While the goals of consumer protection, price transparency, and cost concessions are important and necessary, the legislation is starting to present real challenges to practices’ financial stability
The No Surprises Act (NSA) has been in effect since January 1 to protect patients against an estimated 12 million surprise bills this year. Yet, while the goals of consumer protection, price transparency, and cost concessions are important and necessary, the legislation is starting to present real challenges to practices’ financial stability.
Fulfilling the new regulations places additional burden on practices’ already tight time and labor resources. For practices to survive without further unexpected surprises, they must act quickly.
New Jersey Brain and Spine, a subspecialty neurosurgery practice located in Northern New Jersey, has been closely monitoring and adjusting to the No Surprises Act legislation. “We firmly believe in the need to protect patients from surprise medical bills,” said neurosurgeon Reza Karimi, MD, of New Jersey Brain and Spine. “The law does place additional burdens on practices like ours, including new expenses for added billing paperwork, legal consulting and hiring an arbitration specialist. We have been focused on putting the right structures in place.”
Protections for patients—and for practices
Providers would be wise to consider the legislation from two angles: protection and growth. For patients, protection means no surprise billing; for practices, it means preventing violations and preparing for arbitration.
In essence, the No Surprises Act prohibits out-of-network providers from billing patients more than a payer’s applicable in-network cost sharing amount, known as balance billing. If this happens, providers risk a penalty of up to $10,000 per violation. To protect themselves, providers must now be ready to:
The most significant area in which practices must start to protect themselves will likely be the new Independent Dispute Resolution (IDR) process, a strictly regulated baseball-style arbitration for contesting unreasonable reimbursement amounts with insurers. Physicians will not only need to become savvy at submitting bids to receive more favorable reimbursements but also because the loser in the arbitration may be required to cover fees for both parties.
John Abrahams, MD, physician and president of Brain & Spine Surgeons of New York, said his practice took drastic steps to prepare for the arbitration process. “We went through about 5,000 cases of our lumbar and cervical fusions over the past eight years. We documented lengths of stay, readmissions, and outcomes over three, six and 12 months,” Dr. Abrahams said. “It was a Herculean effort, but we felt we had to do it because we don't know what we're going to be compared to moving forward.”
Will the No Surprises Act help or hinder growth?
Whether the law will allow physicians, especially those who take call or provide emergency care, to grow their practices under their current business models remains to be seen. That’s because the cost of achieving and sustaining NSA compliance and retaining legal counsel may overtake revenue from reimbursements.
If a portion of a provider’s revenue stream now moves to just above Medicare reimbursement levels, it will be difficult for practices to stay viable. There are a few options to combat this, and all require additional time or money or both before they generate ROI: Increasing volume, negotiating with more insurers to go in-network, and adding ancillary services, although those services may also be regulated by the NSA.
Another issue impacting growth is the uncertainty around the IDR process, as the rules keep changing. Early this year, several state medical associations and air ambulance companies filed suits about the interim final rule that bases appropriate reimbursements on insurers’ qualifying payment amounts (QPA). In April, 2022, CMS retracted its stance on just how much weight QPAs should carry in arbitrators’ decision making.
Still unclear, too, is whether state or federal mandates will be used to determine appropriate reimbursement amounts. “If we have state-based plans going over to federal arbitration guidelines, and if the federal arbitration guidelines are very unfavorable, we will have to make some potentially drastic changes to the way we practice,” Dr. Karimi noted. “Everything comes down to the federal IDR process.”
Steps practices should take to prepare
Domenic Segalla, Healthcare Market Leader, Principal at Withum Advisory Services, which provides advisory, tax and audit services to hospitals and physicians, says practices first need to ensure they have a firm understanding of the regulations and their potential financial repercussions.
“We have been working with medical practices to estimate the potential financial impact this law could have on them as well as developing workflows to manage the appeals process,” he said. “Many physicians still need education on this law and what’s coming down the pike.”
Practices should begin taking the following steps to limit any negative impacts of the No Surprises Act:
The onus lies on providers and practice administrators to ensure that they understand and prepare for the requirements of the No Surprises Act. It is vital for to proactively evaluate strategies to respond to these market changes and ensure practice health and financial stability.
Dan D’Orazio is the CEO of Sage Growth Partners, a national consultancy that accelerates commercial success for B2B, B2B2C and B2C healthcare organizations.