[co-author: Carina Arellano]

On July 1, 2021, the Office of Personnel Management, Department of the Treasury, Department of Health and Human Services (“HHS”), and Department of Labor (collectively the “Departments”) issued the interim final rule “Requirements Related to Surprise Billing; Part I” (the “IFR”), which is the first phase of regulations implementing the No Surprises Act. The No Surprises Act provides certain protections against surprise medical bills and was signed into law on December 27, 2020 as part of the Consolidated Appropriations Act, 2021 (“CAA”). For more information about the CAA’s impact on employer-sponsored group health plans, see our SW Benefits Update, “2021 Consolidated Appropriations Act Compliance Checklist for Plan Sponsors.”

Surprise billing occurs when an individual receives an unexpected bill from a health care provider or facility because the individual did not realize that he or she received medical services from a nonparticipating provider or nonparticipating facility with respect to the individual’s coverage. Following a surprise bill by an out-of-network provider, the individual can often be balance billed for any amount not covered by their health plan. The No Surprises Act and the IFR do not completely eliminate surprise billing, but they provide relief from some of the more common scenarios when an individual may experience high and unexpected medical costs. Those scenarios include surprise medical bills from:

1. emergency services;
2. non-emergency services performed by nonparticipating providers at participating health care facilities; and
3. air ambulance services.

However, they do not prohibit surprise medical bills from ground ambulance providers or non-emergency services provided at facilities that do not meet the IFR’s definition of health care facility (e.g., an out-of-network doctor’s office).

The IFR greatly expands upon the Affordable Care Act’s coverage requirements for emergency services and is generally applicable for plan and policy years beginning on or after January 1, 2022. The IFR applies to individual policies, insured group health plans, self-funded group health plans, grandfathered and non-grandfathered group health plans, grandmothered group health plans, traditional indemnity plans without a network, non-federal governmental plans, church plans, student health insurance coverage, and the Federal Employees Health Benefits ("FEHB") Program. The IFR does not apply to health reimbursement arrangements or other account-based plans, excepted benefits (e.g., dental and vision plans), short-term limited duration insurance, and retiree-only plans. This newsletter focuses on private employer-sponsored group health plans.

I. Prevention of Surprise Medical Billing for Emergency Services

When the new rules take effect, if a group health plan covers emergency services, the group health plan must satisfy the following requirements with respect to such services:

