Be Equipped to Address the Fallout of this Legislation
On July 1, 2021, the Departments of Health and Human Services, Labor, and Treasury, and the Office of Personnel Management issued an interim final rule to implement fundamental parts of the No Surprises Act (NSA). Despite the disarming title, the No Surprises Act will lead to many surprises, around lack of parity in reimbursements within a market. In upcoming years, payers and providers will be forced to evaluate their value proposition, market positioning, customer/patient transparency, and data analytics.
The NSA contains key protections to hold consumers harmless from the cost of unanticipated out-of-network medical bills. According to the Kaiser Family Foundation, “surprise bills lead the list of affordability concerns for many families; 2 in 3 adults say they worry about unexpected medical bills, more than the number worried about affording other health care or household expenses. Surprise bills can number in the millions each year.”
While the major implications of the NSA will benefit consumers, the severity of impact that this legislation will have on payers and providers will depend on how they react. In this post, we’ve worked to summarize this new law and discuss some of the ways that both providers and payers can be prepared to act.
The Impact on Payers
- Health plans must cover surprise billing at in-network rates.
- Meaning: The impact of a provider going out-of-network will be significantly diminished. This will level the playing field in regard to rates and how in-network providers can use going out-of-network as a means to secure better rates.
- Detail: This does not mean out-of-network rates will be equal to in-network rates. Rates will be based on a “Qualified Payment Amount” (QPA). According to Health Affairs, the QPA will be calculated by “taking the contracted rates of all plans or all coverage offered by the insurer in the same insurance market for the same or similar item or service, that is provided by a provider in the same or similar specialty or facility of the same or similar facility type, and provided in same the geographic region.”
Knowing the median amount will drive out-of-network rates, Stratasan’s Market Reimbursement Analyzer (MRA) can be of particular value to payers. MRA can equip payers with median reimbursement rates across a market, giving them a benchmark for planning and a better idea of what to expect from QPA calculations.
- Health plans must provide transitional continuity of coverage.
- Meaning: Health plans must issue a notice to enrollees when a provider or facility leaves a plan while it is providing ongoing care.
- Detail: In some cases, health plans must also provide transitional coverage for up to 90 days or until treatment ends (whichever is earlier) at in-network rates. The transitional coverage requirement applies to treatment for serious or complex health conditions, institutional or inpatient care, nonelective surgery, pregnancy, and care for patients with a terminal illness.
- Health plans must maintain accurate provider network directories.
- Meaning: Health plans and issuers must establish a verification process to update provider directory information at least every 90 days.
- Detail: Health plans also must respond within one business day to requests from individuals about whether a provider or facility is in-network. This information becomes binding.
Impact on Providers
- In-network rates will likely be adjusted to offset the out-of-network impact.
- Meaning: If providers know they will begin to lose money they historically made from out-of-network billing, they will need to make up for those losses somehow. One way to do this is an incremental increase in in-network rates. This will allow providers to make more off of each in-network patient while also boosting the out-of-network “median.”
- Detail: It will take time for markets, payers, and providers to find a new balance with the limiting of out-of-network billing. MRA makes it possible for providers to understand the rate spread in their market. This will be key for providers positioning themselves in a way that meets the economic needs of the system and is attractive to the payers.
- Balance billing is prohibited.
- Meaning: Out-of-network providers of emergency services will not be allowed to balance bill patients beyond the applicable in-network cost-sharing amount.
- Detail: This is targeted at emergent care, not all care. Balance bills can still be sent by providers or facilities that provide non-emergency care that is not explicitly covered by the NSA (outpatient mental health providers, for example, or services delivered in a physician’s office, will not be covered).
- Out-of-network providers cannot bill for excess charges.
- Meaning: This is essentially an extra layer of protection for consumers. The law states that providers “shall not bill, and shall not hold patients liable” for an amount that is more than the in-network cost-sharing amount for such services. Without the direct language, out-of-network providers could continue to bill patients for the full amount and only later refund the excess amount when and if a patient learns surprise billing protections apply.
- Detail: This puts the burden on out-of-network providers to know the patient insurance status and the appropriate in-network QPA for the surprise medical bill.
From the increased administrative burden to decreased out-of-network reimbursements, payers and providers will have to reposition themselves to one another, and the consumer, as reimbursement parity limits pricing differentiation. Understanding how this will be calculated, and the ability to model that internally, will be essential in determining how this repositioning will impact organizations in the long term.
As referenced earlier, in most cases, the in-network cost-sharing amount will be based on a health plan’s median in-network rate paid for a given service in 2019, with that QPA indexed for subsequent years. The “how” is fairly straightforward if you have reliable data that shows market reimbursement trends across providers, payers, and service lines.
Stratasan’s curation of this data within the MRA will provide access to the most frequent, recent data with quarterly updates. Users of this tool will be able to review market-specific data and track how rates have changed over time.
If your team is working to make adjustments based on this new law and could use in-depth market insights that will help you plan and strategize your next move, then let us know. Request a demo of the MRA today and start developing a better understanding of the rate spread in your market.