The US Departments of Treasury, Labor, and Health and Human Services (the Departments) along with the Office of Personnel Management (OPM) issued Requirements Related to Surprise Billing; Part I on July 1. This interim final rule (IFR) is the first in a series of regulations implementing the No Surprises Act, which was part of the Consolidated Appropriations Act, 2021 that was signed into law at the end of 2020.
We previously issued a LawFlash discussing that legislation, including the No Surprises Act provisions. Along with the IFR, the Departments released model notices that group health plans and issuers (as well as providers and facilities) must make publicly available, post on a website, and include on each explanation of benefits and other related materials.
These regulations are generally effective for plan years beginning on or after January 1, 2022. The Departments and OPM are accepting public comments on the IFR for 60 days after publication in the Federal Register (30 days for comments on the related materials).
The regulations apply to group health plans and insurance issuers offering group or individual coverage, including grandfathered plans. The regulations do not apply to retiree-only plans; excepted benefits; short-term, limited duration insurance; health reimbursement accounts (HRAs); and other account-based group health plans (e.g., healthcare flexible spending accounts).
Regulations regarding the rest of the No Surprises Act provisions, including the Independent Dispute Resolution (IDR) process, consumer protections, transparency, and price comparison tools, are forthcoming. However, the statutory effective date is January 1, 2022, and the Departments note that certain regulations may not be issued until on or after that date. Until the Departments issue regulations with respect to those provisions, which will apply prospectively, plans and issuers are expected to implement the No Surprises Act requirements using a reasonable, good-faith interpretation of the statute.
With strong bipartisan support for eliminating surprise billing practices at the federal level, the No Surprises Act was finally enacted after a two-year-long debate on how to best protect patients from surprise medical bills while balancing provider concerns.
According to the Departments, “A surprise medical bill is an unexpected bill from a health care provider or facility that occurs when a covered person receives medical services from a provider or facility that, usually unknown to the participant, beneficiary, or enrollee, is a nonparticipating provider or facility with respect to the individual’s coverage.” While the focus tends to be on balance billing (i.e., the difference between the actual amount billed by a nonparticipating provider or facility and the allowed amount that the plan or issuer will pay), surprise billing also includes out-of-network cost-sharing, deductibles, and out-of-pocket maximums, as well as additional fees and expenses charged by nonparticipating providers and facilities.
The No Surprises Act did not go so far as to prohibit all surprise billing practices. Rather, it focused on three situations where patients do not have any meaningful choice of provider and are therefore most vulnerable:
Considerations and Comments
The IFR, coupled with both recently published and anticipated rules regarding transparency in coverage, signals the government’s goal of attempting to make healthcare a “shoppable” commodity. The general idea that seems to be driving these rules is that in order for patients to really be “consumers,” they need to know the cost of the healthcare services they intend to consume so they can make a meaningful choice. In the situations identified in the IFR, patients have little to no say in where they receive care or who provides it (e.g., in an emergency). Thus the Departments reason that protections should be put in place to prevent patients from incurring significant financial hardship as a result of obtaining medical care from a provider who is out of network.
The IFR builds on existing protections under the Affordable Care Act (ACA) (which protections sunset effective for plan years beginning on or after January 1, 2022) that require that cost-sharing for out-of-network emergency care be no greater than in-network cost-sharing amounts. The IFR requires that group health plans and issuers offering group or individual coverage (including grandfathered plans) that cover “emergency services” do so
Cost-sharing for out-of-network services is still limited to in-network levels and is now required to count toward any in-network deductible or out-of-pocket maximums. Balance billing is now prohibited. More information about cost-sharing requirements is described later in this LawFlash.
The term “emergency services” in the IFR is defined to generally maintain the Emergency Medical Treatment and Labor Act (EMTALA) meaning, but such services are no longer limited to those services provided in an emergency department of a hospital. The emergency services protections under the IFR extend to pre-stabilization services provided after a patient is moved out of the emergency department, as well as services provided at an independent freestanding emergency department (including urgent care centers that are permitted to provide emergency services under applicable state law).
The emergency services protections also extend to post-stabilization services unless any of the following occur:
The IFR repeatedly mentions the Departments’ commitment to upholding Executive Order 13985 and all civil rights protections regarding nondiscrimination and accessibility. This is particularly evident under the post-stabilization services requirements where the Departments direct providers to account for an individual’s location, social risk, and other cultural and contextual risk factors in determining whether there are unreasonable travel burdens that could prevent them from freely consenting. Providers are also required to ensure that the individual is capable of understanding the informed consent process not just by addressing language and literacy barriers, but also by addressing lack of trust arising from historical inequities and misinformation about the informed consent process.
The IFR applies surprise billing protections similar to those provided for out-of-network emergency services to air ambulance services in situations where the plan or coverage has a network of participating providers and provides or covers any benefits for air ambulance services, even if those air ambulance providers are all out of network.
The Departments expressly declined to address air ambulances under the ACA emergency services rules. Because the Airline Deregulation Act prohibits states from regulating air ambulance prices, federal action was required in order to provide surprise billing protections in every state. However, neither the statute nor the IFR extends any surprise billing protections to ground ambulances.