1. No Prior Authorization Required: A plan may not require prior authorization for emergency services even if such services are provided out-of-network.
2. No Participating Provider Requirement: A plan must cover emergency services regardless of whether the health care provider furnishing such services is a participating provider or a participating emergency facility.
3. If an Individual Receives Treatment from a Nonparticipating Provider or a Nonparticipating Emergency Facility:
   1. Restrictions or Limitations: A plan must not impose requirements or limitations on such services that are more restrictive than the requirements and limitations that apply to emergency services from a participating provider or participating emergency facility.
   2. Cost-Sharing Requirements: A plan must not impose cost-sharing requirements on such services that are greater than the requirements that apply to emergency services from a participating provider or participating emergency facility. The plan must count the cost-sharing payments toward the plan’s in-network deductible and out-of-pocket maximums. In other words, a visit to an out-of-network emergency room is billed the same as a visit to an in-network emergency room.
      1. Cost-Sharing Calculation: Generally, a plan must calculate cost-sharing as if the total amount that would have been charged by a participating provider or participating emergency facility is equal to the “recognized amount” for such services. The recognized amount is: (1) an amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act; (2) if there is no applicable All-Payer Model Agreement, an amount determined by a specified state law; or (3) if there is no applicable All-Payer Model Agreement or specified state law, the lesser of the amount billed by the provider or facility or the qualifying payment amount (“QPA”). The QPA is generally the median of the contracted rates of the plan or issuer for the item or service in the geographic region.
   3. 30-Day Notice: A plan must send the nonparticipating provider or nonparticipating emergency facility an initial payment or notice of denial within 30 calendar days after the provider or facility transmits the bill for such services.
   4. Total Plan Payment: A plan must pay a total plan payment directly to the nonparticipating provider or nonparticipating facility that is equal to the amount by which the out-of-network rate for the services exceeds the cost-sharing amount for the services, less any initial payment amount.
      1. Out-of-Network Rate: The plan’s total plan payment must be equal to one of the following amounts, less any cost-sharing from the participant: (1) the All-Payer Model amount (see above); (2) if there is no applicable All-Payer Model amount, an amount determined by a specified state law; (3) if there is no applicable All-Payer Model amount or amount specified by state law, the amount the plan and provider/facility agree to; and (4) if options (1)-(3) fail, the amount determined by the independent dispute resolution process (“IDR”).
4. No Limit on ‘Emergency Medical Condition’: A plan must not deny emergency services coverage based solely on diagnosis codes, but instead must determine whether a prudent layperson (rather than a medical professional) would reasonably consider the situation to be an emergency based on all pertinent documentation and the presenting symptoms.
5. Without Regard to Any Other Term or Condition of the Plan: A plan must cover emergency services without regard to any other term or condition of the plan, except the exclusion or coordination of benefits, waiting periods, and applicable cost-sharing requirements.
6. No Time Limit Between Symptoms and Seeking Care: A plan must not restrict the coverage of emergency services by imposing a time limit between the onset of symptoms and a patient seeking care at the emergency department. Similarly, a plan may not restrict the coverage of emergency services because the patient did not experience a sudden onset of the condition.
7. No General Plan Exclusion: A plan must not deny coverage of emergency services based on a general plan exclusion that would apply to items and services other than emergency services. For example, if a plan excludes dependent maternity care, it cannot deny claims for emergency services provided to dependent women who are pregnant.
8. Prohibition on Balance Billing: And perhaps most importantly, the No Surprises Act prohibits nonparticipating providers or nonparticipating facilities from balance billing patients for emergency services. A plan may submit a complaint to HHS against a provider or facility who violates these rules.

II. Prevention of Surprise Medical Billing for Non-Emergency Services Performed by Nonparticipating Providers at Certain Participating Facilities

A group health plan must satisfy the following requirements with respect to non-emergency services performed by nonparticipating providers at certain participating facilities (e.g., an out-of-network anesthesiologist at an in-network hospital):

1. Cost-Sharing Requirement: A plan must not impose cost-sharing requirements on such services that are greater than the requirements that apply to non-emergency services from a participating provider. The plan must count the cost-sharing payments toward the plan’s in-network deductible and out-of-pocket maximums.
   1. Cost-Sharing Calculation: Generally, a plan must calculate cost-sharing as if the total amount that would have been charged by a participating provider is equal to the “recognized amount” for such services (see definition of recognized amount above).
2. 30-Day Notice: A plan must send the nonparticipating provider an initial payment or notice of denial within 30 calendar days after the provider or facility transmits the bill for such services.
3. Total Plan Payment: A plan must pay a total plan payment directly to the nonparticipating provider that is equal to the amount by which the out-of-network rate for the services exceeds the cost-sharing amount for the services, less any initial payment amount (see definition of out-of-network rate above).
4. Prohibition on Balance Billing: And perhaps most importantly, the No Surprises Act prohibits nonparticipating providers from balance billing patients for emergency services, unless the provider satisfies certain notice and consent requirements, if applicable. If a plan does not receive such information, it must assume that the individual has not waived the IFR’s protections. A plan may submit a complaint to HHS against a provider or facility who violates these rules.

