On July 6, 2023, the U.S. Department of Health and Human Services (HHS) released their first annual No Surprises Act (NSA) report. This report focuses largely on establishing a baseline framework for further evaluation, detailing key trends in factors like: the implementation and impacts of state surprise billing laws already in effect, trends in market consolidation and concentration, the impact of market consolidation and concentration on prices, quality, and spending, and trends in OON billing.
We’ll give you the overview below, but if you’d like to read it for yourself, you can find the full report here.
NSA: As we currently know it
Healthcare can be a daunting subject, especially when you’re hit with unexpected medical bills. To alleviate this burden on patients, the NSA was enacted on December 27, 2020.
This legislation aims to tackle the issue of surprise billing (aka where individuals with private health plans receive unexpectedly high medical bills from out-of-network [OON] providers).
More specifically, the NSA sets limits on how much an provider can charge patients for specific OON emergency services, non-emergency services from OON providers at in-network facilities, and OON air ambulance services.
Additionally, the NSA establishes a process to resolve payment disputes between providers, health plans, and issuers. This process, referred to as Independent Dispute Resolution (IDR), was prompted by growing concerns from consumers about the financial strain caused by surprise medical bills.
The IDR process has faced multiple lawsuits and court reviews in 2023. Most recently, on Thursday, August 3rd, a federal judge in the U.S. District Court for the Eastern District of Texas granted partial summary judgment to an ongoing lawsuit filed by the Texas Medical Association (TMA). This will have quite a few consequences for current NSA regulations and IDR processes.
On Jan. 30, 2023, TMA filed its fourth lawsuit (TMA IV) against the federal government, challenging the 600% hike in the administrative fee for initiating the IDR process. In the suit, TMA asked for an order vacating the increase in the administrative fee and additional provisions of the NSA final rule surrounding batching of claims.
As of August 7th, CMS has confirmed suspension of the Federal IDR process as the federal departments involved attempt to provide new guidance consistent with the ruling.
CMS stated that it is reviewing what updates to the process will be necessary in light of the decision and has noted that these updates and additional guidance will be provided in the “near future.”
Here are the consequences as we currently understand them:
- The judge discarded the December 2022 Centers for Medicare and Medicaid Services (CMS) increase in administrative fees for parties to an IDR. The result, for the time being, is that the fee has been reverted back to the original $50.
- The judgment also threw out language in CMS’ final rule governing the Federal IDR process that batching must only be used for same or similar items/services. TMA argued that batching should additionally be available for items or services that are provided to the same patient during the same encounter.
Since the inception of the IDR legislation, Zelis has received more than 2.5M NSA claims with billed charges of ~$3B with a 10% inquiry rate, 5.5% open negotiation rate, and 1.4% resulting in IDR. In other words, the Zelis IDR win rate beats the CMS overall win rate by 45%.
Zelis, your reliable partner in NSA and federal legislation, remains committed to closely monitoring these changes and will promptly update you on any developments from CMS.
For more information about these changing IDR regulations, connect with us.
HHS report findings
The NSA requires annual reports on its impact on healthcare market outcomes for five years. As previously mentioned, HHS’ first annual report focuses on establishing a baseline and a framework for further evaluation. However, there are limitations in estimating the NSA’s current impacts.
The surprise billing provisions came into effect on January 1, 2022, making it challenging to assess the full impact with such limited data. Additionally, surprise bills may only represent a small proportion of total healthcare claims, and the impacts may be concentrated in certain service areas like emergency departments and air ambulance services. And let’s not forget factors like demographic changes, technology advancements, and the COVID-19 pandemic also influence trends that may make it difficult to directly attribute changes to NSA policies.
One study conducted interviews with regulators and stakeholders, indicating that the NSA seems to protect patients from common forms of balance billing. However, evidence on its broader impact is limited, and it’s too early to assess its effects on health insurance premiums and other areas.
Future reports will continue to explore the NSA’s impact by utilizing various study designs, statistical methods, and qualitative approaches as more data becomes available.
The wrap up
The NSA, as well as its corresponding rulings and updates (yes, we’re looking at you, IDR), will have long-term implications across the healthcare ecosystem. But these mandates, as confusing and ever-changing as they may be, serve as an opportunity to develop innovative solutions that leverage the current healthcare industry in creative ways.