No Surprises Act's first rule favors employers, insurers over hospitals

Employers and health plans should be pleased with the interim final rule CMS unveiled July 2 to address the No Surprises Act.

The No Surprises Act, a measure to end surprise medical bills for emergency and scheduled care, was passed in December when President Donald Trump signed a $1.4 trillion year-end spending bill into law. 

The rule details how payments from health plans to providers will be determined. It appears to keep payment rates lower than those lobbied for by hospitals and other healthcare providers.

Under the rule, the qualifying payment amount — which serves as the basis for calculating patients' share of their bills — will be based on health plans' median contract rate for similar services in a geographic area. If health plans and providers disagree about how much a physician or provider should be reimbursed, arbitrators will step in.

The qualifying payment amount will be determined by provider contracts instead of by looking at each individual provider, which will keep payments down for insurers. If the rates were set based on each provider, the rates would rise because large equity-owned healthcare providers employ many physicians receiving higher rates, James Gelfand, senior vice president for healthcare policy at the ERISA Industry Committee, told Bloomberg Law.

Most provisions outlined in the proposed rule will not take effect until Jan. 1, 2022. 

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