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On July 13th, group health plans and health insurance issuers subject to the Federal No Surprises Act (the “Act”) received the first phase of interim final rules promulgated under the Act (the “Rules”) and issued by the Office of Personnel Management, Department of Labor (DOL), Department of Treasury, and Department of Health and Human Services (collectively, the “Departments”). The Act applies to individual health insurance coverage offered by health insurance issuers, and group health plans that are fully-insured, self-insured, non-federal governmental, or grandfathered.

Enforcement of the Act could be vigorous, both through required regulatory audits and the complaints process established by the Departments.

Here are 6 steps that group health plans and health insurance issuers should take now to ensure they are compliant in 2022.

Step 1: Review and Update “Emergency Medical Condition” Determination Criteria

If a group health plan provides or covers services provided in the emergency department of a hospital or independent freestanding emergency department, then the plan must cover emergency services as dictated in the Rules. When determining whether a participant suffered an emergency medical condition for coverage purposes, plans and issuers should not automatically deny coverage based solely on a list of final diagnosis codes, such as ICD-10-CM codes. The Departments view this practice as inconsistent with the emergency services requirements of the Act and the Affordable Care Act.

Instead, the coverage determination process should:

• Include a complete consideration of the claim, including the individual’s presenting symptoms;
• Apply the prudent layperson standard;
• Not restrict coverage of emergency services by imposing a time limit between the onset of symptoms and presentation of the covered individual at the emergency department; and
• Not restrict coverage of emergency services because the patient did not experience a sudden onset of the condition.

Plans are permitted to consider diagnostic codes when denying coverage, but the codes cannot serve as the sole basis for denial. However, nothing in the Act or Rules prevents a plan or issuer from approving coverage for emergency services solely based on the diagnostic codes.

Step 2: Evaluate How Cost-Sharing Requirements Interact with Your State’s Law

Under the Act, plan enrollee cost-sharing is limited to amounts that would apply if the services had been provided by a participating provider or facility. Cost-sharing amounts are calculated as if the total amount that would have been charged for the services by a participating provider or participating emergency facility were equal to the “recognized amount” for such services.

The “recognized amount” is:

1. All-Payer Model Agreement[1] amount, if applicable;
2. if no applicable All-Payer Model Agreement, the amount required by a specified state law; or
3. if neither All-Payer Model Agreement nor specified state law apply, then the lesser of the amount billed by the provider or the qualified payment amount (QPA).

A “specified state law” is a state law that provides a method for determining the total amount payable under a group health plan or group or individual health insurance coverage to the extent state law applies. In order for a state law to determine the “recognized amount,” any such law must apply to:

• the plan, issuer, or coverage involved;
• the nonparticipating provider or nonparticipating emergency facility involved; and
• the item or service involved.

In instances where a state law does not meet the above criteria, then it does not apply to determine the recognized amount.

• Example: if an insurance issuer licensed in State A covers out-of-state emergency services for an individual who is injured while vacationing in State B, the Departments take the position that State A’s law would not apply to determine the recognized amount. Instead, lesser of the billed amount or qualified payment amount would apply.

Self-insured plans should evaluate their state laws to determine whether they are permitted to opt-in. A plan that chooses to opt-in to a specified state law must do so for all items and services to which the state law applies. Also, a self-insured plan choosing to opt-in to a state law must prominently display in its plan materials describing the coverage of out-of-network services a statement that the plan has opted in to a specified state law, identify the relevant state (or states), and include a general description of the items and services provided by nonparticipating facilities and providers that are covered by the specified state law.

Step 3: Review Methodology for Calculating Qualified Payment Amount

When a specified state law does not apply, plans and issuers must calculate the qualified payment amount or “QPA.” Generally, the QPA is the plan’s or issuer’s median contracted rate on January 31, 2019, increased for inflation, for the same or similar service when provided by a provider in the same or similar specialty and provided in a geographic region in which the item or service is furnished.

The Rules provide strict guidelines for calculating the median contracted rate. We will post a follow-up next week that describes the requirements for calculating the QPA.

Step 4: Create Balance Billing Disclosure Language for Website and Explanation of Benefits

Each health plan is required to make publicly available, post on its website, and include on each explanation of benefits disclosures relating to balance billing prohibitions and network and cost-sharing information to enrollees. To assist with compliance, the Departments published a model notice and consider use of the model notice in accordance with the accompanying instructions to be good faith compliance with the disclosure requirements of Section 116.

