By: Neil C. Brown and
Some Inside Baseball
Typically, when a person is seeking medical care, he or she will select a provider who is in-network. This is because a provider will discount its list prices (or charges) in order to be included in an insurance plan’s network.1 Hence, a patient will often seek in-network providers because of this lower negotiated rate.2 But in practice, a patient does not always have this luxury. For example, during an emergency visit, a patient may be treated by an out-of-network provider because a patient will not be able to choose his or her provider. As a result, the patient will be billed at full list price, resulting in surprise (and often expensive) bills for medical care.3
To protect patients and their insurance plans against such “surprise bills,” while at the same time respecting a provider’s ability to receive remuneration for services rendered, Congress enacted the No Surprises Act (“Act”). Critically, the No Surprises Act creates a new Independent Dispute Resolution (“IDR”) process to remedy surprise billing situations.
Are We in the Ball Park?4
The Act requires that a patient incurring a bill for emergency medical services from an out-of-network provider pay the provider only the amount that he or she would have paid at an in-network facility.5 In effect, this takes the patient out of the dispute and leaves only the provider and the insurance plan. The resulting IDR process “will determine how much the insurance company will be required to pay, over and above the amount they would have paid if the provider was in-network.”6
At the beginning of the IDR process, there is an initial thirty (30) day “negotiation” window for the parties to agree on a price.7 If the parties cannot reach an agreement by the end of the window, then either party may initiate the Act’s IDR process.8 After IDR has been initiated, the parties have three (3) days to jointly select an arbitrator (“IDR entity”).9 If the parties agree on a price before the end of the IDR process, the parties split the cost of the IDR entity.10 Within ten (10) days of the selection of the IDR entity, the parties must submit final offers. The IDR entity will then select one of the offers submitted by the parties within thirty (30) days.11
After the IDR entity selects an offer, the party whose offer was not chosen pays the costs of IDR.12 This requirement serves as a strong incentive for both parties to pursue a negotiated settlement and avoid IDR at the outset, as IDR increases expected costs for both parties for failure to do so. Ultimately, the IDR process has two goals—to grant remuneration to the out-of-network provider and to discount the amount that the plan will have to pay because of the patient’s lack of choice in selecting an emergency medical care provider.
Tallying the Score Board
HHS will publicly report IDR use and outcomes—creating a transparent atmosphere.13 This, in turn, could potentially create opportunities to improve the system and achieve greater efficiencies. Furthermore, it has been estimated by the Congressional Budget Office that the Act will reduce commercial insurance premiums by anywhere from .5% to 1%, resulting in approximately $17 billion in savings for taxpayers over the course of ten (10) years.14 Meanwhile on February 16, 2021, state legislation relating to surprise billing passed the West Virginia House of Representatives by a vote of 96-0 and is currently being debated in the West Virginia Senate’s Health and Human Resources Committee.15
Parallel to the federal Act, the West Virginia bill contains a provision stipulating that when negotiations for remuneration between the provider and the plan “do not result in a resolution of the payment dispute16 and the difference between the carrier’s and the provider’s or facility’s final offers is not less than $1,000,” then the IDR process – as described above – will be initiated to resolve the dispute. The legislation relating to surprise billing enacted by the federal government and currently being contemplated by the West Virginia legislature may signal a long-term solution to problems associated with surprise billing.
The IDR process detailed in the Act above will be implemented in 2022. In the meantime, Jackson Kelly’s attorneys and staff are dedicated to helping you meet all of your health care compliance needs.
1 See Hyman ET. AL., Surprise Medical Bills: How to Protect Patients and Make Care More Affordable, 108 Geo. L.J. 1655, 1661 (2020).
2 Id.
3 Id.
4 The IDR process created by the Act is similar to professional baseball’s arbitration model in that one of the two parties’ offers becomes the settlement price. Id. at 1665 (2020).
5 42 U.S.C. § 9816(a)(1)(C)(ii).
6 See Hyman ET. AL., Surprise Medical Bills: How to Protect Patients and Make Care More Affordable, 108 Geo. L.J. 1655, 1665 (2020).
7 No Surprises Act § 2799A-1(c)(1)(A) (2021).
8 The process must be initiated during a four (4) day period after the “negotiation” window by serving a notice on the other party and filing the notice with the Secretary of the Department of Health and Human Services (“HHS”). No Surprises Act § 2799A-1(c)(1)(B) (2021).
9 No Surprises Act § 2799A-1(c)(4)(F) (2021). To maintain the integrity and fairness of the arbitration, the Act lays out a process by which an IDR entity must become certified, as well as providing for certain limitations and a process for revoking the certification. See generally No Surprises Act §§ 2799A-1(c)(4)(A)-(F) (2021).
10 No Surprises Act § 2799A-1(c)(5)(F)(ii) (2021).
11 The IDR entity will choose an offer based on the “qualifying payments amount,” the “training, experience, and quality and outcomes measurements of the provider or facility,” “the market share,” “the acuity of the individual receiving such item or service,” and “the teaching status, case mix, and scope of services of the nonparticipating facility. See No Surprises Act § 2799A-1(c)(5)(C)(i)-(ii) (2021). Importantly, the IDR entity cannot “consider usual and customary charges” or payment rates by public payors, including, but not limited to Medicare, Medicaid, and Tricare. No Surprises Act § 2799A-1(c)(5)(D) (2021).
12 No Surprises Act § 2799A-1(c)(5)(F)(i) (2021). Akin to MLB’s arbitration process.
13 No Surprises Act § 2799A-1(c)(7)(A). More specifically, HHS will disclose quarterly: the number of IDR notifications submitted, size of provider practices and facilities, number of times the payment amount was agreed to, total amount of fees paid, the total compensation paid to IDR entities, inter alia. Id.
14 Loren Adler ET AL., Understanding the No Surprises Act, Feb. 4, 2021, https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2021/02/04/understanding-the-no-surprises-act/.
15 To view the bill in toto, please visit https://www.wvlegislature.gov/Bill_Text_HTML/2021_SESSIONS/RS/bills/HB2005%20SUB.pdf
16 H.R. 2005, 85th Leg., 2021 Reg. Sess. (W. Va. 2021).