Employee Benefits Compliance, COVID-19

No Surprises Act—What is in it? The Outlaw of Out-Of-Network Emergency Bills

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A surprise addition to the Emergency COVID Relief Act of 2020, the No Surprises Act (“Act”) was added to the COVID relief bill at the 11th hour. This Act brings home, however short it falls, the intent of ending surprise medical billing, as well as adding transparency provisions.

Unexpected Out-Of-Network (OON) care at a facility or by a provider not in the plan network has long provided claims issues for plans and participants.

Further rulemaking is still a necessary part of the process as this Act is in the very early stages of the legislative process. The true effect of the Act on OON claims, and the specific administrative requirements for the Act, is yet to be known at this time of this writing. For example, the rules have yet to answer which OON services are to be covered by the new law.

Depending on an Independent Dispute Resolution process (IDR) to settle payment disputes between insurers, self-insured plans and OON providers, the Act will require claimants and plan sponsors to mediate the disputed OON bill. Using IDR is no doubt the more expensive path (anyone whose retained an attorney can tell you that!). A market-based solution could have provided a more cost-effective process. Providers could abuse this new IDR process by merely out lawyer-ing the self-funded plan.

OON bills subject to the mediation or arbitration provision via this bill include most importantly:

  • OON emergency room visits provided at non-network hospital or freestanding emergency room
  • Services provided by OON providers at an in-network facility
  • OON care provided at an in-network facility without the patients’ informed consent
    • Informed consent must be provided within 72 hours of appointment, where possible; for:
      • Network status
      • Cost of OON care (co-payments, co-insurance; estimate permitted)
        • Offer price comparison tool online to allow cost-sharing comparison
      • Options for in-network providers
      • Other insurance requirements
  • Prohibition on emergency balance billing for air ambulances
  • Exception to balanced billing prohibition for non-emergency performed by OON providers at an in-network facility where provider does not provide the ancillary services. Applicable ancillary services:
    • Emergency medicine
    • Anesthesiology
    • Pathology
    • Radiology
    • Neonatal
    • Items/services provided by assistant surgeons, hospitalists and intensivists
    • Diagnostic services unless they are exempted by rule
    • Items/services provided by out-of-network providers if no in-network providers are available at the facility

Ban on surprise billing for air ambulances is a welcome addition to the Act for any self-funded plan.

The rule prohibiting emergency services balance billing applies for non-ancillary (see above list) services unless receiving  patient/participant’s consent 72 hours in advance of the appointment or on the same day in which the appointment is made if the appointment is made within the 72 hour window.

Consent must include:

  • Network status (whether paying in or out of network)
  • Statement consenting to receive services from an OON provider, that it is optional, and that services may be provided by an in-network provider
  • Good faith estimate of the amount the patient will
    be charged if consenting

State Law

Where no state law exists for air ambulances provided OON, the provider provides the invoice and within 30 calendar days the plan must sent payment or denial. That initial 30 days is a negotiation period.

  • States are charged with enforcing the requirements with penalties of up to $10,000 per violation. Where states refuse to do so, HHS will step in.
  • State law always applies in the area of determining billing. Always consult state law.
  • State law still applies if the care is provided in a state with a law that determines the amount a plan would pay an OON provider. The law varies by state.
  • If in a state that uses an All-Payer Model Agreement (only Maryland and Vermont), use that system. If that applies to your employer group, consult your Leavitt Group representative.

Where there is no applicable state rule, this Act provides the arbitration and IDR process to follow.

Participant Responsibilities

  • Only responsible for in-network payments for same service/item

Provider Responsibilities

  • Must provide costs 72 hours ahead of appointment
  • Must list services provided during visit upon discharge or within 15 days
  • Billing after 90 days may result in penalties, including refund of patient payments, plus interest
  • Providers must submit bills to insurers/self-funded plans within 30 days
  • Provide emergency services without the need for any prior authorization determination, even if out-of-network provider or emergency facility

Independent Arbitration Process (IDR)

The Act mandates that when an insurer/self-funded plan and OON provider do not agree on a final bill, the provider must send a bill within 30 days.

