Behavioral Health Providers Face New Compliance Burdens With No Surprises Act

A law meant to protect patients from spurious hospital practices may create headaches for the behavioral health industry.

The No Surprises Act adds additional administrative burdens to provider organizations to take on without a corresponding funding measures. The law, in part, requires health care organizations to provide good faith estimates to patients who choose to pay cash, seek out-of-network care, or are uninsured.

The law also allows patients to dispute bills that substantially exceed the estimate. Separately, it protects against bills for out-of-network providers and facilities or organizations that are otherwise in-network with a patient’s plan, especially in emergency situations.


The impact of the law, which was passed through the Consolidated Appropriations Act of 2021 in December 2020, is yet to be seen. Legal challenges to the bill and a piecemeal federal regulation process have dragged out the implementation of the No Surprises Act.

“Psychiatric reimbursement has been low for many years, and administrative burdens have been rising, rising, rising,” Maureen Maguire, associate director of policy and practice advocacy at the American Psychiatric Association, told BHB. “Of course, it has the impact of contributing to burnout.”

The American Psychiatric Association (APA) is a professional association of physicians that specialize in mental illness.


It may also further complicate the already fraught intersection of behavioral health and emergency rooms. The coronavirus pandemic touched off a wave of alarming instances of patients — especially children — seeking behavioral health at their local emergency room and being warehoused for weeks while their community health system struggled to deliver care.

On top of reinventing emergency and urgent behavioral health services, health care organizations turn to contracting with separate local or interstate telehealth organizations, which could complicate questions of network participation. 

What’s more, it supposes that providers will accurately diagnose and predict costs at the outset of care, something that may not be reasonable for some behavioral health providers, especially those treating patients with serious mental illness (SMI).

“When somebody comes in and you don’t know what the diagnosis is, it’s going to be hard to really estimate exactly what treatment looks like,” Maguire said. “Then, you may have a really complicated patient who, on top of having a serious mental illness, may also have physical conditions like diabetes or a heart condition, which can play into how they react to medications.”

The No Surprise Act doesn’t exempt behavioral health

While the No Surprises Act targets hospitals, it broadly applies to health care. The law protects patients from out-of-network bills where a provider is ostensibly in-network. It also ensures that patients have some ability to shop for health care costs. Creating health care pricing transparency was an initiative Republicans took up during the Trump administration

While empowering patients, it can make behavioral health providers’ work much more complicated during the intake process, a time that is already fraught with risks for patients in terms of their health and difficulty from a customer standpoint.

“If I’m going to a medical professional and it’s not an emergency situation, I can ask for an estimate of the cost of the services to me,” Christine Cooper, CEO of Aequum LLC, told BHB. “Where you can see the problem is if you’re going to a therapist, and I go once a week — are they going to have to constantly turn out paperwork? What’s that going to cause in the process?”

Aequum LLC is a firm that specializes in employee benefits and health care costs on behalf of plan members.

Behavioral health advocacy organizations have petitioned the Biden administration for an exemption for behavioral health providers. Several organizations signed on to a letter that states mental health providers “were not the problem the No Surprises Act sought to resolve.”

“Our providers have a long-standing practice of being transparent about fees with their patients because it is required by their professional ethics,” the letter states. “Requiring clinicians to fill out the [good faith estimate] form and update it every time there is a minor change in the treatment plan that may or may not have an impact on costs takes away from valuable treatment time – which is in extremely high demand as more and more people are struggling with the mental health impact of the COVID pandemic.”

The letter also describes fears about the independent dispute resolution (IDR) created by the No Surprises Act. The IDR is an arbitration process to settle disputes between payers and providers. The comment letter — signed by the American Psychological Association, the American Psychiatric Association and the National Association for Behavioral Healthcare, to name a few — says the process cedes too much power to the payers.

The final rules released by the Biden administration do not grant that exemption.

Other impacts

The patient protections would not be in effect if the patient purposefully went out of network. The gist of the law is to protect people from unfair or unforeseen costs when seeking health care. However, a shrinking portion of facility-based behavioral health providers still purposefully operate out of payer networks to target historically larger rates. Several payers have cut back on those rates, leading some providers to severe financial struggles.

The No Surprises Act makes this model even more difficult, especially if there is an attempt to balance the patient’s for whatever the difference is between the provider’s charge and the payer’s reimbursement. It will also create severe stakes for any behavioral health provider that attempts to be opaque about whether or not a provider is in-network or not.

Intent aside, it will require that behavioral health providers, especially those who operate facilities with urgent or acute services, ensure parity between providers’ network status, another potential administrative headache for organizations seeking to hire. It can take months to get credentialed with just one health plan. 

While health care investors and businesses have been moving away from targeting out-of-network rates, the No Surprises Act put “the final nail in the coffin” for reputable investors taking this approach, Rebecca Springer, lead analyst for healthcare at PitchBook told BHB.

“Those businesses were already struggling before No Surprises took effect because the payers had been pushing back on the out-of-network rates,” Springer said. “I think the vast majority of private equity sponsors will not touch an out-of-network-heavy addiction treatment business at this point.”

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