Filing a dispute in the wrong forum is one of the most common reasons out-of-network claims are found ineligible. The No Surprises Act created a federal process, but it deliberately defers to many state surprise-billing laws. Which one applies depends on the claim, not on where your practice is located.
The basic rule
The federal law steps aside when a specified state law determines the out-of-network payment amount for that claim. A state law counts as “specified” when it covers the plan, the provider type and the item or service in question. The same applies where an All-Payer Model Agreement governs payment.
If no specified state law applies, the federal process applies.
The question that usually decides it: how is the plan funded?
Fully insured plans. Coverage is bought from an insurance company and regulated by the state where the policy is issued. If that state has a specified law covering the claim, the state process usually applies.
Self-funded plans. The employer pays claims itself, often with a third-party administrator. These plans are governed by federal ERISA law and generally aren’t subject to state insurance law, so the federal process usually applies. Some states let self-funded plans opt in to the state process. Where a plan has done that, the state process can apply.
The same patient, treated by the same provider in the same state, can be subject to different processes depending on their employer’s plan.
Other factors that matter
- Where the plan is regulated. For fully insured coverage, what matters is the state that regulates the policy. The state where the service was performed doesn’t necessarily decide it.
- Provider and service type. Some state laws cover only certain providers, such as facility-based physicians, or only emergency services. A claim outside the law’s scope defaults to the federal process.
- Air ambulance. State regulation of air ambulance payment is limited by federal law, and these disputes are typically handled federally.
Examples of state processes
Several states run their own dispute resolution systems for out-of-network bills. New York, for example, operates an IDR process through its Department of Financial Services, and Texas offers arbitration and mediation through its Department of Insurance. Each state sets its own eligibility rules, deadlines, fees and standards. They often differ materially from the federal rules.
CMS publishes information on how the No Surprises Act interacts with each state’s laws. Check it, and the state regulator’s own guidance, before filing.
How to tell which applies to a claim
- Identify the plan’s funding type. The EOB, the member ID card, or a direct inquiry to the plan will usually tell you whether it’s fully insured or self-funded.
- Identify the regulating state for fully insured coverage.
- Check whether that state has a specified law covering this provider type and service.
- Check for a self-funded opt-in if the plan is self-funded and the state allows it.
- Document the determination in the claim file. If the other party objects to eligibility, you’ll need it.
If you get it wrong
A federal dispute that belongs in a state process will be found ineligible, and the administrative fee isn’t refunded. Worse, by the time the ineligibility decision arrives, the state deadline may have passed. Getting the forum right before filing is one of the highest-value steps in the process. See our pre-filing eligibility checklist.
This guide is general information, not legal advice. State laws change; confirm current rules with the relevant state regulator and at cms.gov/nosurprises.