Unpacking the No Surprises Act, Its Impact on Emergency Medicine

The federal No Surprises Act (NSA) went into effect on January 1, 2022, to protect patients from surprise medical bills. Specifically, those that may result from out-of-network (OON) emergency services, items and services provided by OON providers at in-network facilities, and OON air ambulance services. 

Under this law, OON providers cannot bill patients for an amount greater than the patient's in-network cost-sharing obligation. Instead, OON providers must negotiate with the patient's insurer to collect adequate payment for their services. 

"The law achieved its goal of protecting patients from unexpected medical bills," explains Dr. Andrea Brault, President and CEO of Brault Practice Solutions. "But, on the provider reimbursement side, the rules remained unclear or under construction for the greater part of this year. Now, we're seeing the indirect impact this has had on the entire reimbursement landscape." 

Payer behavior changed following passage of the NSA

Provider groups typically have contracts with most of the commercial payers in their area. So, many believed the NSA would have little impact on their practice since the law is narrowly focused on OON medical services. 

"But when the law went into effect, we noticed an abrupt change in payer behavior. Many payers lost interest in maintaining in-network status," explains Dr. Brault. "Some walked away from active in-network negotiations while others sent letters of cancelation to their in-network providers. Payers were pushing more providers into OON status and then dramatically reducing their payment rates for OON services." 

The result was an explosion of OON payment disputes being submitted for independent dispute resolution (IDR).

More OON providers, OON payments disputes 

When the NSA was established, there was a general belief that the IDR process would have moderate or possibly even low usage. The expectation was that payers and providers would either opt for more in-network agreements or use the 30-day negotiation period to settle payment disputes before ever reaching IDR.

Less than 18,000 cases were originally estimated for IDR in the first year of the NSA. But, data shows that more than 90,000 disputes have already been submitted since the IDR portal launched in April – with more than half of those cases requiring IDR. And only 3,500 payment determinations were actually made in that same period. 

 The remaining IDR cases are still pending or have been added to the rapidly growing backlog of delayed cases. 

Regulation inconsistent with the law's intent

"Payers were initially emboldened by favorable language in the interim final rule," explains Dr. Brault.  

In the interim final rule (IFR) published September 30, 2021, arbitrators in the IDR process were directed to assume that the qualifying payment amount (QPA) set by the payer was the appropriate OON rate. The QPA is generally the median of an insurer's contracted rates for a particular item or service in the same geographic region (as of January 31, 2019, and adjusted for inflation). The QPA serves as the benchmark rate for patient cost-sharing under the NSA.

"By making the QPA the presumed amount for determining final payment, regulators were effectively changing the law," explains Dr. Brault. "But, the QPA was never meant as a tool to set rates. In fact, Congress had previously rejected proposals that made the QPA the default payment."

The NSA already specifies several other factors that should be considered in the final payment, including patient acuity, provider training and experience, market share, teaching status, and prior contract status or negotiations.

"But, instead of following the language in the law, regulators tipped the scale in favor of the QPA," says Dr. Brault. 

Providers immediately took issue with this guidance, arguing that the IFR created a bias that would prioritize payment offers closest to the QPA rather than allowing arbitrators to exercise discretion and weigh all relevant factors as stated in the law. 

This frustration led to a lawsuit from the Texas Medical Association, which argued that the interim rule was inconsistent with the law's original intent. The court quickly ruled in their favor, ordering the QPA language to be stricken from the IFR.

Updated regulation attempts to alleviate provider concerns

The final rule, published on August 19, 2022, addressed a few concerns related to the prior interim rules, including issues with the IDR process and the role of the QPA in determining final payment.

"This final rule takes some steps in the right direction," says Dr. Brault. "For example, the requirement to presume the QPA as the appropriate OON rate has been removed. IDR entities can now consider other factors in their determination, but only if they haven't already been calculated into the QPA, i.e., no double counting."

