The erosion of out-of-network (OON) reimbursement is accelerating. The No Surprises Act (NSA) became effective on January 1, 2022, empowering payers to have greater control over managing the cost of care by creating reimbursement limits and parameters. The NSA Interim Final Rule with Comment (IFC) titled “Requirements Related to Surprise Billing; Part II,” issued on September 30, 2021, and the corresponding “Requirements Related to Surprise Billing: Final Rules,” issued on August 19, 2022, created an environment where health plans can utilize their self-determined qualifying payment amount (QPA) to suppress OON reimbursement and pressure high-reimbursing in-network providers to accept lower in-network contractual arrangements. Despite efforts made by organizations such as the Texas Medical Association (TMA) challenging the usage of QPA in the Final Rule, OON reimbursement continues to be suppressed, leaving uncertainty with provider reimbursement.
These activities signal lighter paychecks for providers, creating instability in access to emergency medicine (EM) providers and placing increased pressure on hospital executives. EM providers who are OON are on the front lines of patient care and have historically depended on robust OON payments. The NSA creates immediate risk for reductions in reimbursement. In turn, hospital executives should be prepared for increased demand by EM providers to offset losses in reimbursement with subsidies, coupled with renegotiation of professional services agreements (PSAs).
At the heart of this progression is the contentious topic of surprise billing, or balance billing. This occurs when a patient is treated by an OON provider and is billed for the difference between the OON allowed amount, as defined by the patient’s health plan, and the total billed charges. Given how common it is for providers to be OON and not contracted with payers, 33 states and the federal government have developed legislation to protect patients by prohibiting balance billing.
In addition to the reduced revenue from balance billing patients, to date, 16 of 33 states with surprise-billing legislation have enacted laws that legislate OON provider reimbursement. This growing trend, coupled with the broad-reaching federal NSA and commercial payer policies, is placing downward pressure on access to OON provider reimbursement. The map in figure 1 highlights states that contain surprise-billing legislation with a defined payment standard.
FIGURE 1: States with Surprise-Billing Legislation Containing a Defined Payment Standard
In one state, the law contained a state fee schedule that pays OON providers the greater of:
- The median amount negotiated by the patient’s carrier for the region and provider specialty or
- 150% of Medicare, excluding any in-network coinsurance, copayments, or deductibles.
This has a meaningful impact on reducing the cost of EM services, which also benefits the patient financially and increases patient satisfaction. With reductions of this magnitude, coupled with the savings and mitigation of financial risk that protects the patient, we expect more states to develop their own surprise-billing legislation and implement regulations.
Edited by: Matt Maslin
Designed by: Mary Anne Akhouzine
