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No Surprises Act and Its Impact on Self-Funded Plans

The following is an edited version of an interview of Ryan Day, President of HST, and Colleen Dempewolf, Director, Strategic Product Development at MultiPlan, conducted on October 5, 2021, by Dorothy Cociu, President of Advanced Benefit Consulting for the Benefits Executive Roundtable. You can listen to the podcast here.

DC: Some self-funded health plans have replaced their networks with a form of health plan financing called referenced-based pricing.  What is referenced-based pricing and how does it work?

RD: Reference-based pricing is a way to price claims in lieu of or in addition to a provider network.  When we talk about reference-based pricing, we’re trying to determine a fair price for the service(s) received, and we use benchmarks, including Medicare and cost, to do that. Plans use reference-based pricing differently. Some use a network and then use reference-based pricing for out-of-network claims.  Some use a network for professional claims and reference-based pricing for facility claims, and others use it completely in lieu of a network.

DC: Balance billing is something that reference-based pricing plans have to deal with sometimes. Before the No Surprises Act, what is the average percentage of claims that balance bill in your experience?
RD: When you don’t have a network, providers can sometimes balance bill the members. When you look across HST’s book of business, which is just under 900,000 members, our acceptance rate among providers is 98%.  Pushback does happen, but we take steps ahead of time to avoid it.  The proactive procedures we have in place include pre-pricing claims, offering tools so that providers can figure out pricing ahead of services, or giving tools to the members through the mobile app and the website so they can see who’s accepting reference-based pricing before scheduling care.

DC: What does an RBP vendor like HST do when a participant receives a balance bill?
RD: We have a patient advocacy center to help members with balance bills. The member is assigned a case number and a patient advocate who will work with them throughout the balance billing process. We also have communications to educate members so that they understand who we are, what we do, and even what type of plan they have. We talk to the provider and see if we can come to a resolution, and we keep the members updated along the way. We’ve found our members prefer texts. So we’re able to automate communication. That is, when we update our systems, texts are automatically sent out to update the member, if they opt in. Members can also choose to be updated by telephone, email and regular mail.

DC: Do reference-based pricing plans and vendors have a head start in dealing with the No Surprises Act as it relates to balance billing issues?
RD: Yes, absolutely. We already have to have the ability to negotiate claims after they have been paid, which is a new requirement under the Act. We also already have the analytics and tools to determine what other people are paying for that service at other like providers. So much of what we already have in place with our patient advocacy center will be helpful in dealing with the No Surprises Act.

DC: The new law assumes, to a certain extent, that a health plan has a network in place. So what happens when a plan doesn’t use a network, and instead uses a referenced-based pricing approach?
CD: The law does appear to make that assumption, but in the Interim Final Rule published in July, the regulators gave hints as to how they expect these plans to work. They mention indemnity plans with no facility network, and confirm our thinking that these plans will limit surprise bill protections to emergency and air ambulance claims. This is because there is no such condition as an out-of-network provider at an in-network facility if there are no facilities in network. The rule also clarifies that any ad hoc agreement between the plan and facility would be considered as a contracted facility for purposes of protecting members. So reference-based pricing plans are, for the most part, limited to ER services except where these agreements exist. 

DC: Some RBP plans pay all claims using a referenced-based pricing approach and some use RBP only for facilities. What do you think will be the biggest difference in relationship to the No Surprises Act for those with networks for professional services and those that are fully RBP?
CD: Use of a professional network won’t significantly increase the scope of surprise bills. There is still no facility network, so the impact for the most part is only ER and air ambulance claims — unless there are facility agreements in place, which for most RBP plans is very limited. Whether there is a network or not, RBP plans need to be ready to comply with the law in pricing emergency claims and air ambulance claims. To the extent they have agreements with facilities or providers, they’ll need to consider those the same as network contracts when identifying surprise bills.

DC: HST was purchased last year by MultiPlan.  Can you tell us what advantage that may be to RBP plans, whether or not they have a network in place?
RD: For plans that have a professional network or want to add a professional network, HST’s relationship with MultiPlan allows us to make the network tightly integrated with the reference-based pricing. Before the acquisition, plans would have to have two contracts, two electronic connections and claim submission processes, two service organizations, two invoices – two of everything. Now, we are able to deliver the network and the pricing under one program. We also give the member a better shopping experience because we can identify in the app which providers are available under a network contract with 100% acceptance, along with the HST acceptance rates we present for facilities.

DC: Let’s back up for just a moment for educational purposes.  The No Surprises Act addresses primarily emergency services, non-emergency services delivered out-of-network in an in-network facility, and out-of-network air ambulance services.  How will these services be paid by a RBP plan?
CD: It’s important to understand that the No Surprises Act doesn’t prescribe how the plan pays the provider initially, only that the member can’t be balance billed.  Instead, the plan and provider must reach an agreement or take the case to arbitration. This means the plan can continue to reimburse surprise bills using the current reference-based price. Any disagreement would be handled in the same manner it is today, except instead of the member starting the process by reporting a balance bill, the process starts with the provider not being satisfied with the initial reimbursement.

