an out-of-network provider

In an emergency, patients are usually unable to control how or where they are treated. This might be due to being incapacitated or due to the need for immediate treatment. If the patient is transported by an out-of-network ground ambulance or air ambulance, taken to an out-of-network ambulatory service center or treated by a provider that turns out to be out of network, without prior approval, the resulting charge would qualify as a surprise medical bill.

Medical services from out-of-network practitioners within in-network facilities

Even if a patient selects or is taken to an in-network facility for their treatment, the facility may perform additional services through external providers -- such as radiology or anesthesiology. In these instances, the patient is often not told in advance whether these services are covered under their insurance policy, resulting in a surprise medical bill.

Out-of-network cost sharing from emergency services

Similar to being charged for out-of-network emergency care, patients might also receive a bill for out-of-network cost sharing -- such as co-insurance or co-payments. In an emergency, these sums would not be approved in advance, leading to a surprise medical bill.

How the No Surprises Act protects you

Since Jan. 1, 2022, the No Surprises Act has been in effect to increase protections against surprise medical bills. The legislation mostly targets out-of-network charges brought about from emergency care, but there are also some protections for consumers undergoing non-emergent care.

The No Surprises Act applies to both group and individual plans. There are also some added protections for anyone receiving care who is uninsured or does not use their insurance to pay for their medical care. The legislation includes an independent dispute resolution process for any payment issues that arise regarding surprise medical bills.

Some ways the No Surprises Act protects consumers include the following:

• Lower out-of-network emergency services fees. The No Surprises Act limits the amount you pay for emergency out-of-network care to a figure close to what you'd pay an in-network provider. It does so by looking at recognized market pricing or similar qualifying figures, often using your insurance plan's in-network pricing as a guideline.
• Lower out-of-network providers at in-network facilities fees. If you receive care at an in-network facility and post-stabilization services are provided by out-of-network practitioners without prior approval, the NSA limits the amount charged for this care. Similarly to the above scenario, this limit is set by looking at relevant qualifying figures, such as average market rate and often uses your insurance policy's in-network rate as a guideline.
• Lower out-of-network cost-sharing fees. Most insurance policies include terms of cost-sharing -- such as co-payments and co-insurance -- that apply to different kinds of medical care. Out-of-network cost-sharing is usually more expensive for the patient, so the NSA works to ban surprise billing that arises from out-of-network cost-sharing for most emergency and some non-emergency care.
• Clear explanation of benefits. The NSA requires patients be notified of their full billing protections before being asked to sign any waiver of said protections, so they cannot be tricked into accepting balance billing without fully understanding their options. If a patient decides to waive their protections after this notice, they are free to do so.
• Ensures good faith estimates. Without an insurance policy to lay out the cost of care, it can be impossible for patients to guess how much they will be billed for medical care. The NSA requires uninsured patients -- or anyone choosing not to pay through insurance -- be able to receive a good faith estimate for their cost of care, in advance of service(s) being rendered.

Through these new protections, the goal is that the No Surprises Act will be able to minimize the difference in costs between in- and out-of-network care, during specific instances of medical care and eliminate instances of surprise medical billing.

Under what coverage do protections apply?

Healthcare coverage is more complex than simply insured and uninsured. The No Surprises Act is designed to help reduce unexpected charges for out-of-network medical care for all kinds of patients, but these protections vary depending on the kind of coverage you have. This federal law is also designed to supplement any existing protections, rather than supersede them, so some patients may find they are already covered by state law.

Protected groups include the following:

• Individuals insured through employer group plans.
• Individuals insured through the Health Insurance Marketplace.
• Individuals insured through directly purchased individual insurance plans.

Additional coverage includes the following:

• The uninsured and anyone paying without insurance are obligated to be given a good faith estimate of costs upfront, before any medical services have been rendered.

The following groups are already protected against surprise medical bills through participating programs and are exempt from the No Surprises Act legislation:

• Individuals insured through Medicare.
• Individuals insured through Medicaid.
• Individuals insured through TRICARE.
• Individuals who receive care through the Indian Health Service.
• Individuals who receive care through the Veterans Health Administration.

What to do if you receive a surprise bill

The protections now in place through the No Surprises Act mean that you shouldn't be receiving any surprise bills for your medical care. In the instance that you do receive an unexpected bill for medical care, the No Surprises Act can still assist you. This is true whether you are insured or not, but the protocols will vary between the two.

If you are insured under a qualifying plan and you receive a balance bill for emergency care, out-of-network air ambulance providers or non-emergency out-of-network care at an in-network facility, you can appeal the decision from your health plan. Under the No Surprises Act, it is the responsibility of the insurance company and the healthcare provider to agree on a total payment sum that the insurance plan is meant to pay out. The covered individual should only be paying the costs outlined in their in-network plan, including any co-insurance, co-payments and deductibles. The plan provider and the healthcare provider must come to an agreement through an independent dispute resolution process, which is outlined in the No Surprises Act. The patient-provider dispute resolution process is there to ensure you only pay the appropriate healthcare costs.