If after 30 days of the provider sending a bill to the plan (de facto negotiation period), if no price was agreed upon, either party may initiate the IDR process. Payors would have preferred a price benchmarking approach while providers prefer a strict arbitration process.

This legislation took the middle ground by using the established median price (based on the price that would’ve been payed if a contracted rate for the same item or service in the same geographic region) and arbitrating a negotiated rate using that as one qualifying payment amount.

An IDR may include:

  • Submission of best and final offer to the IDR entity
    • 30 days to decide

Mediator will consider:

  • In-network median rates for comparable services within the region
  • Provider experience and other quality measures
  • Market share of the provider
  • Treatment acuity
  • Teaching status of the facility
  • Efforts to enter a network agreement
  • Any information parties request to consider

Mediator will not consider:

  • Billed amounts or data sets that include billed charges
  • Public payor rates paid by Medicaid or Medicare
    • Clarity on whether the latter includes a percentage of Medicare is welcome in later rulemaking.

No similar additional arbitration on a similar claim may be made within 90 days of a determination for either party.


The Act provides that the Department of Health and Human Services (HHS) shall establish a process to audit group health plans and issuers by July 1, 2021.

The audit will examine compliance with these requirements, including suitability of qualifying payment amounts. Beginning with the 2022 year, audits will review only 25 group health plans and submit a report to Congress. Reports will indicate which relevant payment adjustments were considered in negotiating bills and the IDR process for OON in comparison to participating facilities.

Action Required

Effective, generally, in 2022, many of these provisions require more clarity through rulemaking. Rulemaking is expected to begin in July 2021.

☑ Self-funded plans may be required to act

  • Update plan documents to amend provisions for which emergency medical services/items require OON coinsurance.
  • Most self-funded plans will rely on their TPAs for compliance with the specific terms of the OON emergency services/items billing changes.

☑ Update plan documents

  • While you do not need to provide the full dispute resolution description in the plan summary, self-funded plan sponsors will have to include employee/participant rights, mentioned above.

☑ Ensure compliant plan documents

  • There are individual rights to submit complaints with enforcement agencies if the documents are noncompliant or insufficient.

☑ Reconsider referenced-based pricing models

  • Implications for referenced-based pricing models are imminent but not yet known.

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Referenced-based modeling may see a shortened shelf life after this Act. Final regulatory process will determine if the effectiveness of this Act will actually read out that Medicare referenced-based model products cannot survive in a world where there is a forced arbitration rule that prohibits consideration of the Medicare pricing as the basis to negotiate settlement of a balanced bill.

Leavitt Group Compliance is here as your Trusted Advisor. As soon as additional guidance is available, we want to be the first to let you know. Be sure you are signed up for our news alerts. If you have not already, sign up for the Leavitt Group news alerts as such breaking news is released there.


Included in this legislation is a provision intended to increase the transparency of health claims data. See below for the limited details available on these transparency provisions.

Federal Grant

States will determine the cost, while the self-funded plans are permitted to ask the state to provide them access to the data for quality improvement and cost-containment. Any submission of claims data to the state database is voluntary. But where doing so, the Department of Labor (DOL) must standardize the form for which the data is submitted.

  • States that seek to establish an All-Payer Claims Database, and
  • States with such database seeking to improve it

Price & Quality Data Gag Clause Ban

The Act included transparency provisions that included a ban on gag clauses in contracts between providers and insurers/self-funded
plans that would prohibit parties from access to cost and quality data on the providers. This prohibition also prevents the self-funded plan sponsor from accessing de-identified claims data typically shared under other legal contracts.

Brokers consultants must disclose to self-funded plans any direct or indirect compensation received for referral services. By establishing this disclosure requirement at the time of contract, transparency will be achieved as the Act intends.

Pharmacy Drug Cost Reporting

Self-funded plans must report certain plan information to the Departments of HHS, DOL and Treasury through a reporting mechanism. Information to be included are plan medical costs, including pharmacy drug spending. A public report will be generated using this information providing pharmacy trends starting 18 months after the Act was enacted and every two years thereafter.

Employer with self-funded plans should be aware of these changes. Be sure to partner with the Leavitt Group as we continue to analyze the law as it happens. Subscribe to Leavitt Group news.