Providers argue that this shift in language is still problematic because it puts the burden on them to decipher how each payer calculates their QPA. Many also point to recent payer behavior and their reluctance to share information, even when the law requires it. 

"The NSA established a requirement for payers to provide the QPA along with their initial payment," explains Dr. Brault. "Yet, an analysis of OON emergency department claims found that less than 2 percent of OON payments included a QPA for the services billed."

Providers contend that there's already a lack of transparency and the new double-counting language will likely force more claims into IDR. 

Lack of information creates an additional burden

"Lack of information sharing has become commonplace under the NSA and has thrust additional burdens onto the providers and IDR," says Dr. Brault. "Another example is the determination of eligibility for the federal IDR process under the NSA."

In March of this year, the government created a specific set of RARC codes to identify whether a particular claim falls under federal or state jurisdiction. This is known to the payers at the time of their initial payment, and the idea was that payers could apply these codes upfront to help IDR entities determine which cases were eligible for dispute resolution under the NSA. 

"However, payers rarely apply these specific codes at the time of payment, and there is nothing in the regulatory guidance to compel them to do so," says Dr. Brault. "Instead, the work got passed on to the IDR entities who soon realized that making this determination is a challenging and time-consuming effort."

Data shows that of the 91,000 disputes submitted for IDR, more than 22,000 were deemed ineligible.

"This is a lot of administrative work and unnecessary expense that could have been avoided by simply using the RARC codes created for this exact purpose," explains Dr. Brault. "But, instead of requiring payers to use these codes, regulators have accepted this additional burden placed on the IDR entities and passed the cost onto the providers in the form of higher administrative fees." 

Overwhelmed IDR entities face even more requirements

"Now, the final rule has added even more requirements to the IDR infrastructure that is already overwhelmed," adds Dr. Brault. 

The new final rule adds the requirement for IDR entities to provide a written explanation of all the factors considered in their final ruling and the weight given to each consideration. 

"The reality is that the IDR entities were not prepared for the sheer volume of claims or the complexity of these OON payment disputes. And now we're asking them to do even more work," says Dr. Brault. "Many providers fear this will only exacerbate the issues we're already facing with IDR backlogs, ongoing payment delays, and increased costs."

Emergency medicine groups feel the reimbursement pinch

"This new reimbursement landscape has had a big impact on emergency medicine groups," says Dr. Brault. "Especially those with independent group practices or those in rural or underserved communities who are more sensitive to cash flow issues."

EMTALA requires emergency providers to provide care to anyone who presents to the emergency department. Unlike other specialties, emergency medicine groups cannot adjust their business model when a reimbursement shift causes a revenue reduction. For example, they cannot reduce hours or accept fewer uninsured patients. 

"Emergency groups are already facing payment challenges, including lower Medicare and Medicaid reimbursement rates," says Dr. Brault. "So, these new issues with reduced OON payments and IDR delays have a compounding effect."

Potential relief on the way 

These rules are now final, but providers are still working toward some form of relief. 

"As a first step, the industry is already working with regulators to develop FAQs," explains Dr. Brault. "This would at least offer more specific guidance to address some of the vague language in the final rules."

The Texas Medical Association has also filed a second lawsuit in response to the final rule, which promulgated "double counting." Again, arguing that the rules do not support the law's intention to provide a dispute process in which multiple factors are equally considered. Several agencies have already filed amicus briefs in support.  

"As a last resort, these groups could advocate for a congressional hearing and argue that regulators didn't preserve the law's intent," says Dr. Brault. "But, none of this is guaranteed to happen or even help. So, emergency groups need to start examining how much of their revenue comes from OON claims – and determine what changes should be made if OON reimbursement continues down this current trajectory."

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Brault is a revenue cycle and practice management organization that partners with hospitals and independent physician groups. Their intelligent practice solutions include coding and billing, MIPS optimization, provider documentation training, and practice management. Learn more at www.Brault.us