Understanding the Advanced Explanation of Benefits Provisions in the No Surprises Act

The No Surprises Act, passed in 2020, became the law of the land on New Year’s Day of 2022. This law emplaces numerous consumer protections and benefits, primarily centered on providing cost certainty in healthcare and reducing the burden of unexpected, ‘surprise’ medical bills that occur as a result of out-of-network providers. 

What is an advanced explanation of benefits? How will this benefit consumers? And how will this impact healthcare providers and payers? Let’s find out! 

Advanced Explanation of Benefits Timeline

While most provisions of the No Surprises Act went into effect on 1/1/22, certain elements of the bill have been delayed. The advanced explanation of benefits provision is one of those elements.

While Congress passed the law, the Department of Labor, Department of Health and Human Services, and Department of the Treasury are tasked with interpreting and implementing it.  Industry groups such as the American Hospital Association successfully convinced these agencies that healthcare providers need more time for clarification before implementation. 

While it was initially stated that healthcare insurers must provide an advanced explanation of benefits to all insured patients in plan years beginning in 2022, regulators have delayed the implementation indefinitely. The law will go into effect once regulators have completed the rulemaking process, with enough time provided for insurers and payers to make a good faith effort to implement it. 

What Is An Advanced Explanation of Benefits?

The No Surprises Act requires insurers and healthcare payers to provide an Advanced Explanation of Benefits to their members whenever they schedule a healthcare service at least three days before the service, or at a member’s request if the service is as yet unscheduled.. 

The AEOB documentation must be sent to the member within three business days if their service is scheduled at least ten days in advance, or within one business day if there is less than ten days before the procedure or appointment. They must deliver the document via mail or by electronic methods, at the member’s preference. 

What’s In An Advanced Explanation of Benefits?

The Advanced Explanation of Benefits must include the following information: 

‍

• Information about whether the provider is in or out-of-network

• For in-network providers, the payer must include applicable contracted rates. 
• For out-of-network providers, the payer must include information on accessing in-network providers for the same services

• A “good faith” estimate from the provider, with billing and diagnostic codes.
• A good faith estimate of what the plan or payer will pay out of that amount. 
• An estimate of the cost-sharing amount shouldered by the plan member. 
• A “Good faith” estimate of the member’s progress toward deductibles or out-of-pocket cost limits.
• A disclaimer specifically stating that the Advanced Explanation of Benefits is an estimate based on information available at the time of documentation and subject to change
• The insurer or payer may choose to add additional information at their option.

What Services Require Issuance of an Advanced Explanation of Benefits? 

The original legislation did not specify what services would require an Advanced Explanation of Benefits. As is typical with federal legislation,applicable federal agencies interpret the legislation and establish the ground rules. The American Hospital Association has lobbied the Center for Medicaid and Medicare Services to require Advanced Explanation of Benefits only for routine or low-variance services. Part of the delay in the implementation of this provision is to provide time for rulemaking to occur regarding this and other details.

Member ID Card Changes

In addition to the Advanced Explanation of Benefits requirement of the No Surprises Act, insurers and payers will also be required to modify member ID cards with new information to achieve greater transparency regarding healthcare costs. 

‍

This aspect of the law is also on hold pending final rulemaking, but we know that the following information must be included on these new cards:

‍

• All plan deductibles, including in-network and out-of-network deductibles where applicable. 
• All maximum limits on out-of-pocket costs.
• Phone number and web address to obtain consumer information such as in-network providers. 

This implementation is also delayed for clarification and implementation. Some information has been released; regulatory agencies have indicated QR codes with links to the information would likely be compliant. 

Payment Integrity and Transparency

While the No Surprises Act puts great emphasis on transparency, it’s important for organizations to maintain a focus on payment integrity. Even though the final changes to the law are still being debated, healthcare payers need to begin preparing now based on the information out there to ensure they’re compliant when the law goes into effect. Yet they must also continue to combat the growing issue of fraud, waste, and abuse charges; it’s estimated that healthcare payers waste up to $300 billion i every year on overbilling. 

‍

A trusted partner may be the difference you need to ramp up your payment integrity efforts. Alaffia Health uses our next-generation AI platform to identify high-cost claims most likely to contain fraud, waste, and abuse-related overbilling. This allows our team of expert payment integrity analysts to target their efforts for maximum return of overpayments. Best of all, our platform is a true turnkey solution, integrating with your legacy systems for immediate and significant results. 

You focus on compliance with the new regulations, and let us handle payment integrity. It’s a win-win for your organization. Find out how!