What You Need to Know About the New Surprise Bill Rule

By Katie Keith, JD, MPH
October 8, 2021

Katie Keith provides rapid response analysis of all things Affordable Care Act for Health Affairs’ “Following the ACA” blog, teaches courses on the ACA and LGBT health law and policy at Georgetown University Law Center, maintains a faculty appointment at the Georgetown Center on Health Insurance Reforms and is a member of the 2021 Tradeoffs Research Council.

Congress passed historic legislation last year protecting millions of Americans from the most pervasive types of surprise bills — hundreds or even thousands of dollars charged to patients when they unwittingly get care from an out-of-network doctor or hospital. But the devil is always in the details, and many of those details are becoming clearer thanks to a highly anticipated new rule from the Biden administration that lays out how many key parts of the No Surprises Act will actually work.

As Sayeh Nikpay and Ben Chartok explained on an episode of Tradeoffs earlier this year, the No Surprises Act directs providers and payers to hash out surprise bill payments themselves, taking patients out of the middle. But if the two parties can’t agree on a fair amount to pay the provider for the out-of-network care, they can go to “baseball-style arbitration,” where each side submits an offer and an argument, and an independent arbitrator picks the winner. The new rule lays out how this independent dispute resolution (IDR) process will work and gives guidance on how arbitrators should choose between the competing offers — critical details that will determine whether this law will actually lower health spending or inadvertently raise premiums

The new rule directs arbitrators to select whichever offer is closest to the payer’s median in-network rate for similar care in a given geographic area, also known as the qualifying payment amount. Arbitrators can deviate from that amount if the payer or provider offers sufficient evidence for the need to do so. In other words, the arbitrator must pick whichever number is closer to the amount the payer normally pays providers in the area for that kind of service, and if one party wants to pay less (or get paid more), they’ll have to make a convincing case.

Some stakeholders, namely provider groups, have criticized this new rule. Many wanted the administration to require the arbitrator to consider the qualifying payment amount equally among other factors, such as the level of training or experience of the provider or facility, the market share of the payer or provider, and the complexity of the services provided. Arbitrators can consider those factors, but the rule makes them secondary to the qualifying payment amount. 

State experience suggests the rule’s approach, together with the law’s ban on considering providers’ sticker prices (known as billed charges) as a factor, will help ensure IDR outcomes are predictable. It will also disincentivize providers and payers from using the IDR process to obtain unnecessarily high or low out-of-network payments.

There’s a lot more in this rule than the IDR process — such as new protections for uninsured patients — all of which I and colleagues dig into in all its wonky glory on the Health Affairs Blog. But with the major implementing rules now issued and the No Surprises Act set to take effect on Jan. 1, 2022, the focus will now turn to ensuring that the industry adjusts to (and complies with) the new requirements so patients are fully protected from surprise bills while health spending and premiums are held down.

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