Understanding the Interplay Between the No Surprises Act and State Laws

The No Surprises Act (NSA), which was part of the Consolidated Appropriations Act, 2021, that became law in December 2020, restricts medical providers from sending consumers surprise medical bills for emergency care, transport by air ambulance, or non-emergency care at an in-network facility when patients are unknowingly treated by an out-of-network doctor or lab.

The NSA includes a provision that exempts enforcement in states that already have surprise billing statutes on the books. Currently, there are 33 states that have either partial or comprehensive laws protecting consumers against surprise billing. If state law does not cover a service that is subject to the NSA, the NSA will apply. And in some situations, both the NSA and state law could apply to a single medical occurrence.

For example, there are some states with no surprise billing laws that do not cover out-of-network services. However, the NSA applies to all emergency services, including out-of-network providers and facilities. “Emergency services” is broadly defined in the NSA, encompassing services provided before and after a patient’s emergency condition has been stabilized. However, most state surprise billing laws have a more narrow definition of “emergency services” that excludes post-emergency stabilization. So it is feasible that both a state law and the NSA could apply to a single emergency medical occurrence.

Cost-Sharing

The NSA limits cost sharing for out-of-network services to no higher than in-network levels, requires such cost sharing to count toward any in-network deductibles and out-of-pocket maximums, and prohibits balance billing. The cost sharing amounts must be calculated based on one of the following amounts:

  • An amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act.
  • If there is no such applicable All-Payer Model Agreement, an amount determined under a specified state law.
  • If neither of the above apply, the lesser amount of either the billed charge or the qualifying payment amount, which is generally the plan’s or issuer’s median contracted rate.

Payment Disputes

The NSA defers to state law on the resolution of payment disputes between out-of-network providers and insurers. Therefore, payment dispute methods in the 17 states with comprehensive protections – and perhaps even some of the states with partial protections – would remain in effect. Federal law would also defer to state law in states with an “All Payer Model Agreement” to determine what an insurer will pay an out-of-network provider. However, NSA arbitration rules will apply to self-funded plans regulated by the Department of Labor.

The NSA will take effect for health care providers and facilities on January 1, 2022. For group health plans, health insurance issuers, and Federal Employees Health Benefits (FEHB) Program carriers, the provisions will take effect for plan, policy, or contract years beginning on or after January 1, 2022. 

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.
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