The No Surprises Act, effective as of January 1, 2022, aims to provide patients with accurate information regarding their expected health care spending. In many cases, the new law prevents health care providers from charging patients for costs not reimbursed by insurance. We previously covered the impact of these “balance billing” prohibitions on hospital contracting. However, for the 28 million people in the United States without health insurance coverage or for those seeking care that requires initial self-payment, such as most psychological counseling, these balance billing prohibitions lack relevance because the entire balance is payable by the patient or their representative. The No Surprises Act also includes a potential solution for this group–a mandate that “Good Faith Estimates” (GFEs) be provided to all uninsured or self-pay patients.

Unlike the balance billing restrictions addressed in our prior blog, GFE requirements apply to all health care providers in all settings.  Providers must now generate cost estimates when treating uninsured (including those with insurance who do not want a claim filed) and self-pay patients. Many providers will generate estimates using the same billing systems that existed prior to the No Surprises Act, but some changes may be necessary to meet new regulatory requirements. This post will highlight key provisions relating to GFE, including how to ensure that provider billing practices comply with the new mandate.

What is a “Good Faith Estimate”?

Under the interim final rule issued by the HHS in October, “Good Faith” essentially requires honest effort. This includes making an effort to capture all charges that will likely apply to an individual’s expected course of treatment. GFE are not perfect estimates, but they should account for foreseeable charges.

Individual patient and provider characteristics may be relevant to a GFE. For example, if a specific surgeon will perform a procedure, and that surgeon uses a more expensive set of instruments or techniques than other practitioners in the same industry, then those additional costs should be included in the estimate. Similarly, if a patient’s height, weight, medical history, or other risk factors will clearly make a surgery more time intensive or costly, then prior experience with similar patients should be used to inform a more specific cost estimate. These principles apply across medical specialties, with the general rule that a good faith estimate should not be a generic estimate.

Unforeseen or unlikely events do not need to be included in a GFE. For example, if a very small number of patients undergoing a common procedure will encounter a specific complication, then it would not make sense to include the cost of such a complication in a GFE. While some patients might appreciate knowing the cost of a worst-case scenario, that is not what the law requires. In addition, inclusion of improbable costs may reduce the likelihood that uninsured or self-pay patients will seek medically necessary treatment. In cases where unforeseen costs do apply, waiver of the unexpected charges will avoid potential No Surprises Act issues.

Convening providers’ and co-providers’ responsibility for good faith estimates

The “Convening Provider” (i.e., the one responsible for scheduling a primary service) is responsible for determining which other services will be necessary. Correspondence between Convening Providers and “Co-Providers” and “Co-Facilities” (i.e., those non-Convening Providers and Facilities that may be involved in the course of treatment) may be necessary to provide the patient a full picture of the cost of a particular medical event. Ultimately, GFEs must account for the mix of in-house providers, consultations, and follow-up care relevant to a given course of treatment.

In some settings, collaboration between the convening provider and co-providers is straightforward. For example, a patient planning a surgery might inquire with a hospital a week ahead of time, triggering the GFE requirement. The hospital’s central scheduling staff would summarize typical charges for the procedure. The hospital, as the scheduler, must also provide an estimate for any co-providers who might bill separately for their physician services, including hospital based physicians like anesthesiologists or radiologists whose services are needed for surgical care and follow-up. All reasonably likely charges must be assembled and presented to the patient in a single GFE document, including from the convening hospital and any involved co-providers. Thus, hospital-based physicians need to ensure the convening provider (the hospital) has accurate information to supply a GFE inclusive of their costs.

Convening providers may comply with the GFE mandate even without perfect information regarding the actions of outside co-providers. For example, a patient might schedule a surgery alongside a recommended dermatology follow-up closer to their home a week later. The hospital (as convening provider scheduling both services) must then reach out to the dermatologist (a co-provider) to request a GFE for the expected care. The hospital must then list the dermatologist as a co-provider on the GFE, along with the estimated charges from that co-provider. If the dermatologist exercises independent medical judgement and provides services the hospital did not foresee, the hospital would not be responsible for those charges so long as it believed the original GFE was accurate; instead, the co-provider may be accountable for costs beyond their prior estimate. Conversely, if the dermatologist informed the hospital of an error in the original estimate, then the hospital would need to update its GFE and provide a new version to the patient because the dermatologist as co-provider gave the convening provider reason to know the original GFE was inaccurate.

Under these rules, the GFE requirement is relevant to all providers who bill uninsured or self-pay patients. Even co-providers are obliged to provide the convening provider with a GFE for their services or collaborate with convening providers on a process that generates accurate estimates of all relevant costs. When a co-provider’s estimate warrants an update, failure to report that update to the convening provider risks frustrating the patient and making the co-provider responsible for excess charges.