If you are uninsured or paying for medical care without insurance, then you are still offered some protections in the instance of balance billing. Since you are owed a good faith estimate up front, a balance bill would qualify as a surprise medical bill if your payment amount is $400 or more over the estimate. You are entitled to file a dispute of this charge within 120 days of receiving the bill, through the new dispute resolution process. This arbitration will determine the correct amount for you to pay and is overseen by a third party to ensure a fair ruling.

If you think your healthcare provider or insurance provider is not meeting the new standards laid out by the No Surprises Act, you can submit a complaint. This can be done online through the official CMS website or by contacting the No Surprises Help Desk phone line, which is open from 8 a.m. to 8 p.m. EST, seven days a week.

Challenges of the No Surprises Act

The No Surprises Act was intended to offer greater consumer protections for patients receiving surprise medical bills, but there have been some difficulties with its implementation. The goal has been to enable patients to only pay in-network costs for some out-of-network care, but this has been a complicating factor for physicians who have chosen to remain out-of-network for various insurance plans. Through the independent dispute resolution process, final payment determinations should be fair and reasonable for both healthcare provider and insurer -- but this is easier said than done.

Since the No Surprises Act went into effect, the following challenges have been observed:

Determining the qualifying payment amount (QPA)

When setting an appropriate sum for the patient to pay for any covered services under the No Surprises Act, the U.S. departments of HHS, Labor and the Treasury had to define the QPA. This was first done through the Interim Final Rule: Requirements Related to Surprise Billing, Part 1. Officially, the QPA is listed as the median in-network rate, but some healthcare providers believe the definition allows for a much lower sum to be calculated and enforced. Subsequent issuances did little to change this situation, leading many providers to conclude the QPA figures favored the insurance companies.

The reaction from physicians was so severe that two lawsuits were filed against HHS in 2021 -- one by the Texas Medical Association and the second by the American Medical Association. These lawsuits were still pending when the No Surprises Act went into effect. Since then, several lawsuits have been filed against HHS, contesting the calculation of the QPA. While some have been resolved, there are still pending lawsuits today.

High volume of billing disputes for HHS

Due to the disagreements over what balances should be paid for these covered services under the No Surprises Act, there has been a sharp increase in billing disputes. Some critics believe that this also creates an opportunity for insurers to delay payments by filing dispute claims even when the case does not qualify. These disputes are meant to be handled by a third-party arbitrator under the terms of the independent resolution process, which requires a substantial amount of extra administration.

The increased volume in disputes has proved overwhelming for HHS to process, creating a backlog of cases for external review. While these disputes remain unresolved, healthcare providers cannot receive correct payments for their services, which places undue strain on the providers. This resolution process has also been made more complicated by the lawsuits that have been filed and their resulting rulings. Since the definitions of QPA keep changing, it can be very difficult for arbitrators to settle on the right figure.

Lack of consumer awareness

The successful implementation of the No Surprises Act relies on all parties being transparent about the new consumer protections. Many patients might not know about this piece of legislation and therefore won't know about their new rights when it comes to balance billing. Hopefully, the insurer and provider take care of this on their behalf, but this does not always occur. While the No Surprises Act allows patients to file a complaint if their insurer or provider is not complying, this requires the patient to know about the NSA in the first place.

Similarly, while the NSA guarantees the right to a good faith estimate, uninsured and self-paying patients must still request this estimate to later file a dispute against surprise medical bills. This matter is made more complicated by the ongoing lawsuits filed against the NSA, which seek to change the current terms.

How providers avoid complying with the No Surprises Act

Since the No Surprises Act prohibits providers from charging out-of-network prices in certain situations, this has cut into the revenue healthcare providers bring in. This has not been well-received by all providers, and some try to avoid compliance with NSA terms. Here's how some might do that.

No explanation of benefits or good faith estimate to uninsured and self-paying patients

Uninsured and self-paying individuals must have a good faith estimate to compare their surprise medical bills against if they want to file a dispute. They must also be told all their billing protections before they sign any waiver so they know what they are giving up.

Some providers might decline to offer this explanation or an estimate -- and if the patient doesn't know to ask, they won't be able to get the information they need for a future dispute. Since it can be hard to prove what a patient was or was not told, this leaves the patient vulnerable to surprise billing.

Filing an arbitration claim to delay compliance

Since the NSA requires both the provider and insurer to agree on a fair payment, providers can refuse to accept the insurer's proposed in-network costs. In these cases, either party can file an arbitration claim, but the backlog of cases means these bills are often not resolved for months on end.

In the meantime, the provider may continue to bill the patient for their chosen amount -- which patients may ultimately just pay due to fear and confusion over their rights. By dragging out this process -- sometimes unnecessarily -- providers can pressure the patient to just accept the initial charge.

Madeleine Streets is a senior content manager for WhatIs. She has also been published in 'TIME,' 'WWD,' 'Self' and Observer.'