DC: Please explain the coordination between the claims payor, like a TPA, and the RBP vendor, in relation to the No Surprises Act.  How important is the cooperation and communication between the two parties?
RD: It’s critical. It’s always better for the employer if the RBP vendor and TPA have a relationship based on cooperation and communication. With the No Surprises Act, there are new complexities in the relationship between the provider and the plan so this close communication is even more important, especially as we all learn how the new requirements will play out. What we’ve seen in the past is that not all laws make sense in practicality, and there are adjustments that need to be made. Aspects of the law create fundamental changes for the industry that we all need to understand, comply based on that understanding, and then experience and react to the outcomes as the new plan year unfolds.

DC: Let’s talk about one of the new acronyms created by the No Surprises Act,  the Qualifying Payment Amount, or QPA.  Can you explain, in layman’s terms, what the QPA is?
CD: The QPA is the median contract rates of the plan adjusted for CPI in urban markets, or CPI-U. For reference-based pricing plans that have a professional network, any professional claim not matched to a provider in the network needs to have a QPA calculated. That QPA is what is used to determine the member’s share of the cost. It also becomes an important value during arbitration if the claim goes that far. The Interim Final Rule published in July was unclear whether the QPA also applies to facility claims where there is no facility network, and therefore no contract to determine the median. We have some ideas, but we’ve asked the regulators for clarification. The plan also may decide to revise reimbursement for surprise bills to be something closer to the QPA to minimize the likelihood of a negotiation and arbitration.

DC: The QPA will basically add steps to the claims-payment process.  Self-funded health plan sponsors will have to rely on their TPAs to assist them in the QPA process and determine a Qualifying Payment Amount.  However, many TPAs will not be able to do that on their own.  They will need to look at their PPO networks to assist, or if the plan sponsor is self-funded, their RBP vendor.  What role will an RBP vendor like yourself have in this process?
CD: MultiPlan agrees it is the primary PPO’s role to provide the QPA when a claim submitted for network pricing was not matched to a provider. We are prepared to provide the QPA for all claims we price through our primary networks, and that includes customers using HST for facility pricing and a MultiPlan primary network for professional pricing. This means TPAs using MultiPlan and HST services in combination will get the QPA back from us for any out-of-network claim. Without it, they can’t adjudicate the surprise bill claim correctly. We built this QPA calculation technology for our own use, but we designed it to be something that can work with any network. So MultiPlan also can determine QPA for a TPA based on networks other than ours.

DC: Let’s talk about arbitrators and their role in the QPA process.  Arbitrators will have to determine a baseline factor that they will consider when determining a final amount to be paid under the new Independent Dispute Resolution (IDR) process.  The Interim Final Rules under the No Surprises Act state that if a payor, such as a health plan, cannot resolve a payment settlement with a provider, then the payer and provider must resolve the payment dispute using negotiation and arbitration.  Some call this a “baseball-style” arbitration system.  What role will RBP vendors play in the IDR process and what makes an RBP vendor like HST different from other RBP vendors?
RD: Having the resources from MultiPlan gives HST an advantage. MultiPlan has built technology to be able to handle the QPA so that says a lot. When it comes to the No Surprises Act, the process doesn’t end with negotiations. If we can’t reach an agreement with the provider, either the plan or provider will take that claim to arbitration. To help the plan determine that best final offer for arbitration, HST will use not only our significant technology and analytics but MultiPlan’s technology and analytics too. To take it a step further, we can also manage the arbitration process from start to finish on the plan’s behalf.

DC: There is concern that RBP plans and payment levels that are based on a percentage above Medicare rates may not be able to be sustained with the No Surprises Act.  Do you see the percentage of Medicare payments to providers increasing due to the No Surprises Act?
RD: We don’t see that. We looked at the impact of the No Surprises Act on HST’s book of business, and it was minimal. We don’t see a lot of appeals from providers, even those that are “surprise billers.” But the law shines a spotlight on surprise bill reimbursement so we are expecting some pushback that we haven’t historically seen because we now potentially will have to adjust some reimbursements on the physician side. We have looked at the QPA of the PHCS Network, which is MultiPlan’s primary network that most of our customers use, and compared it to our RBP customers. There will be some higher rates on some emergency bills, but we don’t believe it is substantial enough to water down the savings of RBP vendors.

DC: So people don’t have to worry if they’re using reference-based pricing that they will have to go from something like 150% of Medicare to 400% of Medicare?
RD: No, I don’t think so. Not on an overall basis. Some particular claims will increase. Plans will have to adopt plan language that allows them to go above and beyond their normal operating corridors on the Medicare plus pricing. They’ll have to have some latitude to play relative to the QPA. You could be in the 200% range or a little higher for some of the physician claims, but these are usually the smaller dollar claims. Also for HST, we give the provider significant benefits they don’t normally have without participating in a network. With our mobile app, we actually steer members to providers that have a high HST acceptance rate. So, they get the benefit of network steerage even without network participation. These benefits contribute to our high acceptance rates.