III. Prevention of Surprise Medical Billing for Air Ambulance Services from a Nonparticipating Provider

If a group health plan covers air ambulance services, the group health plan must satisfy the following requirements with respect to air ambulance services from a nonparticipating provider:

1. Cost-Sharing Requirement: A plan must not impose cost-sharing requirements on such services that are greater than the requirements that apply to air ambulance services from a participating provider. The plan must count the cost-sharing payments toward the plan’s in-network deductible and out-of-pocket maximums.
   1. Cost-Sharing Calculation: Generally, a plan must calculate cost-sharing as if the total amount that would have been charged by a participating provider is equal to the lesser of the QPA and the provider’s billed charges.
2. 30-Day Notice: A plan must send the nonparticipating provider an initial payment or notice of denial within 30 calendar days after the provider transmits the bill for such services.
3. Total Plan Payment: A plan must pay a total plan payment directly to the nonparticipating provider that is equal to the lesser of the QPA and the billed amount for such services.
4. Prohibition on Balance Billing: And perhaps most importantly, the No Surprises Act prohibits air ambulance providers from balance billing patients for air ambulance services. A plan may submit a complaint to HHS against an air ambulance provider who violates these rules.

IV. Disclosure Requirements for Group Health Plans

1. Disclosures to Providers: Under the No Surprises Act group health plans and the nonparticipating providers or facilities may engage in open negotiations for 30 days regarding certain nonparticipating claims. If those negotiations fail, the plan or nonparticipating provider or facility may request IDR. The losing party must pay the entire cost of the IDR.
   
   To facilitate open negotiations and the IDR process, the IFR requires group health plans to make certain disclosures with each initial payment or notice of denial to providers and facilities regarding how the QPA was determined, including: (1) the QPA for each item or service involved; (2) a statement certifying that the plan has determined that the QPA applies and was determined in compliance with the rules; (3) a statement regarding the 30-day negotiation period, and if that fails, when to initiate the IDR process; and (4) contact information for the appropriate office or person to initiate negotiations. Additionally, upon request, group health plans must also provide: (1) information about whether the QPA includes contracted rates that were not set on a fee-for-service basis; (2) whether the QPA was determined using the underlying fee schedule rates or a derived amount; (3) if a related service code was used to determine the QPA for a new service code, information to identify any related service codes used; (4) if an eligible database was used to determine the QPA, information to identify the database; and (5) if applicable, a statement that the plan’s contracted rates include risk-sharing, bonus, penalty, or other incentive-based or retrospective payments or payment adjustments that were excluded when calculating the QPA.
2. Disclosures to Participants: To educate participants and beneficiaries, group health plans must make publicly available, post on the plan’s public website, and include on applicable explanation of benefits (“EOBs”) information regarding the No Surprises Act’s surprise billing protections. The Departments issued a model notice and will consider group health plans who use it in accordance with its instructions to be in good faith compliance with this requirement. Equally important, however, may be educating participants when the protections of the No Surprises Act do not apply, such as ground ambulance and a visit to an in-network doctor who orders lab work from an out-of-network provider.

Conclusion

The IFR, in addition to many other requirements under the CAA, are effective for plan years beginning on or after January 1, 2022. Therefore, before 2022 begins employers may want to consider taking the following actions:

• Work with third-party administrators (“TPAs”) to update plan documents to incorporate new surprise billing rules, implement requirements under new surprise billing rules, and implement an IDR process.
• Confirm TPAs will update EOBs to include No Surprises Act surprise billing disclosures.
• Confirm TPAs can calculate QPA. The QPA will affect cost-sharing and the IDR process, and the IFR includes an audit provision to ensure that plans comply with the IFR’s requirements.
• Prepare to make publicly available and post on the plan’s website a notice regarding balance billing protections. Education will be key so participants know what is and is not protected by the No Surprises Act.
• Look out for further guidance implementing the No Surprises Act regarding:
  • The federal IDR process
  • Patient protections through transparency and the patient-provider dispute resolution process
  • Price comparison tools
  • Air ambulance reporting
  • HHS enforcement requirements
• Consider and understand plan fees that will be charged as a result of these rules. Needless to say, these are very significant changes, and TPAs are spending considerable time and money gearing up to comply. However, they will also likely change their pricing structure to recoup the cost. For example, some TPAs are expanding their shared savings programs to cover all claims that are subject to the No Surprises Act. This could result in significantly higher fees if plan fiduciaries do not understand the fee structure.