The No Surprises Act, a bipartisan effort to reduce surprise medical bills, was implemented on January 1, 2022. As significant as this legislation is—reducing surprise bills, one of the biggest drivers of medical bankruptcy in America—the act’s true significance is being overlooked.
On one hand, this legislation has the potential to drastically reshape the economics of healthcare in America. On the other hand, it remains unfamiliar to those it affects most—namely, patients, doctors and outpatient surgery centers.
The No Surprises Act (NSA) is the Trojan horse of healthcare legislation (in a good way). In addition to minimizing surprise bills after a trip to the emergency room, it also minimizes surprise bills in non-emergency settings. And most surprising, it requires a level of price transparency for both insurance and self-pay healthcare services. That requirement will affect Americans and the medical establishment far more than price transparency rules imposed on hospitals and the insurance companies in 2021 and 2022, respectively.
In many ways, this bill affects the day-to-day routine of providers more than the Affordable Care Act did. But, many consumers and providers are unaware of the act’s ramifications.
Surprise bills in emergency situations
The aspect of the law garnering the most attention addresses patients that receive treatment in an emergency setting. While insurance may cover much of their “in-network” care, surprise bills can come from other providers in the facility, such as radiologists, who are reading X-rays, that are not in the patient’s insurance network. Depending on the patient’s coverage, these medical bills from out-of-network (OON) providers may not be covered at all, or they might only be partially covered, requiring the patient to shoulder a greater share of the cost.
With implementation of the NSA, the radiologist’s bill in the scenario above will be switched to a lower in-network rate and covered by the patient’s insurance.
Surprise bills in non-emergency situations
The NSA also protects patients from getting surprise bills when they receive treatment from an out-of-network provider at an in-network facility during non-emergency treatment. Consider when a woman delivers a baby at an in-network hospital by her in-network OBGYN.
If the anesthesiologist that places the epidural is out-of-network, that could result in a surprise bill that is not covered by the patient’s in-network benefits. With the NSA, this surprise bill would be covered at the in-network rate.
New price transparency requirements for insured patients
The most transformative aspect of the NSA is the requirement for price transparency in two situations. The first is when a patient chooses to receive care from an OON provider in a non-emergency situation (think plastic surgeon for breast reconstruction after a mastectomy). In the second scenario, the patient is paying for care without insurance (think uninsured or choosing not to use insurance—i.e. self-pay) or non-covered procedures such as cosmetic surgery.
In the case of a patient choosing to receive non-emergent care from an OON provider, they must consent and accept the higher OON charge from the OON doctor. But consent isn’t enough. The patient must be told how much their out-of-pocket cost will be.
That’s not the same as what the doctor will charge. The provider must now give the patient an estimate of their out-of-pocket expense after determining how much the patient has paid towards their deductible and out-of-pocket maximum in that calendar year as well as their coinsurance. By knowing their actual out-of-pocket cost for the care provided by that doctor, the patient is now equipped to make informed financial decisions. This level of transparency was not a guarantee prior to the NSA.
New price transparency requirements for uninsured or self-pay patients
Uninsured or self-pay patients must also now receive an estimate upfront for care, referred to as a Good Faith Estimate (GFE). The GFE is required even for those patients who have insurance but are choosing not to utilize it. Why would someone not use their insurance? There are many circumstances where paying the cash rate is less than the insurance rate, especially if a consumer hasn’t met their deductible yet.
Similar to the estimate a doctor must provide a patient seeking out-of-network (OON) care, the Good Faith Estimate must include the expected costs associated with a procedure. But unlike the OON estimate, there is no cost-sharing calculations since the patient doesn’t have or is not using their insurance.
The GFE also differs from the OON estimate in a more significant way. The provider must include all charges that would be reasonably expected in the patient’s episode of care. That includes not only the doctor, but also the anesthesiology and operating room fee as well as any ancillary fees such as, but not limited to, lab work and radiological or pathological studies.
This GFE must also include a disclaimer that the patient has a right to dispute any charges that are $400 greater than the GFE. To avoid these disputes, doctors are incentivized to ensure accurate pricing upfront, and when appropriate, overestimate additional charges. Not only does this promote transparency by ensuring that possible charges match actual charges, but it addresses the original purpose of the NSA—avoiding surprise bill after a procedure.
Also, while minimizing surprise bills may capture the headlines, the integration of price transparency into the daily routine of the healthcare establishment is the real news here. Prior to the NSA, healthcare was immune to basic market forces such as upfront pricing seen in other sectors of the economy. But now, just like a consumer can determine the cost of a car or house prior to buying, it’s possible to know their costs prior to receiving care, thanks to one transformative Congressional act.
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