For two years, from the end of 2018 through the end of 2020, congressional leaders explored different policy solutions to protect patients from surprise medical bills. A February 2020 Bulletin article outlined the leading policy options last year to address surprise medical bills at the federal level.1 From the outset, the American College of Surgeons (ACS) advocated for a comprehensive solution that would remove patients from the middle of the payment negotiations between providers and insurers and that would require equitable and coordinated efforts by health care insurers, hospitals, and physicians.
Throughout the process, the ACS consistently advocated for surprise medical billing legislation that would protect patients, increase insurance plan transparency and accountability, and address narrow and inadequate networks. Furthermore, the College opposed any solution that would rely on a benchmark payment rate (also known as rate setting) based on negotiated in-network rates or a percentage of Medicare to pay for out-of-network (OON) care. The ACS asserted that a viable solution to surprise billing issues should strike a careful balance, allowing physicians and insurers to negotiate a final payment through a fair, independent dispute resolution (IDR) process, while protecting patients from surprise medical bills.
Differing committee perspectives
All congressional committees agreed on the end goal of protecting patients from surprise medical bills, but the primary committees of jurisdiction had differing opinions on the structure of the legislation. Original versions of bills offered by the Senate Health, Education, Labor, and Pensions (HELP) Committee and the House Energy and Commerce Committee did not include an IDR process and set a benchmark payment rate for all OON care at the median in-network rate. The ACS asserted that this bill would unfairly tip the scales in favor of insurance companies—giving plans significant leverage during contract negotiations.
Facing pressure from opposing congressional leaders and opposition from physician organizations, subsequent versions of the legislation and alternative compromises from those committees included an IDR process but placed significant limitations on claims eligible for this type of resolution process. Inclusion of an IDR process was an important step; however, the limits placed on accessing the process rendered it practically unusable.
The House Ways and Means Committee offered an alternative approach in the Consumer Protections Against Surprise Medical Bills Act of 2020, H.R. 5826.2 This legislation did not set a payment rate for OON claims, and it offered an open negotiation period during which insurers and providers could try to resolve a payment dispute. If that process failed, the bill provided a mediation mechanism to settle the payment dispute. No minimum amount was set for a claim to be eligible for the mediation process. While the mediation allowed for consideration of the median in-network rate, it was not the sole factor to be considered. This legislation was viewed as more favorable to physicians than the alternative proposed by the other key committees.
Momentum for advancing surprise medical billing legislation stalled with the onset of the coronavirus 2019 (COVID-19) pandemic. Although surprise medical bills resulting from treatment for COVID-19 garnered the attention of congressional leaders, the first iteration of COVID-19 relief legislation only included a ban on balance billing for providers who accepted COVID-19 relief funding. As a condition of eligibility, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, H.R. 748/P.L. 116-136, banned balance billing of presumptive and confirmed COVID-19 patients. Physicians had to certify that they would not try to collect more money from COVID-19 patients than the patients would have been expected to pay if the services had been provided in-network.
The ban applied to patients covered by commercial, government, or employer-sponsored insurance plans. While further congressional action on surprise medical billing seemed to be losing steam, then-President Donald Trump issued an executive order (EO), which called on Congress to act on a solution before the end of the year. Although the EO did not have a mechanism for a solution, it kept surprise billing as part of the dialogue through the end of 2020.3 As the 116th legislative session began to wrap up, congressional leaders were eager to issue another round of COVID relief, extend government funding, and address a few remaining critical issues, which provided an opportunity to include surprise medical billing legislation in the end-of-year appropriations package.
Bipartisan leaders reach a compromise
On December 11, 2020, leaders of the Senate HELP Committee and House Committees on Education and Labor, Energy and Commerce, and Ways and Means announced a comprehensive bipartisan, bicameral agreement on the No Surprises Act.4 Subsequently, this agreement was included in the last-minute funding and COVID-19 relief package on December 21. The Consolidated Appropriations Act of 2021, H.R. 133/P.L. 116-260, was signed into law December 27, 2020.
A revised version of the No Surprises Act was included in the legislation. Starting January 1, 2022, plans and providers (including hospitals, facilities, individual practitioners, and air ambulance providers) will be prohibited from billing patients more than in-network cost-sharing amounts. The prohibition applies to emergency care and to certain nonurgent situations in which patients are unable to choose an in-network provider.
