The No Surprises Act (the “NSA”), which was signed into law at the end of 2020 as part of the Consolidated Appropriations Act, is designed to protect consumers from unexpected medical bills. The NSA generally applies to group health plans, healthcare providers, and health insurance issuers. The NSA is expected to have significant and far-reaching impacts on the health industry, so it is imperative that group health plan sponsors take steps to implement regulatory guidance on the NSA as it is issued.
Among other provisions, the NSA prohibits balance billing for emergency services and services provided by a non-network provider when a participant receives services at an in-network facility, as well as air ambulance services. Balance billing occurs when a bill for remaining charges assessed by the out-of-network provider is sent to a participant after the group health plan has paid its portion, if any, of those charges. Because a non-network provider is not subject to a network contract, the provider’s bill may include charges in excess of the amount paid by a group health plan and after applying any co-insurance or copayment paid by the plan participant.
On July 1, 2021 (the deadline mandated by the NSA), the Department of Health and Human Services, jointly with the Departments of Labor, the Treasury, and the Office of Personnel Management, issued an interim final rule (“IFR”) to implement certain provisions of the NSA. The regulators also issued a fact sheet, press release, and other related guidance. The IFR provides guidance mainly for insurers and third-party administrators, but group health plan sponsors should take note of how the IFR implements the NSA’s expanded mandates affecting emergency services, non-emergency services provided by an out-of-network provider, and air ambulance services. The IFR is subject to a notice and comment period but, absent changes made by HHS or the other federal agencies, the IFR is effective for group health plan years beginning on or after January 1, 2022.
For group health plans, a key aspect of the IFR relates to how the cost-sharing amounts are calculated for the participant and the non-network provider. While a detailed analysis of the NSA/IFR rules is beyond the scope of this post, below is a short summary of the IFR guidance on calculating the cost of coverage:
- A participant’s cost-sharing (e.g., deductible, copayment, coinsurance) is limited to the group health plan’s in-network rate that would be charged by an in-network provider or facility for the corresponding in-network services (referred to as the “recognized amount”). The IFR includes a hierarchy of reference points for determining the recognized amount, with a final backstop of the lesser of (a) the amount billed by the non-network provider or facility or (b) the qualified payment amount (“QPA”). The IFR includes detailed guidance on how the QPA is determined.
- The IFR prescribes the amount of the payment that must be made by the group health plan to a non-network provider for the services subject to the NSA. This amount generally ties back to the same reference points that are used for determining the participant’s cost-sharing responsibility, less the amount payable by the participant. The rules also prescribe timing rules for making the payment to the non-network provider.
Note that the NSA also provides for an arbitration process to resolve disputes between the group health plan and an out-of-network provider when the parties cannot agree on a final payment amount. The IFR does not address this provision of the NSA. Rather, the regulators expect to issue rules for arbitration between the plan and out-of-network providers later this year. In addition, the regulators intend to issue regulations on other consumer protections set forth in the CAA, including the advance explanation of benefits requirement and the requirement to maintain an online price comparison tool, which both impact group health plans.
The IFR and related guidance is the first in a series of regulatory guidance to address the NSA requirements for transparency in billing for out-of-network services. Although additional guidance is expected, given the upcoming effective date and the significant and detailed new obligations and parameters for determining payment amounts, we recommend that group health plan sponsors begin to coordinate with their service providers and advisors so that they are prepared to comply with the new requirements by the effective date.