No surprises act & price transparency rule: impact & strategy

During 2021, 28 Million Americans exhausted their savings due to medical debt. This issue spans generations, and is no longer a concern isolated to the older, sicker populations: 42% of Millennials struggle with medical debt while seeing their health decline faster than the previous generation as they age. At the same time treatment costs for Millennials are projected to be as much as 33% higher¹.

Those millennials are experiencing U.S. healthcare during a time where employment-based coverage and high deductible plans have fostered their need to know the economical outcomes of care.

The perspective of today’s patients has changed. New patient mentality and public policy have created an environment where digital innovations and care connected journeys are no longer luxury attributes but minimal requirements for care.

Schedule a meeting with our experts to discuss best practices on how both payers and providers can adjust their strategy to comply with this policy update.

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Two pieces of heavily contested legislation, go into effect starting next year that directly speak to the consumers need for digitalization and where the broken economics of healthcare can only be resolved through the adoption of data integration reform.

One out of five medical claims and one out of every six hospitalizations in the U.S. includes a surprise bill; they are the primary cause of medical debt². Surprise bills occur when a patient receives an unexpected bill for care services from a provider who is not part of their health plan’s network. Often, these patients did not know they were receiving care from an out-of-network provider because they can occur when they have little say in where they receive care, such as an emergency care event. Another common way to incur a surprise bill is at in-network hospitals or other facilities receive care from an ancillary provider who are not in-network.

The patient is often responsible for the cost burden of surprise bills. A health plan that generally doesn’t cover out-of-network care, such as an HMO, might deny the entirety of a surprise bill, or plans may pay a portion of the bill but leave the patient liable for balance billing.

Thus, the long disputed No Surprises Act, or No Surprise Billing (NSB), which addresses the expanding costs of care, was signed into law on December 27, 2020.

This legislature includes many requirements, including the Price Transparency Rule. If the NSB is the equivalent of the removal of a tumor, the Price Transparency Rule would be the chemo to cure the cancerous U.S. healthcare body. Going into effect July 1, 2022, the Price Transparency Rule requires that both hospitals and insurers must reveal long-confidential pricing data, including the rates that insurers pay for services.

The Transparency Rule also includes mandates for underlying negotiated rates paid to healthcare providers, historical information on charges from and payments to out-of-network providers, and negotiated rates and historical prices for covered prescription drugs.

The one-two punch of No Surprises Act and the Price Transparency Rule will serve as the catalyst for payment reform in U.S. healthcare and work to usher the industry into the age of consumerism. In this white paper, we’ll look at how both payers and providers can adjust their strategy to comply with both the act’s mandates.

A closer look at the act

The Consolidated Appropriations Act COVID-19 relief bill became law on December 27, 2020. It is a comprehensive, $1.4 trillion legislative package that includes COVID-19 related relief for physicians and provides funding for healthcare-related government operations through the end of the fiscal year 2021.

The new law includes the “No Surprises Act” (the Act), which allows for price transparency, provider directories, and patient financial protections that impact health plans, physicians, facilities, and other non-MD/DO licensed health care professionals effective January 1, 2022³.

Specifically, the law applies to out-of-network providers and facilities delivering emergency care and out-of-network providers delivering emergency and non-emergency care at in-network facilities. The law also protects patients from surprise bills from out-of-network air ambulance services.

The No Surprises Act contains key protections to hold consumers harmless from the cost of unanticipated out-of-network medical bills, essentially removing the member from the equation and no longer allowing them to be balanced billed for those services.

The law establishes significant penalties for violation of balance billing prohibitions, requires a consumer complaints process, and grants appeal rights to consumers whose health plans do not appropriately recognize and cover surprise medical bills. It also creates an independent dispute resolution process for determining payment for claims that would otherwise result in surprise bills. These Independent Dispute Resolution Entities (IDRE) are certified to ensure the timely and efficient provision of determinations.

The application: what type of Insurance is included in the acts and what supersedes it, state or federal?

One of the complexities around the NSB implementation is that many states have laws enacted today to protect the consumer from balance bills. However, those existing laws only cover state governed plans which makes up about 18% of the insured. Meaning that roughly 80% of members now have broader protections⁴. For all Providers, Payers or Vendors operating in multiple states managing requirements can be difficult.

As the NSB is written, payers and providers must first apply existing State laws, so long as they meet the mandates of the Federal Act. States may enforce federal requirements against health plans they regulate (including non-group health plans and fully insured employer-sponsored plans). Federal law enforcement may be required if states are failing to substantially enforce requirements.

For states without an applicable law on the books, the Federal law will apply the Qualified Payment Amount (QPA) to all out-of-network claims. The QPA is generally the median of the contracted rates of the plan or issuer for the item or service in the geographic region.

Out-of-network providers wishing to bill patients will need to obtain a notification of consent, asking patients to wave their balance bill protections. However, some states have strict applications of consent which is governed by the Ethics of Physicians Oath and careful consideration is required.

For the Price Transparency Rule, starting July 1, 2022, each hospital operating in the United States will be required to provide clear, accessible pricing information online about the items and services they provide in two ways:

1. As a comprehensive machine-readable file with all items and services

2. In a display of shoppable services in a consumer-friendly format⁵

How do the CMS requirements help the patient to a shoppable market given it does not represent what patients are going to owe with allowable and cost shares? CMS agrees that meeting the mandates of the legislation does not provide a shoppable market. The Price Transparency Rule does drive to the goal of enabling of data analysis and fostering private-sector innovation to boost consumer shopping behaviors. In essences, allows secondary vendors to help create a consumer centric market.