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Breaking Down the No Surprises Act

Quick Look: The No Surprises Act (NSA) went into effect on January 1, 2022, to protect those insured from receiving “surprise” medical bills from healthcare service providers. Though on its face, it’s a benefit for health plan participants, when it comes to new federal rules regarding compliance and the complexity of state insurance regulations, nothing is ever as simple as it seems. Brokers should carefully consider this new information as they determine the best healthcare plans for their clients, as traditional solutions may no longer be the obvious or most cost-effective route to take.

The NSA is changing the landscape of medical billing compliance. Prior to the new legislation, receiving care from an out-of-network provider often left those who were insured with a higher (often unexpected) balance to pay than what they’d receive from an in-network provider; otherwise known as “surprise bills.”

Under NSA provisions, the uninsured or those who opt not to use health insurance for their medical services can receive a good faith estimate of costs upfront before visiting their chosen medical facility. Providers cannot bill patients more than the in-network cost-sharing amount for medical services covered by the NSA. Additionally, if there are disagreements with the bill, individuals may also be able to dispute charges.

Since most health plans have deductibles, where the plan has adopted a PPO network, providers of in-network services receive a higher level of reimbursement, which is justified by the contractual agreement to charge less. The compliance updates per the NSA are likely to have a ripple effect among healthcare coverage providers and are likely to lead to increased costs.

Expected coverage cost increases across the board

Unfortunately, medical costs paid by employer-sponsored plans are expected to go up. Due to the NSA’s new administration requirements, it eliminates the incentive for out-of-network providers to bill for a lesser amount once they know the qualifying payment amounts of in-network providers.

The qualifying payment amount is defined as the average of contracted rates for medical services within the same geographic region and same insurance market. Though in-network providers may agree to put a limit on charges in order to be part of the network, they won’t be satisfied if the reimbursement is less than what the plan pays to out-of-network providers. With a publicized median rate, it should be expected billed charges from providers will not dip below the average, and policyholders should expect higher health coverage costs as a result.

Guiding businesses toward benefit strategies

Every change lends itself to the possibility of new opportunities. As a PEO broker, you can guide businesses toward alternative options, if the traditional route of healthcare benefits no longer seems optimal. By giving employers the full scope of their options and drawing side-by-side comparisons, it allows them to make the most informed choice for their company and employees. Here are four strategies to consider:

1. In-depth health plan review

Health plan information will be easier and more convenient to review due to transparency tools mandated by the NSA. Though health plan participants aren’t required to use them, greater access will prove helpful when comparing plan designs, services costs, and other details to narrow down options.

In addition to standard deductibles, out-of-pocket maximums, and the NSA-required good faith estimates, health care providers are also responsible for making balancing billing information (the amount a patient is responsible for when costs exceed what the health plan covers) publicly available. Taking advantage of this deeper dive into plan details will help eliminate unexpected costs and confusion about coverage, giving brokers and their clients a clearer pathway when choosing the most favorable health plans for their companies.

2. Secure a seasoned PEO solutions partner

As a PEO broker, there’s an opportunity to reap significant cost savings by optimizing the value of health plans for small- and medium-sized business (SMB) employers. One approach is by working with a professional employer organization (PEO) to offer cost-effective, comprehensive health insurance. A PEO works with various employers, which means they typically serve a large number of worksite employees. This gives them group bargaining power to access sophisticated benefits at competitive prices using economies of scale.

In addition to helping with plan optimization and cost-effective solutions amid a changing healthcare cost structure, this type of partnership also allows brokers to offer clients quality services, including administrative and compliance support, risk management, recruiting, payroll, and more. It’s also important to look for a PEO partner who embraces innovation and advocacy in the marketplace, as well as a people-focused mentality to provide ongoing support.

3. Higher HSA contribution

Overall, a PEO broker wants to secure affordable healthcare plans without a significant reduction in the quality of coverage for employers and their employees. The most straightforward option for plan sponsors in preparing for out-of-pocket costs is to offer a Health Savings Accounts (HSA) strategy. Per the Plan Sponsor Council of America HSA Benchmarking Survey, when HSA is a coverage option, over 83% of employers choose to contribute to their employees’ accounts.

These contributions deliver the highest tax benefits preference from the Internal Revenue Code. And, history shows both groups will spend less when enrolled in HSA-coverage while still maintaining similar value as with other types of plans.

4. Possibility of reference-based pricing

Another strategy to help moderate costs is reference-based pricing (RBP). Instead of the traditional provider network, RBP creates a benchmark fee schedule with a payment ceiling. It can eliminate the negative effects of excessive charges otherwise passed on to the employer and the participant. Though the employer-sponsored marketplace has not yet fully committed to this option, many states have adopted the process.

However, the potential downside with RBP is it creates an independent dispute resolution (IDR) process with interim final rules requiring IDR decision-makers to assume the in-network qualifying payment amount. To be successful with this strategy, it’s best to have a plan inclusive of carefully drafted plan documents which strengthen patient rights to dispute bills, a patient advocacy process comprising of legal representation, and avoidance of provider contracts or limited use contracts.

No surprises when you partner with a PEO

While most obligations fall on health plans and providers, it’s important for all participants to know they will be impacted. As a trusted adviser, you can offer different solutions, provide education, and connect your clients with a qualified PEO to help them stay a step ahead.

To help navigate these newest compliance measures and extend your value as a PEO broker, our ExtensisHR experts can help. Contact us today to learn how.

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