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Part Two: How Does the No Surprises Act Affect Medical Bills?

Jan 2, 2023

The No Surprises Act is a landmark piece of legislation passed on January 1, 2022, to protect consumers from surprise medical billing. In just two months after the Act was passed, more than 2 million surprise medical bills were avoided, and if the trend continues, the Act is expected to single-handedly avoid over 12 million unexpected medical bills. This could prevent millions of people from falling into medical debt due to such surprise bills. 

Before the No Surprises Act was passed, patients had little to no idea about the ballpark figure of the total treatment cost in advance. And when they finally get the medical bill after treatment, they have no control over the charges levied and the extent of the insurance coverage. 

The No Surprises Act addresses this flaw by requiring healthcare providers to disclose the out-of-network rates before treatment so patients can make informed decisions. This would allow patients to plan for expensive procedures and know what to expect before going under the knife. 

While this has been hugely welcomed among consumers, healthcare practitioners and facilities need to make some hard-and-fast changes to their billing workflow to comply with the No Surprises Act. 

Key Changes to the Medical Billing Workflow 

Healthcare Providers Are Prohibited from Billing More than the Cost-Sharing Amount 

Patients receiving care from out-of-network providers or facilities can only be charged within the cost-sharing amount. This amount is calculated based on the median rate for similar services in the previous year in that region. 

Under the No Surprises Act, patients can’t be charged for: 

  • Out-of-network cost-sharing for all types of emergency care
  • Non-emergency care at in-network facilities provided by out-of-network providers and
  • Air ambulance services from out-of-network providers.

Instead, this cost-sharing amount is negotiated between the patient’s insurance carrier and their health plan administrator (HPA). The HPA negotiates rates with providers and facilities based on factors such as utilization trends, quality metrics, and provider contract rates. 

Even when the patient has to bear the cost of the services (due to the absence of a health plan or after providing written consent), they can’t be charged more than the cost-sharing amount. They only need to pay the usual in-network charges decided by the cost-sharing amount. 

Healthcare Providers Can’t Raise Balance Bills 

The Act prohibits healthcare facilities from raising balance bills for additional out-of-network care at an in-patient facility. Balance billing happens when the HPA negotiates with the facility to pay a percentage of the total cost of the treatment, and the facility bills the patient for the rest. 

For example, if the total cost of treatment comes to $1000, the HPA can negotiate to pay 40% of the total bill ($400). The healthcare provider will now bill the patient for the remaining amount, which is $600. The No Surprises Act protects the patient from such balance billing and has provisions for patients to raise complaints in case of any violations. 

Healthcare Providers Should Submit the Out-of-Network Bill Directly to the Insurance Companies 

The No Surprises Act requires all healthcare providers to provide patients with clear information about their out-of-network care before they receive services at an in-network facility. Also, the hospital should raise the out-of-network bills directly to the respective HPA for emergency care. The hospital is responsible for giving complete 

information to the HPA, like the applicable protections and the consent for out-of-network care. 

The HPA can negotiate the charges with the hospital within 30 days and should finalize the cost and notify the claim amount of the patient. A dispute resolution case can be filed if both parties cannot agree on the claim. 

Healthcare Providers Can’t Bill the Patient Directly for Out-of-Network Services Without Written Consent 

The primary root causes for creating the No Surprises Act were to prevent patients from getting surprise medical bills and allowing them a choice to make decisions regarding the cost and scope of the treatment. During emergencies, patients may get treated at an out-of-network hospital or physician and pay out of pocket. Or even during non-emergency situations, out-of-network services may be provided in in-network facilities, leading to out-of-network charges. 

To address this issue, the No Surprises Act requires informed consent before providing care. 

The bill would not prohibit patients from being billed for out-of-network care, but it would require them to be notified of those charges and get written consent before the care is provided in non-emergency situations. 

Debt Collectors Can’t Collect Medical Bills Prohibited Under the No Surprises Act 

One of the most important changes to the medical billing workflow by the No Surprises Act is that debt collectors can no longer collect medical bills prohibited under the law. 

This means debt collection agencies can’t pursue cases of surprise billing or charges by an out-of-network provider for emergency care. The Consumer Financial Protection Bureau also issued a bulletin in January 2022 asking the credit bureaus and debt collection agencies to be aware of the legalities and limitations of the No Surprises Act when pursuing debtors with unexpected medical bills. 

So everyone working in medical debt recovery should take a long and hard look to ensure that the debt they’re pursuing isn’t a violation of the No Surprises Act. This would avoid any undesirable consequences for the debt collection agencies as well as the healthcare providers. 

If you’re a medical practitioner looking to recover the debt you’re owed — within the legalities of the FDCPA and No Surprises Act — then book a free consultation call with one of our experts today.