The model notice does not incorporate state-specific disclosure requirements. It does provide that, if a state develops model language for its disclosure notices that are consistent with the Federal Requirements, then the Departments will consider a plan or issuer that makes good faith use of the state-developed model language to be compliant with the federal requirement to include information about state law protections.

The Rules did not include regulations regarding transparency requirements for plans or insurance identification cards; these are expected in a future rule-making phase.

Step 5: Update Processes for Initial Provider Payment and Providing Notice of Denial

The Act established several procedural requirements that apply to plans and issuers to ensure timely resolution of billing disputes, including timeframes for:

1. the plan or issuer making an initial payment or sending a notice of denial;
2. the length of any open negotiation period regarding payment, and
3. initiating the independent dispute resolution (“IDR”) process following an open negotiation period.

These three requirements do not apply in certain circumstances with regard to post-stabilization services or out-of-network nonemergency services if the provider or facility provided notice and received consent from the participant.

The Rules clarify the deadlines for the plan or issuer to send the initial payment or notice of denial. The Rules provide:

• 30 day deadline. A plan or issuer has 30 days after the bill for services is transmitted by the provider or facility to determine whether the services are covered under the plan and send an initial payment or notice of denial. The 30-day period begins on the date the plan receives the information necessary to decide whether a claim is payable.
• Notice and Consent Transmittal. When transmitting the bill, providers and facilities are required to notify plans and issuers whether out-of-network notice and consent requirements have been met. Absent receiving this information, a plan or issuer must assume that the individual has not waived protections and must calculate cost-sharing accordingly. Plans and issuers may rely on the provider’s or facility’s representation as being true and accurate, unless and until the plan or issuer knows or reasonably should know otherwise.
• Defining Initial Payment. The Act’s reference to an “initial” provider payment does not refer to a first installment. Rather, this initial payment should be an amount that the plan or issuer reasonably intends to be payment in full.

Rules on the IDR process were not included with this phase, but are expected later this year.

Step 6: Prepare to Implement Other Requirements in Good Faith and Watch for Future Guidance

Additional rulemaking is forthcoming. This phase did not include guidance on the federal IDR process, the patient protections through transparency, the patient-provider dispute resolution process, or price comparison tools. The Departments intend to undertake rulemaking related to these provisions, which could occur after January 1, 2022.

Until rulemaking is finalized and effective, plans and issuers are expected to implement the Act’s requirements using a good faith, reasonable interpretation of the statute. As a reminder, the Act created several requirements intended to provide transparency and continuity of care to patients, including:

Provider Directory and Verification, Consumer Response Protocol, and Price Comparison Tool

Each health plan must establish a provider database, verification process, a response protocol, and price comparison tool.

Provider Directory: The Act requires the health plan to maintain on its public website a list of each provider and facility with which it has a direct or indirect contractual relationship and provider directory information with respect to each provider and facility. The information must include the name, address, specialty, and telephone number of the provider or facility.

Verification process: under the verification process, the health plan must verify and update the provider directory at least every 90 days. It must establish a procedure for removing a provider or facility if the plan has been unable to verify the information during a period specified by the health plan. The database must be updated within 2 business days of the health plan receiving information that a provider or facility has changed its network status.

Response protocol: If a plan enrollee requests information through a telephone call, electronic web-based system, or email regarding whether a provider or facility has a contractual relationship, the health plan must have a protocol that responds to the enrollee as soon as possible but no later than 1 business day after the call or email is received. The communication must be retained in the individual’s files for at least 2 years.

Price comparison: A health plan is required to offer price comparison guidance by telephone and make available on its website a price comparison tool that allows an enrollee to compare the amount of cost-sharing that the enrollee would be responsible for paying with respect to a specific item or service by a provider.

If the plan enrollee demonstrates that they relied on the health plan’s provider directory and that information turned out to be incorrect, then cost-sharing is restricted.

Disclosure Requirements for Website, Explanation of Benefits, and Insurance ID Card

Each health plan is required to make publicly available, post on its website, and include on each explanation of benefits disclosures relating to balance billing prohibitions and network and cost-sharing information to enrollees. To assist with compliance, the Departments published a model notice and consider use of the model notice in accordance with the accompanying instructions to be good faith compliance with the disclosure requirements of Section 116.

