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At Nine Months, No Surprises Act Can Barely Crawl

Sept. 21, 2022, 8:00 AM

As with any major new health-care program, the No Surprises Act is off to a challenging start.

The act, which went into effect Jan. 1, is aimed at restricting surprise billings—bills sent to a patient by out-of-network providers that gave the patient with either emergency care or non-emergency services while they were treated in an in-network hospital or ambulatory surgery center.

However, the act’s implementing regulations are incomplete, and regulators have announced delays in enforcing other important provisions of the law, while some enforcement mechanisms are still under construction between the federal and state governments.

The NSA’s short implementation timeline—six months or less between the passage of the act’s implementing rules and its effective date—posed numerous challenges to plans and providers.

Moreover, both have been required to operate under a regulatory regime established by interim final rules promulgated without meaningful feedback from stakeholders or answers from regulators to important questions.

Further complicating matters, professional organizations representing members impacted by the act promptly filed lawsuits aimed at invalidating portions of the interim final rules. The lawsuits claimed the regulations were inconsistent with the law.

As a consequence, health-care providers and facilities continue to struggle with understanding the NSA, operationalizing its requirements, and anticipating what’s coming next.

Claims Adjudication and Payment

The NSA establishes a 30-day process for plans to make an initial payment to providers with claims covered by the NSA and requires those payments to include information on the applicable qualified payment amount and a plan contact for providers that wish to pursue open negotiations.

However, a number of plans and providers report that they have not yet fully established their NSA procedures for negotiating disputed qualified payment amounts due to lack of federal guidance on key issues.

Some providers report that they are not receiving initial payments within the required time frame or they are receiving the initial payments without the required qualified payment amount information.

Failure to receive the qualified payment amount from the plan directly impacts the provider’s ability to accurately calculate and bill the patient for their cost sharing.

Status of Enforcement

Luckily for many, enforcement of the provisions that went into effect in January has been light to non-existent.

For fully insured plans and providers, the NSA contemplates a state-heavy enforcement regime, with the Centers for Medicare & Medicaid Services taking enforcement actions where states either fall short or lack the authority to enforce various elements of the law.

Beginning in late 2021, CMS began issuing individual enforcement letters describing CMS’s agreement with a particular state or territory on responsibility for NSA enforcement between federal and state regulators. Tennessee remains the only state for which CMS has yet to issue an enforcement letter.

There are four basic enforcement approaches contained in these agreements: state-only, federal-only, collaborative (state and federal regulators work together to enforce various elements of the act), and bifurcated (state and federal regulators each have exclusive enforcement authority over specified elements of the NSA).

Additionally, providers and facilities are concerned that the enforcement moratorium on the convening/co-provider good-faith estimate rules of the NSA will be lifted in January 2023, as CMS has intimated.

Enforcement of these rules was delayed because of acknowledged challenges relating to building the infrastructure required for providers and facilities to share the information necessary to comply. For many, those challenges remain.

As a result, the American Hospital Association recently wrote to the CMS administrator, asking that she consider extending the enforcement moratorium on these rules.

Status of Litigation

Earlier this year, rulings in two cases from the US District Court for the Eastern District of Texas—Tex. Med. Ass’n v. HHS and LifeNet Inc. v. HHS—invalidated a portion of the interim final rules implementing the NSA’s independent dispute resolution process for providers and payors. The rulings found that the rules deviated too substantially from the NSA.

The interim final rules direct entities subject to the independent dispute resolution process to use the qualified payment amount as the baseline for determining the appropriate out-of-network rate, which the court found was not supported by the NSA.

In response, the administration posted revised guidance on the independent dispute resolution process, removing language from the prior version that directed entities to more heavily weigh the qualified payment amount than other evidence.

The administration also filed an appeal to the court’s decision in the Texas Medical Association case, but moved to stay it pending the issuance of a final rule intended to correct the defects the court identified in the interim final rules.

Recent Regulation

Meanwhile, the Department of Labor published a rule on Aug. 26 finalizing several provisions of the interim final rules. Specifically, the DOL rule finalizes some disclosure requirements that payors need to share about the qualified payment amount when downcoding claims.

The DOL rule, in light of the two court decisions, removes the direction to independent dispute resolution entities to place higher emphasis on the qualified payment amount.

Payors and providers will have to wait for additional guidance or finalized regulations on the many other aspects of the interim final rules. Nonetheless, providers and plans hoping to remain NSA-compliant will need to continue to monitor these and other developments.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Author Information

Helaine Fingold is a member of Epstein Becker Green in Baltimore. She has worked at the CMS and the Medicare Payment Advisory Commission, and she represents clients ranging from small start-ups to large corporate entities with multiple subsidiaries.

Philo Hall is a member of Epstein Becker Green in Washington, D.C. He counsels health plans, providers, manufacturers, and related investors on complex reimbursement issues arising under Medicare and Medicaid law and policies.

Robert Hearn is a member of Epstein Becker Green in St. Petersburg, Fla. His practice focuses on litigation and regulatory, compliance, and business counseling work, with an emphasis on the health-care and life sciences sector.

Erin Sutton is an associate at Epstein Becker Green in Chicago with a focus on state and federal health regulatory analysis.