How the No Surprises Act Affects Physician Reimbursement Strategies

When the federal No Surprises Act (“NSA”) took effect on January 1, 2022, it changed the relationship between patients, insurers, and out-of-network providers. The NSA was designed to protect patients from surprise medical bills by limiting “balance billing” in certain situations and capping patient cost-sharing obligations at in-network levels. Congress recognized that disputes would inevitably arise between health plans and providers regarding appropriate reimbursement for out-of-network services. As a result, the NSA established a federal Independent Dispute Resolution (“IDR”) process to resolve payment disputes.

For physicians, the NSA is not just a patient protection law. It is also a reimbursement law that can significantly affect revenue cycles, payer contracting strategies, and negotiations with commercial health plans – and many physicians have no idea of the potential payments they may be entitled to under the NSA. 

Prior to the NSA, patients often received unexpected bills after receiving care from out-of-network providers, particularly in emergency settings or at in-network facilities where they had little control over which physician provided treatment. In many cases, providers could bill patients for the difference between their charges and the amount paid by the patient’s insurer, a practice commonly known as “balance billing.”

The NSA generally prohibits “balance billing” for:

• Emergency services provided by out-of-network providers;
• Certain non-emergency services provided by out-of-network practitioners at in-network facilities; and,
• Certain air ambulance services.

Because physicians can no longer seek payment directly from patients in many of these situations, disputes regarding payment amounts now occur primarily between providers and health plans. This is the mechanism physicians may not be aware of.

The federal IDR process serves as a form of arbitration between the provider and the payer. If a provider disagrees with the insurer’s payment determination, the parties first enter an open negotiation period. If negotiations fail, either party may initiate the federal IDR process, where a certified arbitrator reviews the competing payment proposals and selects one of them.

Unlike traditional litigation, the process is intended to be faster and more efficient. However, success frequently depends on the quality of the evidence submitted and the provider’s ability to demonstrate why its proposed reimbursement amount more accurately reflects the value of the services provided.

One of the most important aspects of the IDR process is understanding the factors that may influence the arbitrator’s decision. The NSA directs arbitrators to consider the “Qualifying Payment Amount” (“QPA”), which is generally the health plan’s median contracted in-network rate for the service in a particular geographic area. The QPA often serves as a significant benchmark in the dispute process.

However, the law also permits consideration of additional factors, including:

• The physician’s level of training, experience, quality, and outcomes;
• The market share of the provider and health plan;
• The acuity and complexity of the patient’s condition;
• The provider’s teaching status, case mix, and scope of services;
• Previous good-faith efforts to enter into network agreements; and,
• Historical contracting rates between the parties during the previous four years, where applicable.

These factors create opportunities for physicians to distinguish themselves from other providers and demonstrate why reimbursement above the insurer’s initial payment offer may be justified.

The implementation of the NSA has been accompanied by substantial litigation, particularly concerning the weight that arbitrators should give to the QPA. Provider organizations, including the Texas Medical Association, challenged federal regulations that effectively directed arbitrators to presume that the QPA should be the primary factor in determining reimbursement. A federal court agreed that the statute did not authorize regulators to elevate the QPA above the other factors specifically listed by Congress.

These legal challenges are important for physicians because they reinforce the principle that the IDR process should involve a comprehensive evaluation of all relevant circumstances, not simply a comparison to an insurer-generated benchmark rate. For providers seeking higher reimbursement, this distinction can be significant. It is important to engage legal counsel or experts that understand these distinctions.

Physicians who may become involved in the IDR process or believe the process could apply to services they provided should take a proactive approach to documentation and payer relations. If a physician believes the NSA and the IDR may be applicable, an experienced attorney can help navigate the complexities and seek adequate reimbursement, potentially for care provided and which the physician would otherwise go uncompensated. 

For many healthcare practices, understanding the dispute resolution framework is now an essential component of revenue cycle management. Physicians who proactively collect relevant data, maintain records supporting their market position, and develop a thoughtful arbitration strategy may be better positioned to secure fair reimbursement when out-of-network payment disputes arise.

As this legal issue continues to develop, physicians and their practices should work with knowledgeable legal counsel to understand their rights and potential recourse. If you believe the NSA or IDR applies to you, we have the ability to help! Reach out for an initial consultation today and find out how much reimbursement you may be entitled to.