Determining whether the No Surprises Act (the NSA) applies to your benefits and preparing to comply with the new requirements

From fostering a workplace culture centered on supporting the physical, emotional, career and financial wellbeing of employees to ensuring that benefit programs are compliant with local, state and federal requirements, effectively protecting the wellbeing of your employees connects directly to protecting the wellbeing of your organization overall. Compliance Connections delivers monthly, actionable guidance designed to help you manage and optimize the connections between the compliance of your benefits and human resources programs to overall organizational wellbeing. This edition focuses on new requirements intended to protect participants, beneficiaries, and enrollees in group health plans (and group and individual health insurance coverage) from "surprise" balance billing when they receive specified emergency care (generally from out-of-network providers or facilities). Below, we explore some important action steps as organizations prepare to comply with the new requirements created by the No Surprises Act (the NSA) as established under the Consolidated Appropriations Act, 2021.

Determine whether the NSA applies to your benefits. Congress enacted the NSA to protect patients, beginning in 2022, from surprise medical billing for certain medical services received from out-of-network providers. The NSA's surprise billing protections apply to individual and group health insurance contracts and self-insured group health plans, including grandfathered health plans. Plans provided by private employers, non-federal governmental employers, and churches are subject to the new rules. The rules do not apply to plans that provide only excepted benefits, retiree-only plans, account-based plans (such as Health Reimbursement Arrangements), or short-term, limited-duration insurance. Which of your benefits are subject to the NSA requirements?

Work with your carrier/third-party administrator (TPA) to determine which claims are subject to the NSA rules. The requirements generally apply to claims for three categories of healthcare: (1) the provision of emergency services by a nonparticipating emergency facility or nonparticipating provider; (2) non-emergency services (other than certain ancillary services) furnished by out-of-network providers in in-network facilities, and (3) air ambulance services provided by out-of-network providers. Each category of healthcare has specific definitions, so it is important to be able to identify (and flag) those items and services for relevant claims. What steps has your carrier or TPA taken to identify (and flag) covered claims?

Gain an understanding of how recognized amounts will be determined under your plan. Patient cost-sharing for emergency services provided by a nonparticipating emergency facility or for non-emergency services provided by nonparticipating providers in participating health care facilities is to be calculated based on a "recognized amount." A recognized amount is: (1) an amount under a State All-Payer Model Agreement (established by the Centers for Medicare and Medicaid), if applicable; (2) an amount stipulated by Specified State law, if applicable; or (3) the lesser of the amount billed or the Qualified Payment Amount (QPA). The QPA is generally the median of the contracted (i.e., network) rates of the group health plan or insurer for the item or service in the geographical region in which the item or service is provided. A self-insured group health plan may determine the QPA using median contracted rates under all of its own plans or, if the plan uses a TPA to pay claims, it may choose to use the TPA's median contracted rates. An employer with a self-insured plan will thus wish to obtain data from its TPA in order to make an informed decision regarding whether to use their own plan's median contracted rates or the TPA's median contracted rates. What information have you obtained from your carrier/TPA with regard to how recognized rates will be calculated for your plan?

Recognize which claims may be subject to alternate methodology. If there is insufficient data to calculate a median contracted rate, a plan or insurer may use an alternate methodology when the QPA must be calculated in order to determine the recognized rate. In order for data to be sufficient, the plan or insurer must have had at least three contracted rates for the item or service as of January 31, 2019. If it does not, then the data is considered to be insufficient. For such items and services, the plan or insurer may use what is called an "eligible database." For which claims will your plan be required to rely upon an eligible database?

Determine how patient cost-sharing must be coordinated with HSA-compatibility for your High Deductible Health Plan (HDHP). If your HDHP is intended to be HSA-compatible, additional administrative action may be required. Because an individual's cost-sharing amount will be calculated using the recognized amount, there may be situations where the plan is required to make a payment before the individual has satisfied the deductible under an HDHP. This could occur in situations where the plan is required to make a payment based on the out-of-network amount (e.g., an amount determined by the IDR process) while the individual's cost-sharing amount is calculated using a lower recognized amount. In some cases, the plan will be required to make a payment to the provider before the individual has satisfied the minimum statutory deductible under an HDHP. Although this would normally cause an HDHP to lose its qualified status, the NSA provides that a plan will not lose HDHP status when it makes a payment as required by the NSA. What additional administrative processes should your plan implement to ensure that appropriate provider payments are made even if an individual has not yet met a statutory deductible under your HDHP?

This is a preview edition of Compliance Connections, a monthly publication produced by Gallagher's Compliance Consulting Practice. For five more action steps, contact your Gallagher representative or visit our Compliance Resources page to subscribe and receive the full version of this publication each month.


Compliance is a series of actions, not a final destination. As a trusted advisor, Gallagher has developed this Compliance Connections series to help you pursue a path through employee benefits compliance issues as part of an overall continuing compliance plan. Plan sponsors should carefully evaluate their health and welfare plans to determine if they are in compliance with both federal and state law. If you have any questions about one or more of the compliance requirements listed above, or would like additional information on how Gallagher constantly monitors laws and regulations impacting employee benefits in order to support plan sponsors in their compliance efforts, please contact your Gallagher representative.


The intent of this analysis is to provide you with general information. It does not necessarily fully address all your organization's specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues should be addressed by your organization's general counsel or an attorney who specializes in this practice area.