The compromise combines elements from the various proposals, but also makes key changes to the IDR process and eliminated the median in-network benchmark payment for OON care. These changes were intended to address some of the key concerns of the physician community. The ACS has consistently opposed using the median in-network payment rate as the default payment for OON care. The Congressional Budget Office (CBO) has previously acknowledged that most health care services are delivered within patients’ networks, and more than 80 percent of the estimated budgetary effects of previous versions of the No Surprises Act would arise from changes to in-network payment rates. The CBO and Joint Committee on Taxation maintain that if OON care were reimbursed at median in-network rates, payments to providers—inside and outside of networks—would converge around those median rates.5
This surprise billing legislation is a dramatic shift from the initial versions offered in 2018 and 2019, which would have allowed health plans to pay the median in-network rate to OON physicians who were not chosen by the patient and with no opportunity for independent review. The ACS had actively opposed initial surprise billing legislation and many subsequent versions because they lacked a strong independent review process and relied too heavily on the median in-network payment rate. Although the legislative language is imperfect, and the ACS did not support it, it is significantly improved compared with the legislation from two years ago.
The legislation holds patients harmless from surprise medical bills by ensuring they are responsible only for their in-network cost-sharing amounts, including deductibles, in both emergency situations and certain nonemergency situations in which patients are unable to choose an in-network provider. Furthermore, the No Surprises Act prohibits certain OON providers from balance billing patients unless they give patients notice of the treating providers’ network status and an estimate of charges 72 hours before receiving OON services and patients consenting to OON care.
To ensure patients are not relying on outdated provider directories, the law includes provisions that require health plans to have up-to-date directories of in-network providers. The directories must be available to patients online or within one business day of an inquiry. Patients who provide documentation that they received incorrect information from an insurer about their providers’ network status prior to a visit will be responsible only for the in-network cost-sharing amount. Patients’ cost-sharing amounts are based on the median in-network rate for 2019, adjusted for inflation.
Resolving payment disputes
In states that have passed surprise billing laws, the legislation defers to state payment standards or dispute resolution processes for state-regulated group and individual plans. In addition, in states that have all-payor model agreements, the amount approved under that system should be applied in lieu of the federal payment standard. The process outlined in this article will otherwise be applicable to federally regulated plans. Having two systems in place for some states will likely create confusion and add an additional burden to physicians; however, until the federal law is implemented, it is impossible to know the full impact of two separate dispute resolution processes.
To reconcile payment disputes between plans and providers, the legislation calls for a 30-day open negotiation process between the parties and then a prescribed IDR process if negotiations fail. Specifically, the IDR process does not set a minimum dollar threshold for claims eligible for IDR and allows for batching of claims for similar services when claims are from the same payor. IDR entities shall be independent, unbiased bodies with no affiliation to providers or payors. The IDR entity must pick one of the amounts submitted by the parties and the loser pays the cost of the IDR process.
The IDR is required to consider the following factors:
- Market-based median in-network rate.
- Relevant information brought by either party.
- Information requested by the reviewer.
- Provider’s training and experience.
- Patient acuity and the complexity of furnishing the resource or service.
- In cases involving facilities rather than health care professionals, the IDR entity shall consider the teaching status, case mix, and scope of services of the institutions.
- Market share of either party.
- Demonstrations of good faith efforts (or lack thereof) to enter into a network agreement.
- Contracted rates during the previous four plan years.
- An IDR body may not consider billed charges or public payor rates.
Following IDR, the party that initiated the process may not take the same party to IDR for the same claim for 90 days following a determination by the IDR entity so as to encourage settlement of similar claims. However, all claims that occur during the 90-day period may still be eligible for IDR upon completion of the 90-day period.
The ACS has concerns about delays in payment related to the 90-day cooling-off period; however, the legislation included a provision that calls for a study of whether the 90-day suspension results in delayed payment determinations or affects resolution through open negotiation. The report shall be submitted to Congress on an interim basis no later than two years and the final report no later than four years after implementation. The final report will review whether any health plans have a pattern or practice of routine denial, low payment, down-coding of claims, or abuse of the 90-day suspension of the IDR period. Additionally, the report will include recommendations on ways to discourage such a pattern or practice.
Notice and consent requirements for surgeons
One specific area of concern is the responsibility and corresponding burden placed on providers by the notice and consent requirements for nonemergency services. The law provides for exceptions to the balance billing protections when patients who receive nonemergency services from OON providers consent to receive those services from those providers. This exception does not apply to non-ancillary services. However, the requirements for surgeons who still opt to treat OON patients may be rather burdensome. Patients must provide written consent to take responsibility for OON amounts, including OON cost sharing and any balance billings with respect to the patients’ health plans.
