- The U.S. Departments of Health and Human Services (HHS), Labor and Treasury, along with the Office of Personnel Management, on July 1, 2021, issued a much-anticipated Interim Final Rule with Comment Period (IFC) – Requirements Related to Surprise Billing; Part I. This is the first regulation implementing provisions of Title I (No Surprises Act) of Division BB of the Consolidated Appropriations Act, 2021
- The IFC largely focuses on specifying patient protections and defining the qualifying payment amount (QPA) central to the law. The IFC will go into effect 60 days after it is published in the Federal Register. However, most of the provisions will not be applicable until Jan. 1, 2022.
- A second regulation is expected by Oct. 1, 2021, and will establish an audit process. The third regulation is expected by Dec. 27, 2021, and will detail the independent dispute resolution (IDR) process.
The U.S. Departments of Health and Human Services (HHS), Labor and Treasury, along with the Office of Personnel Management, on July 1, 2021, issued a much-anticipated Interim Final Rule with Comment Period (IFC) – Requirements Related to Surprise Billing; Part I. This is the first regulation implementing provisions of Title I (No Surprises Act) of Division BB of the Consolidated Appropriations Act, 2021.
The IFC largely focuses on specifying patient protections and defining the qualifying payment amount (QPA) central to the law. A second regulation is expected by Oct. 1, 2021, and will establish an audit process. The third regulation is expected by Dec. 27, 2021, and will detail the independent dispute resolution (IDR) process.
The IFC will go into effect 60 days after it is published in the Federal Register. However, most of the provisions will not be applicable until Jan. 1, 2022. The rule will take effect for healthcare providers and facilities on Jan. 1, 2022. For group health plans, health insurance issuers and Federal Employees Health Benefits (FEHB) Program carriers, the provisions will take effect for plan, policy or contract years beginning on/after Jan. 1, 2022. Consumer protections in the rule will take effect starting Jan. 1, 2022.
Written comments must be received by 5 p.m. on Sept. 7, 2021, to be considered. Note when issuing an interim final rule, an agency invokes good cause, issues a rule and then holds a post promulgation comment period. If the agency is persuaded by any of the comments and so chooses, the rule can be amended in light of those comments.
In a Nutshell
This IFC includes the following provisions:
- Bans surprise billing for emergency services. Emergency services, regardless of where they are provided, must be treated on an in-network basis without requirements for prior authorization.
- Bans high out-of-network cost-sharing for emergency and non-emergency services. Patient cost-sharing, such as co-insurance or a deductible, cannot be higher than if such services were provided by an in-network doctor, and any co-insurance or deductible must be based on in-network provider rates.
- Bans out-of-network charges for ancillary care (like an anesthesiologist or assistant surgeon) at an in-network facility in all circumstances.
- Bans other out-of-network charges without advance notice. Healthcare providers and facilities must provide patients with a plain-language consumer notice explaining that patient consent is required to receive care on an out-of-network basis before that provider can bill at the higher out-of-network rate.
Detailed Summary of Provisions
Who is Affected by the Rule?
Health insurance issuers offering group or individual health insurance coverage (including grandfathered-in plans) and applicable healthcare facilities and providers. Group health plans include both insured and self-insured plans, private employment-based group health plans subject to Employee Retirement Income Security Act (ERISA), non-federal governmental plans (such as plans sponsored by states and local governments), and church plans and traditional indemnity plans. Individual health insurance coverage includes exchange and non-exchange plans and student health insurance coverage. It does not apply to health reimbursement arrangements, short-term limited-duration insurance or retiree-only plans. Applicable healthcare facilities include hospitals, hospital outpatient departments, critical access hospitals and ambulatory surgical centers. HHS seeks comment on adding other types of facilities to include, such as urgent care centers.
What Types of Services Does It Cover?
- (A) Emergency services*
- (B) Nonemergency services furnished by nonparticipating providers at participating facilities
- (C) Air ambulance services furnished by nonparticipating providers of air ambulance services
* The definition of emergency services includes pre-stabilization services provided after the patient is moved out of the emergency department (ED) and admitted to a hospital, post-stabilization services and emergency services provided at an independent, freestanding ED.
In addition to items and services furnished by a provider at the facility, a "visit" to a participating healthcare facility includes the furnishing of equipment and devices, telemedicine services, imaging services, laboratory services and preoperative and postoperative services, regardless of whether the provider furnishing such items or services is physically at the facility (e.g., provided via telemedicine).
This IFC prohibits balance billing and limits the total amount paid to the provider or facility, including any cost-sharing, to (in order of priority):
- an amount determined by an applicable All-Payer Model (APM) Agreement1, or
- an amount determined by specified state law2, or
- an amount agreed upon by the plan/issuer and provider/facility, or (if none apply)
- an amount determined by an independent dispute resolution (IDR) entity
Cost-Sharing and Out-of-Network Caps
For (A) and (B) above, limits cost-sharing to:
- an amount determined by applicable APM Agreement, or (if none)
- an amount determined by specified state law, or (if neither applies)
- the lesser of the billed charge or median contracted rate, i.e., "qualifying payment amount" (QPA)
For (C), limits cost-sharing to the lesser of the billed charge or the QPA and in-network cost-sharing.
Likewise, out-of-network payment amounts must be based on an approved APM and, if no APM, state law. If there is no state law, the payment amount agreed upon by a provider and insurer applies. If none of those conditions apply, the IDR process could come into play.
All cost-sharing for out-of-network providers must count toward in-network deductibles and out-of-pocket maximums.
For more details on calculating median contracted rates, see the Appendix section below.