The model notice does not incorporate state-specific disclosure requirements. It does provide that, if a state develops model language for its disclosure notices that are consistent with the Federal Requirements, then the Departments will consider a plan or issuer that makes good faith use of the state-developed model language to be compliant with the federal requirement to include information about state law protections.

Also, a health plan is required to include, on the physical or electronic plan or insurance identification card issued to enrollees: (i) any deductible applicable to the health plan; (ii) any out of pocket maximums, and (iii) a telephone number and website through which the individual may seek consumer assistance information.

Advance Explanation of Benefits Requirements

Each health plan that receives notice from a provider or facility of a scheduled service is required to provide the covered individual with notice that includes:

1. whether or not the provider or facility is participating and either the contracted rate or information about how the individual can obtain information from non-participating providers;
2. the good faith estimate included in the notification received from the providers and facilities that are participating, if any;
3. a good faith estimate of the amount the plan is responsible for and the amount of any enrollee cost-sharing;
4. a good faith estimate of the amount the enrollee has incurred toward meeting the limit of financial responsibilities under the plan;
5. if the item or service is subject to a medical management technique, an appropriate disclaimer;
6. A disclaimer that the information provided in the notification is only an estimate based on the items and services reasonably expected, at the time of scheduling (or requesting) the item or service, to be furnished and is subject to change.
7. any other information or disclaimer the plan determines appropriate that is consistent with the information and disclaimers required.

The Advance Explanation of Benefits must be provided not later than 1 business day after the provider or facility gives notice to the health plan or, if the item or service was scheduled in time, then at least 10 business days before the item or service is to be furnished. If the notification is made pursuant to an enrollee request, then the deadline is 3 business days after the date on which the plan receives the request.

Continuity of Care Requirements

If a plan enrollee is a continuing care patient with an in-network provider or facility and (1) the contractual relationship with the plan is terminated; (2) benefits are terminated because of a change in the terms of the participation of the provider or facility; or (3) the health plan contract is terminated resulting in the loss of benefits with respect to the provider or facility, then the health plan must take steps to ensure continuity of care for the plan enrollee.

Specifically, the health plan must:

• notify each enrollee who is a continuing care patient on a timely basis of the termination and their right to elect continued transitional care from the provider or facility;
• provide the individual with an opportunity to notify the health plan of the individual’s need for transitional care; and
• permit the individual to elect to continue to have their benefits for the course of treatment relating to the individual’s status as a continuing care patient during the period beginning on the date on which the notice is provided and ending on the earlier of 90 days later or the date on which the individual is no longer a continuing care patient.

A “continuing care patient” is an individual who is: (1) undergoing treatment for a serious and complex condition from that provider or facility; (2) is undergoing a course of institutional or inpatient care; (3) is scheduled to undergo nonelective surgery from the provider, including postoperative care; (4) is pregnant and being cared for during pregnancy; or (5) is or was determined to be terminally ill and is receiving treatment. A “serious and complex condition” is defined as an acute illness or condition that is serious enough to required specialized medical treatment to avoid the reasonable possibility of death or permanent harm; or a chronic illness or condition that is life-threatening, degenerative, potentially disabling or congenital, and requires specialized medical care over a prolonged period of time.

Prohibition on Gag Clauses

Plans and issuers are prohibited from entering into contracts that restrict a plan from accessing and sharing certain information. Specifically, under Section 201 of the Consolidated Appropriations Act of 2021, plans and issuers are prohibited from entering into contracts with providers, networks or associations of providers, third-party administrators, or other services providers offering access to a network of providers, if the contract would directly or indirectly restrict the plan or issuer from:

• providing provider-specific cost or quality-of-care information or data, through a consumer engagement tool or any other means, to referring providers, the plan sponsor, participants, beneficiaries, or individuals eligible to become participants or beneficiaries of the plan;
• upon request, electronically accessing de-identified claims and encounter information or data for each enrollee, consistent with the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Genetic Information Nondiscrimination Act of 2008 (Gina), and the Americans with Disabilities Act (ADA) including, on a per-claim basis:
  • financial information, such as the allowed amount, or any other claim-related financial obligations included in the provider contract;
  • provider information, including name and clinical designation;
  • service codes; and
  • any other data element included in claim or encounter transactions.
• Sharing information any such information, or directing that such data be shared with a HIPAA business associate.