To satisfy the notice and consent requirement established in the No Surprises Act, eligible providers or facilities must obtain the required consent from patients or their authorized representatives within 72 hours of the date of the delivery of the items or services. The notice and consent may be given on the date of the appointment, if patients make an appointment within 72 hours of furnishing the items or services.6
According to the No Surprises Act, the notice must comply with the following requirements:
- Clearly state that consent is optional and that the patient may instead seek care from a participating provider or participating facility, with respect to their particular health plan
- State that if the enrollee obtains the services from a participating provider or facility, then the patient’s cost sharing cannot exceed the cost sharing applicable if the item or service is furnished by a participating provider or participating facility
- Be available in the 15 most common languages in the geographic region of the facility
- Be retained by the OON provider or facility for at least seven years after the date on which the item or service is furnished
Information required in the written notice is as follows:
- The provider or facility is nonparticipating with respect to the health plan
- A good-faith estimated amount that the provider or facility may charge the patient, including a notification that the provision of the estimate or the consent to be treated does not constitute a contract with respect to those estimated charges
- A list of any participating providers at the facility who can furnish the items and services involved and that the patient may be referred, at their option, to that provider
- Information about whether prior authorization or other care management limitations may be required in advance of receiving the items or services at the facility
- The consent form must acknowledge, in clear and understandable language, the following items:
- The patient was provided with the written notice
- The patient was informed that the payment may not accrue toward meeting any limitation that the health plan places on cost sharing, including the in-network deductible
- The patient had the opportunity to select the form (paper or digital) of written notice
- The patient received the written notice in the chosen form
- The date of receipt of the written notice and date on which the enrollee signed the consent
Rulemaking will fill in the details
The legislation included a lot of information about the process for handling OON claims, but some of the details will become clearer once the Biden Administration begins the required rulemaking process before the law’s implementation. Specific details will depend on those regulations, particularly with respect to the notice and consent requirements, as well as the IDR process. Rulemaking also will come into play to determine the methodology for calculating the median in-network rate for the purposes of IDR consideration, as well as an enrollee’s in-network cost-sharing information.
Congress has recognized the imbalance in the playing field between physicians and insurers. At the end of the last session, in a last-minute legislative push, Congress passed the Competitive Health Insurance Reform Act H.R. 1418/P.L. 116-327. The legislation was signed into law January 13. The law repeals the insurance industry’s exemption under the McCarran-Ferguson Law regarding health and dental insurance. This long-overdue reform is one step in the process of putting insurance plans and physicians on equal footing with respect to contract negotiations.
The ACS has long argued that inadequate insurance networks are the root cause of surprise medical bills. Legislation aimed at effectively and permanently remedying surprise billing must address network adequacy. Unfortunately, the No Surprises Act did not include network adequacy improvements. Should Congress choose to consider options to strengthen the Affordable Care Act, it could provide a legislative opportunity for network adequacy improvements.
The ACS maintains that insurance plans must be mandated to meet minimum standards of network adequacy to include contracting with an adequate number of surgeons, specialist and subspecialist surgeons, emergency physicians, and hospital-based physicians. In addition, Congress should consider geographic and driving distance standards, as well as maximum wait times. Comprehensive oversight and rigorous enforcement of network adequacy will be required from both federal and state governments to ensure the effectiveness of such requirements. As opportunities for improving network adequacy requirements arise, the ACS will continue to engage with policymakers.
- Zlatos C. ACS continues to press for a congressional solution to surprise medical bills. Bull Am Coll Surg. 2020;105(2):25-31. Available at: bulletin.facs.org/2020/02/acs-continues-to-press-for-a-congressional-solution-to-surprise-medical-bills/. Accessed February 2, 2021.
- U.S. House of Representatives. Consumer Protections Against Surprise Medical Bills Act H.R. 5826. Available at: www.congress.gov/bill/116th-congress/house-bill/5826/text. Accessed February 2, 2021.
- Executive Office of the President. An America-First Healthcare Plan. E.O. 13951 of September 24, 2020. Federal Register. Available at: www.federalregister.gov/documents/2020/10/01/2020-21914/an-america-first-healthcare-plan. Accessed February 3, 2021.
- Senate Committee on Health, Education, Labor, and Pensions. Congressional committee leaders announce surprise billing agreement. December 2020. Available at: www.help.senate.gov/chair/newsroom/press/congressional-committee-leaders-announce-surprise-billing-agreement. Accessed February 2, 2021.
- Congressional Budget Office. Congressional budget cost estimate. H.R. reauthorizing and extending American’s Community Health Act. Available at: www.cbo.gov/system/files/2019-09/hr2328.pdf. Accessed February 3, 2021.
- Fuchs B, Hoadley J. Summary of the No Surprises Act (H.R. 133, P.L. 116-260). The Commonwealth Fund. Available at: www.commonwealthfund.org/sites/default/files/2021-01/Surprise_Billing_Law_Summary_v2_UPDATED_01-19-2021.pdf. Accessed February 3, 2021.