Feds Act to Regulate Surprise Billing
Interim final rule lays groundwork for implementing No Surprises Act by 2022.
On July 1 the U.S. Department of Health and Human Services (HHS), Labor, and Treasury, and the Office of Personnel Management issued Requirements Related to Surprise Billing; Part I, an interim final rule (IFR) that is a first step toward implementing the No Surprises Act (NSA) — legislation that regulates surprise billing in healthcare settings and mandates full transparency of coverage regulations for patients. The NSA was signed into law Dec. 27, 2020, as part of the federal Consolidated Appropriations Act, 2021. Part II of the rule is expected to be published after a 60-day comment period following publication in the Federal Register, and at least one more rule is expected before Jan. 1, 2022, to finish laying all the groundwork. Here are some of the changes to billing you can expect to see next year.
What is Surprise Billing?
Surprise billing — also known as balance billing — happens when a patient receives an unexpected medical bill from a provider or facility that does not participate with the patient’s insurance coverage. Any out-of-network costs are charged to the patient. Surprise billing is common, for example, when a patient is taken to the emergency room and services are provided outside of the patient’s control. According to the Centers for Medicare & Medicaid Services (CMS), an estimated one out of every six emergency room visits and inpatient hospital stays involve care from at least one out-of-network provider, resulting in surprise medical bills. Surprise billing occurs in non-emergency settings, too. There may be nonparticipating providers involved in a patient’s overall care, even though their services are performed at a participating facility.
Currently, surprise billing is prohibited by Medicare, Medicaid, Indian Health Services, Veterans Affairs Health Care, and TRICARE. This new rule will extend the same protection to Americans who get their coverage through their employer (including a federal, state, or local government), or through the federal marketplaces, state-based marketplaces, or directly through an individual market health insurance issuer.
Affordable Care Act
The NSA seeks to protect patients from the most pervasive types of surprise bills by ensuring that patients incur the same costs for out-of-network providers/facilities as they do for in-network providers/facilities. To that end, the NSA continues the protections guaranteed under the Affordable Care Act (ACA), while also eliminating surprise medical bills to patients.
Prior to the NSA, a nonparticipating provider could balance bill a patient for any costs not paid by an insurance plan (unless prohibited by state law) with few limits. The ACA’s current Public Health Service (PHS) Act does not completely prohibit balance billing; it merely restricts it depending upon circumstances. The new IFR utterly bans exorbitant, unexpected emergency bills and mitigates cost-sharing.
The IFR bans the following:
- Surprise billing for emergency services, regardless of where they are provided
- High out-of-network cost-sharing for emergency and non-emergency services by keeping costs no higher than in-network rates
- Out-of-network charges for ancillary care (e.g., anesthesiologist) at any in-network facility
- Other out-of-network charges without advance notice
In addition, if a patient’s health plan covers any benefits for emergency services, the IFR requires nonparticipating emergency services to be covered:
- Without any prior authorization
- Regardless of whether a provider or facility is in-network
- Without limitations
Section 102 of the NSA broadens the definition of emergency services to include emergency services provided at an independent freestanding emergency department (i.e., a healthcare facility that provides emergency services and is geographically separate and distinct from a hospital, as well as separately licensed as such by a state). This includes urgent care centers that are permitted to provide emergency services under state licensure laws.
What can providers and facilities expect for cost-sharing? Emergency services provided at an out-of-network emergency facility and non-emergency services provided by out-of-network providers in an in-network facility must be calculated as if the services were provided by in-network facilities and providers. Patient cost-sharing cannot be greater than the recognized amount and will count toward any in-network deductible or out-of-pocket maximums. Per the IFR, the amount is limited to one of the following:
- An amount determined by an applicable All-Payer Model (APM), or if none,
- an amount determined by a specific state law, or if none,
- the lesser of the billed charge or qualifying payment amount (QPA), or
- an amount determined by an independent dispute resolution (IDR) entity.
The IFR describes how the QPA will be determined. In general terms, the QPA is the median contracted rate for the same or similar item or service, offered by a similar provider or facility type, in the same geographic region. Payers will have to disclose to nonparticipating providers the QPA for items and services and provide information concerning how the amount was derived, if requested.
How to bill for air ambulances, the cost of which is regularly balance-billed to patients to the tune of tens of thousands of dollars, is still unclear. Air ambulance providers do not fall under the jurisdiction of states but rather the Airline Deregulation Act, so the federal government has stepped in to help regulate these costs with the NSA. The NSA subjects air ambulance operations to the same general IDR process and prohibition of balance billing, but because air ambulances currently fall outside of state and federal laws, the final rulemaking still needs to be hammered out.
New Year, New Protections
Consumer protections in this rule will take effect beginning Jan. 1, 2022. The regulations are generally applicable to group health plans and health insurance issuers for plan years beginning on or after Jan. 1, 2022, and to Federal Employees Health Benefits (FEHB) program carriers for contract years beginning on or after Jan. 1, 2022. They are applicable to providers and facilities beginning on Jan. 1, 2022.
The federal government is currently working on guidance to provide to stakeholders prior to the January effective date. Expect to see more rules that continue to address consumer protections, IDR processes, and state law implications announced in the coming months and into the new year.