When and how to provide good faith estimates

Information regarding the availability of a GFE must be provided to patients both orally and in writing. Notices about the availability of estimates should be prominently displayed to patients at the point of scheduling, including on websites and in-office. Providers must notify uninsured or self-pay patients about the availability of a GFE when inquiring into scheduling or cost of services. All health care providers’ facilities should ensure adequate notices are posted, and that staff are trained to provide additional notices while interacting with patients.

A GFE must be provided when uninsured or self-pay patients request an estimate, discuss costs, or schedule a procedure. Prior to scheduling, patients are entitled to an estimate within 3 days of their request for a GFE, which allows patients to compare prices across providers. If patient schedules a procedure well in advance (at least 10 days) then the good faith estimate must be provided within 3 days from the date of scheduling. If a patient schedules a procedure closer to the date of a procedure (at least 3 days in advance), the provider must provide an estimate the day after scheduling. Currently, there is no clear requirement to provide good faith estimates for short-notice procedures (i.e. those scheduled on less than 3 days notice), but providers may choose to provide short-notice GFEs as much as possible to mitigate the risk of disputes (see below).

GFE content is specified by regulation, and the Department of Health and Human Services (HHS) will eventually release a template to provide clearer guidance. For now, a GFE must include at least five items:

  • Patient name;
  • Patient date of birth;
  • An itemized list of items or services involved in the treatment;
  • Name of each provider/facility involved in the treatment; and
  • Various disclaimers as specified in 45 C.F.R. Part 149.610(c)(1).

All of this information must be provided together, either electronically or on paper, in clear language that is understandable to a layperson. For a comprehensive review of the requirements, we recommend comparing a GFE template with the items in 45 C.F.R. Part 149.610(c)(1).F.

In the interim final rule, HHS did not address the circumstance where insured patients seek services that are ordinarily covered by their commercial insurance but are not covered in the circumstance of the procedure, and whether such a circumstance converts those patients from insured to self-pay status. Many providers make use of advance beneficiary (ABN) notices, or ABN-like notices, to communicate with such patients that their payor may not cover the service and that the patient must accept responsibility for paying for the service. We will monitor future guidance on the rule as to whether providers will be expected provide a GFE to those insured patients who choose to self pay when their insurer does not provide coverage.

How is an incorrect good faith estimate resolved?

The No Surprises Act provides patients with a specific process to dispute charges that exceed a GFE by $400 or more. Once a patient initiates a dispute, the matter is paused pending resolution. Providers cannot attempt to collect on the disputed bill or charge additional fees while the dispute is pending.

Once a dispute is initiated, HHS will assign an arbitrator, called a “Selected Dispute Resolution Entity” (SDR). After an SDR is assigned and notifies the provider, that provider has 10 days to respond. In responsive submissions to an SDR, providers should include the relevant bills, underlying GFE, and the reasons for the excess charges. To prevail in the dispute, a provider’s submission must prove that charges in excess of the GFE are both (i) medically necessary and (ii) could not be anticipated at the time of the estimate.

The SDR then has 30 days to make a decision based on the provider’s submission. If the patient and provider reach a settlement during this time, the provider has 3 days to notify the SDR (including the date, settlement amount, and some proof of the agreement with the patient). If the patient paid an SDR’s administrative fee, the provider must reduce the settlement by at least half of the administrative fee (to share the cost of initiating the dispute).

Once an SDR makes a decision, one of two procedures will apply:

  • Finding for Patient: The SDR will direct the patient to pay the charge as listed on the good faith estimate, or to pay the amount charged on the bill if lower than the estimate; if the disputed services are not listed on the estimate at all, then the patient will not be required to pay for those unlisted services.
  • Finding for Provider: The SDR will direct the provider to proceed with collection of its billed charges. The provider may still need to reduce those charges if exceeding the median payment for the relevant service in their geographic area.

Enforcement of the GFE requirement will expand over time. In the current ‘Phase 1’ of No Surprises Act regulation, convening providers are required to provide a GFE inclusive of their own charges. Regulators have deferred enforcement of the mandate to include co-provider estimates until ‘Phase 2’, expected to begin January 1, 2023. In ‘Phase 3’ (effective date to be determined), GFEs including provider and co-provider estimates must be provided to all patients regardless of their insurance status. Today, still in Phase 1, all providers should consider what systems need to be in place to generate accurate estimates for co-provider treatments. The narrow application of Phase 1 regulation makes this an ideal time to ramp-up GFE processes before the mandate rolls out to all patients.

Reed Smith will continue to track developments related to the No Surprises Act and how it is implemented. Please reach out to the health care attorneys at Reed Smith if you have any questions about this how these new good faith estimate requirements might affect your organization or about any aspect of the implementation of the new law.