DC: So if a plan pays at 150% of Medicare, and they give you the ability to negotiate up to 200%, they may need to consider raising the 200% a little higher?
RD: Yes, just for the surprise bill claims where QPA is higher. In that way, the pricing still has the teeth you want it to have. You need to have the flexibility to increase reimbursement on surprisebills. This will help avoid arbitration, which no one wants to go to. Arbitration is costly for the plans — and for us.

DC: Let’s talk about options RBP plans may consider with the No Surprises Act.  I’ve heard most commonly “one-off” facility agreements, creating a networked facility or single-case agreements, which may be negotiated before the patient arrives in the hospital or surgery center.  Can you explain what is meant by one-off agreements and what may occur with the No Surprises Act?
CD: The Interim Final Rule speaks to single-case agreements as pertaining to a specific patient. These would have to be considered in identifying a surprise bill, but they aren’t factored into calculating the QPA. RBP plans also often have agreements that aren’t patient specific. We think these are effectively the same as network contracts, and likely would be considered for both surprise bill identification and QPA calculation.

DC: Is there concern that these “one-off” agreements may set precedents, or may be considered a contracted rate under the No Surprises Act?
CD: The regulators were very explicit in allowing for these agreements. They don’t impact the plan’s QPA, but they do increase the scope of the law by requiring the facility with an agreement to be considered contracted for any out-of-network services performed at the facility for a patient’s course of care. We’ll have to wait and see what the long-term impact of these patient-specific agreements are, but on the surface, it seems like a lot of administrative burden for that benefit.

DC: Another option that is talked about is setting up direct provider contracts, but those may be limited to certain services only, and talk is that if providers do other services that weren’t part of the direct provider contract, the providers could opt to balance bill for the additional services, and then we’re back at the beginning again.  Should self-funded plan sponsors using RBP be concerned about this, and if so, what will RBP vendors like HST do to support them and resolve these issues?
RD:We offer direct-to-employer contracts with providers today. A lot of health systems talk about critical mass — how many employee lives, what are you spending, where’s the care going. Having all those talking points gives us an advantage. On the MultiPlan side, we have network contracts and relationships with most health systems. This gives us a big advantage over other RBP vendors because we already know the players and who to talk to.  We don’t see direct provider contracts as a negative.  We see them as a positive. Direct-to-employer contracts will capture more employers’ attention.  They want to purchase healthcare differently, and a direct-to-employer strategy gives them another option along with RBP. We have the relationships in place to make direct-to-employer happen.

DC: How does HST propose to bridge the gap if/when facilities refuse to accept payment entirely from RBP plans, as that has begun to happen, and there is fear that more of that will happen with the No Surprises Act?
RD: Unfortunately, you can have providers who say I’m not going to accept that; you have to pay me cash up-front. If this does happen, we have a tool to assist, namely, Provider Quick Pay. We confirm that the services the provider is rendering fall into the plan guidelines and then we offer a virtual credit card to make the payment in advance of the member receiving the service.  While we have the ability to do this, we don’t want the situation to get that far. The mobile app and website show the providers’ history and information, including their HST acceptance rate. If members see a provider with a red dot, that indicates the provider is giving us pushback or requires payment in advance so they may want to choose another provider. Once a hospital sees that our customers’ members aren’t accessing them, they may become more willing to work with us. We don’t want to steer members around a hospital. We want to steer more business to them.

DC: Should self-funded plans that are considering RBP shy away from this financing method due to the No Surprises Act and if not, why? 
RD: No. The No Surprises Act shines a spotlight on the need for reference-based pricing. We’re all talking about the No Surprises Act and transparency, but we’re dancing around the issue. We have to address the elephant in the room. Healthcare prices have been increasing for years, and they continue to climb. That’s not sustainable. So we have to look at new ways of purchasing healthcare. We have to understand what we’re paying for. We have to prevent people from being devastated from balance bills. We have to make healthcare more affordable. A $5,000 deductible health plan for someone earning $15 an hour is an enormous burden. We need to make it more affordable, and reference-based pricing does that. Reference-based pricing is here to stay.

DC: Are there portions of the No Surprises Act that you are waiting on and wanting additional guidance on from Washington?  If so, what specifically?
CD: Yes, the first Interim Final Rule did not cover all requirements. We are expecting the second Interim Final Rule in October and it should provide detail on the independent dispute resolution process. We also are waiting on rules for how the cost estimate and advanced explanation of benefits requirements will work, as well as the coordinating requirement for providers to furnish a good faith estimate to the member.  (Editor’s Note: the second IFR was released September 30 and did offer guidance on the IDR process, as well as the good faith estimate requirement for providers treating uninsured or self-pay patients.)

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