The surprise billing protections under the IFR that apply to out-of-network emergency services and air ambulance services also apply in situations where nonparticipating providers furnish nonemergency services at participating healthcare facilities. But unlike the emergency and air ambulance provisions, patients may agree to receive nonemergency care from certain nonparticipating providers and waive the surprise billing protections.
However, notice and consent cannot be used for the following ancillary services under any circumstances:
Consistent with the statute, the IFR allows for limited exceptions to the surprise billing protections in situations where patients have a meaningful choice as to whether to select a nonparticipating provider. This makes sense in nonemergency situations where, for example, the patient has a specific specialist they want to see and can afford (both physically and financially) to wait for that provider. Under those circumstances, the Departments reasoned that the additional cost-sharing and balance billing amounts are no longer a “surprise” because the patient can knowingly and purposefully seek care from the nonparticipating provider.
The list of ancillary services outlined is intended to include instances where patients have little control over a particular provider or receipt of a particular item or service, and thus have no real choice despite appearances. The US Department of Health and Human Services (HHS) has asked for comments on the providers and services included in this list, including the criteria it should use to determine what other ancillary services should be added (if any).
For emergency services furnished by a nonparticipating emergency facility, and for nonemergency services furnished by nonparticipating providers in a participating healthcare facility, participant cost-sharing amounts will be calculated based on the following:
For air ambulance services provided by nonparticipating providers, cost-sharing is based on the lesser of the billed amount and the QPA, and the cost-sharing requirement that would apply if such services were provided by a participating provider.
Similar to the cost-sharing rules that apply to participants, the “out-of-network rate” for nonparticipating providers and facilities is based on the following:
Although the statute referred to cost-sharing based on the QPA only, the IFR included the “lesser of” provision to address concerns that there may be situations where the provider bills less than the QPA. The IFR goes into great detail describing the methodology for calculating the QPA, as well as the All-Payer Model Agreements and specified state law provisions. Those details are beyond the scope of this LawFlash, as we anticipate these calculations will largely be determined by the insurance companies and third-party administrators on behalf of the self-insured plans that they service.
Under the notice and consent process referenced above for post-stabilization and certain nonemergency services, the nonparticipating provider generally has 72 hours before the service is delivered to notify a patient of its out-of-network status and obtain the patient’s consent to receive out-of-network services. If the item or service is scheduled to be furnished within that timeframe, notice must be provided no later than three hours prior to furnishing the items or services.
The notice can be in paper or electronic form (as selected by the patient). The IFR requires that providers and facilities use a standard, fillable, HHS-provided notice document that contains the required statutory content elements (i.e., indicates that the provider is out of network; provides a good-faith estimate of the charges; for nonparticipating providers at in-network facilities (i.e., post-stabilization services), includes a list of in-network providers at the facility to which the patient can be referred; provides information on any prior authorization or other care management requirements; and includes a clear statement that consent is optional and the patient can instead opt for a participating provider). The standard notice must be translated in the 15 most common languages spoken in the geographic region in which the applicable facility is located, and will need to be tailored by providers and facilities to include the required individual-specific information.
The IFR builds in a number of protections to ensure individuals are aware of their rights and options in order to effectively waive the No Surprises Act protections. For example, if a patient’s preferred language is not among the 15 most common languages, a qualified interpreter must be provided to ensure the individual understands the notice and consent documents. In addition, providers and facilities may be required to comply with other state and federal laws regarding language access. This is also consistent with Executive Order 13985.
The IFR provides that the Departments intend to set up a unified complaint system for patients to report No Surprises Act violations and will issue additional guidance on that process. The Departments chose not to include a specific deadline under which complaints must be filed but will respond to complaints within 60 business days of receipt. Such response will acknowledge receipt of the complaint, notify the complainant of their rights and obligations under the complaints process, and describe any next steps.
The Departments may also request any additional information they may need to process the complaint and make a determination of facts for an investigation, including but not limited to information related to the claim itself (e.g., explanations of benefits, processed claims, evidence of coverage, summary plan descriptions, policies, certificates, or contracts of insurance) and information about the plan or issuer covering the claimant, as well as information about the provider, facility, air ambulance service involved.
The statute directed the Departments to establish a compliant process for QPA violations specifically. However, the IFR has expanded the process to all of the consumer protections and balance billing requirements. The Departments maintain that this is necessary in order to effectively enforce the No Surprises Act balance billing provisions, but are seeking comments on this extension.
While generally unrelated to surprise billing practices, it is worth noting that the No Surprises Act recodified the ACA rules regarding choice of healthcare professional. In contrast to the ACA emergency services rules, the IFR generally leaves the rules regarding choice of healthcare professional unchanged. However, the IFR clearly requires that grandfathered plans now comply with these requirements. In other words, now both grandfathered and nongrandfathered group health plans and/or issuers that require designation of a participating primary care provider must permit individuals to designate any participating primary care provider available to them, including pediatricians, and are prohibited from requiring authorization or referral for obstetrical or gynecological care.
While the choice of healthcare professional requirements are not extremely burdensome, they still present an additional change for grandfathered plans. In particular, grandfathered plans that require participants to designate a primary care provider (e.g., HMOs) must provide notice of these particular patient protections in their summary plan descriptions or other similar descriptions of benefits provided to participants.