Surprise Bills No More—So What Will Docs Get Paid?

By: Jennifer Berman, CEO of MZQ Consulting

As we have previously shared, effective for plan years beginning on or after January 1, 2022, “surprise billing” is prohibited. This means that plan participants can only be billed in-network rates even when they go to out-of-network providers for “protected services.” These protected services include emergency services, services provided at an in-network facility by an out-of-network provider, and air ambulance services. 

This creates a gap between what the plan participant pays and what the provider charges that needs to be filled. Consider the following example, in which a participant has an emergency visit to an out-of-network hospital:

Total Amount Charged by Hospital:$2,500  
Plan In-Network Negotiated Rate for Same Services:  $1,000  
Participant Coinsurance:20%  
Paid by Participant:$200  
Amount Plan Would Pay In-Network:$800  
Balance “Due” to Hospital:$1,500

The Dispute Resolution Process

The participant can no longer be billed this $1,500 “balance”—so, the question becomes, what does the provider get paid? The payor in this scenario is the plan, but the plan hasn’t agreed to pay the provider what they are billing, and the provider hasn’t agreed to accept less. Guidance recently issued by the Departments of Labor, Treasury, and Health and Human Services sets out the framework for how this disconnect will be resolved. This new procedure, which generally applies if there is not an otherwise applicable process at the state-level, is described below:

Step 1Plan issues initial payment or denial of payment to provider.The payment or denial must include a statement informing the provider: That they may initiate a negotiation within 30 business days; That if that negotiation is unsuccessful, an independent dispute resolution process is available; and how to contact the plan to initiate the open negotiation period, including a phone number and e-mail address.
Step 2Provider accepts payment as total payment or issues a “Open Negotiation Notice” within 30 business days.The open negotiation notice must include: Information sufficient to identify the items or services at issue, including the date provided and service code; The initial payment amount or denial of payment; An offer of an amount the provider will accept; and contact information for negotiating the claim.
Step 3The parties agree to a payment amount within 30 business days, or 30 business days elapse and the open negotiation period ends.   After the open negotiation period ends, both parties have 4 business days to request an independent review through the independent dispute resolution (IDR) process. The IDR process is initiated using a new web portal the Federal government is creating for this purpose.   A Notice of IDR Initiation can be filed on the portal. The notice must include: Information sufficient to identify the items or services at issue; The names and contact information of the parties involved; That state where the items or services were provided; The commencement date of the open negotiation period; The preferred IDR Entity (i.e., the third-party entity that will review the case);An attestation that the items or services at issue are covered by the No Surprises Act; The qualified payment amount; and General information describing the Federal IDR process for the non-initiating party.
Step 4The parties agree to an IDR Entity, or one is assigned by the Federal government.   If the non-initiating party does not object to the IDR Entity requested within 3 business days, that IDR Entity is assigned.   If the non-initiating party objects, the parties have 3 business days to agree to an IDR Entity.   If the parties do not agree, an IDR Entity will be randomly assigned.The IDR Entity is the third-party responsible for determining the amount the plan will ultimately pay the provider.   Strict conflict of interest rules apply to ensure that the IDR Entity does not have any material, familial, or professional relationship with either party.
Step 5Within 10 business days after the selection of the IDR Entity, each party submits an “offer” to the IDR Entity.This offer must be expressed as both a dollar amount and a percentage of the qualified payment amount (QPA).   The QPA is generally the median in-network contracted rate that the plan pays for the items or services at issue. If a plan does not have sufficient information to determine their median contracted rate, they can use a database free from conflicts of interest to determine the QPA.
Step 6Within 30 business days after being chosen, the IDR Entity must select one of the offers presentedThe IDR Entity must select the offer that is closest to the QPA unless creditable evidence submitted by the parties clearly demonstrates that the QPA is materially different from an appropriate out-of-network rate.   For these purposes, the IDR Entity may not take into account: Usual and customary charges; Any amount that would have been billed to a plan or insurance carrier; or reimbursement rates payable by any public payor (such as Medicare).
Step 7IDR Entity issues written decision.The written decision is provided to the parties and the Federal government. It must include the rationale for the IDR Entity’s decision. If that decision was not the closest offer to the QPA it must also include: A detailed explanation of the additional considerations relied on; whether the information about those considerations submitted by the parties was credible; and the basis upon which they determined that the QPA was materially different from the appropriate out-of-network rate.
Step 8The plan pays the provider any balance due within 30 calendar days from the date the IDR Entity issues its written decision.The IDR Entity’s decision is binding on all parties.  Following the issuance of a decision, the same parties may not enter into the IDR process again regarding the same items or services for 90 calendar days. This “cooling off” process is designed to encourage entities to mutually agree to pricing moving forward. The IDR’s fees are ultimately paid by the losing party.

Expansion of External Review Rules

The No Surprises Act also amends the external review rules created by the Affordable Care Act (ACA) by adding to the types of determinations that may be subject to external review. Notably, these new categories are subject to external review for ACA grandfathered plans—thereby creating the first external review requirements for those plans. 

The new determinations that are subject to external review include:

  • Services constituting “Emergency Services” under the No Surprises Act definition;
  • The claimant is asserting the plan did not apply the No Surprises Act appropriately relative to out-of-network services provided at an in-network facility;
  • The issue relates to whether the participant consented to treatment from an out-of-network provider; and
  • There is question as to whether a service that may be subject to protection under the No Surprises Act was coded correctly.


Many of the requirements of the No Surprises Act will be handled by insurance carriers and claims administrators, including those outlined above. Plan sponsors are, however, generally responsible for ensuring that the new participant notice regarding their rights under the No Surprises Act are distributed. These notices should be distributed with the other legal notices generally provided during open enrollment for the first plan year beginning on or after January 1, 2022. We will continue to monitor developments and bring any additional information to you as it becomes available.

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