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How the No Surprises Act Changes Reimbursement

The No Surprises Act (NSA), effective January 1, 2022, changes the reimbursement process for claims identified as surprise bills. While the reimbursement process begins the same way it does for other claims with the provider sending the bill to the health plan for adjudication, the similarities end there. The NSA prohibits members from being balance billed when they inadvertently receive out-of-network care. It doesn’t prescribe the amount that must be paid to the provider, but it does outline how the member’s and payor’s shares of the payment are determined. Here are three key terms you need to know.

The Recognized Amount

According to the NSA, the member’s share must be based on what the new law calls the Recognized Amount (RA), which may or may not be the claim’s allowed amount. The member’s share is determined before the claim is paid, and it can’t be changed even if the plan ends up paying a higher amount. For most ERISA plans, the RA is the lesser of billed charges or the Qualifying Payment Amount described below. For insured claims regulated under state surprise bill laws or All-Payer Model Agreements, or ERISA plans that have opted in to such laws, the RA may be determined by the state law.

The Qualifying Payment Amount

While the NSA doesn’t dictate the amount the plan pays the provider, it does establish an important benchmark, the Qualifying Payment Amount (QPA), which is the median contract rate for the plan as of January 31, 2019, adjusted for urban market CPI (CPI-U). In addition to serving as the RA for ERISA and select insured plans when less than billed charges, the QPA is a required value considered during the Independent Dispute Resolution process described below.

The Out-of-Network Rate

The total amount the plan pays the provider is called the Out-of-Network Rate. It is determined in one of three potential steps. The first step is the initial payment amount. The plan receives the bill and makes an initial payment. This is an amount the payor believes to be an appropriate full reimbursement amount. If the provider accepts that payment, it becomes the Out-Of-Network Rate for this claim, and the reimbursement process is complete.

Open Negotiation is the second possible step. It occurs if the provider doesn’t accept the payor’s initial payment. The plan and provider have 30 business days to negotiate a settlement. If the negotiation is successful, the negotiated amount becomes the Out-Of-Network Rate. If the parties don’t come to an agreement, the process moves to the third potential step, Independent Dispute Resolution (IDR). If reimbursement reaches the third step, both the payor and the provider submit a final offer amount for consideration by a Certified IDR Entity, who will choose one of the two amounts. Typically, the IDR Entity is expected to select the offer that is closest to the QPA for the claim, but either party may submit information supporting the position that the QPA is or is not the appropriate reimbursement in this instance.

Learn how MultiPlan’s Surprise Billing Service can help you comply with requirements of the No Surprises Act.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes. If you have questions about how the No Surprises Act applies to your organization, please consult your legal counsel.