Methodology for Calculating the Qualifying Payment Amount (QPA)
The rule lays out how the qualifying payment amount will be determined, which is the basis on which the patient's share of the bill is calculated. The No Surprises Act defines the QPA as the median of contracted rates for similar services in a particular geographic area adjusted by the consumer price index to minimize the influence of high outlier rates. The IFC acknowledges this goal in crafting definitions.
Under the law, patients can't be billed for any amount other than what they would pay for in-network care in emergencies and when they receive services from out-of-network providers at facilities that are in their networks.
The QPA also must be considered by arbitrators if the health plan and the providers can't agree on how much the doctor or hospital should be paid, according to the law.
A health plan issuer is deemed to have sufficient information to calculate the QPA so long as there are at least three provider contracts for a given service in a given region. The IFC defines geographic regions for the QPA as one for each Metropolitan Statistical Area (MSA) in a state and one for all other regions in the state. However, the rule tries to minimize how often a plan may have insufficient information to calculate the QPA, by first going to broader regions. If a plan has an inadequate number of contracts at the MSA level, then the QPA calculation moves to one region for all MSAs in a state. If there is still an insufficient number of contracts, then it moves to the nine census regions.
For air ambulance services, however, geographic regions for calculating the QPA are first defined as one for all MSAs in a state and one for all other regions in a state. Similarly, if insufficient contracts exist, they move to the nine census regions (split into urban and rural).
The IFC also covers how to determine if services are similar and what is considered insurers' normal practices in contracting with providers. (For more details on similar services, see the Appendix section below.)
Notably, the Health and Human Services, Labor and Treasury Departments seek comment on all aspects of the methodology established in this IFC for determining the QPA. In particular, the departments seek comment on whether there are any considerations or factors that are not sufficiently accounted for in the methodology established in these interim final rules; the impact of the methodology on cost-sharing, payment amounts and provider network participation; and whether there are areas where commenters believe additional rulemaking or guidance is necessary.
Patient Notice and Consent Requirements
Cost-sharing and balance billing protections do not apply if the nonparticipating provider/facility provides the patient with notice and receives consent to waive these protections and agree to out-of-network charges, which it may do only if the patient has received emergency services, their condition has stabilized and certain conditions are met. The notice and consent document must be provided together but must be physically separate from any other forms or documents. They can be provided in paper or electronic form. They must be provided at least 72 hours prior to scheduled appointments, or if scheduled after, on the same day as the appointment no later than three hours prior to services being rendered. The notice must list the provider's name, include a "good faith estimate for such items or services that would reasonably be expected to be provided," and clearly state that the patient is not required to consent. A copy of the signed consent document must be provided to the patient. The notice and consent document must be made available in the 15 most common languages in the geographic region. If the individual's preferred language is not among the 15, the notice and consent requirements are not met unless the provider or facility furnishes a qualified interpreter. Providers and facilities are expressly prohibited from seeking consent from individuals in certain circumstances, such as ancillary services including anesthesiology, pathology and radiology, and to items or services furnished due to unforeseen, urgent medical needs that arise at the time an item or service is furnished. Facilities and providers are required to retain written notice and consent documents for at least seven years after the date on which the item or service was furnished.
Provider/Facility Disclosure Requirements
For each item or service furnished by a nonparticipating provider or facility, the provider/facility must timely notify the plan or issuer as to whether balance billing and in-network cost-sharing protections apply, and provide a copy of any signed written notice and consent documents. Plans and issuers must make certain disclosures with each initial payment or notice of denial of payment and provide additional information upon request. Plans/issuers must provide the QPA for each item/service as well as a statement certifying that the QPA applies and was determined in compliance with the methodology outlined in this IFC. They must also notify providers/facilities to initiate a 30-day open negotiation period and provide relevant contact information. If that does not result in a determination, they may initiate the IDR process within four days. In addition, upon request, a plan/issuer must provide, promptly, information about QPA pricing, including whether it includes non-fee-for-service (FFS) rates, was based on a derived amount, which related service codes were used to price new codes, and what database was used (if relevant), and any APM-based rates that were not included in calculating the QPA.
Public Disclosure Requirements
Certain healthcare facilities/providers and plans/insurers must post in a prominent location within the facility and on a public website and provide notice to patients with the following information: 1) applicable requirements and prohibitions under the No Surprises Act and implementing regulations; 2) any applicable state balance billing requirements; and 3) how to contact appropriate state and federal agencies if the individual believes the provider or facility has violated any of these requirements. All of these must be provided prior to or at the time of billing. There is a federal model disclosure notice that can – but is not required to – be used to satisfy these requirements. These requirements do not apply to air ambulance service providers (although they are encouraged to comply), items or services not furnished at a healthcare facility or in connection with a visit at a facility, or patients not covered by an applicable group health plan or individual coverage.
Timely Settlement of Payment Disputes
To ensure timely resolution of billing disputes, this IFC establishes time frames for initial payment/notice of denial (within 30 days of a bill being submitted), making a final benefit determination and payment (with 30 days of initial response), payment negotiations and initiating the IDR process. Plans/issuers are expected to act "reasonably and in good faith" for additional information requests. These requirements do not apply to nonemergency services (other than air ambulance), post stabilization services or patients who consent to out-of-network rates.
The Consolidated Appropriations Act directs HHS to establish a process to receive consumer complaints regarding violations and respond to such complaints within 60 business days. This IFC does not specify a time period by which a complaint must be filed. The agencies intend to create a central system to intake all complaints and intend to issue additional guidance. The agencies may request additional information or documentation. The next steps of the complaint resolution process may include referring the complainant to another state or federal resolution process or regulatory authority with enforcement jurisdiction or initiating an investigation for enforcement action.
The Labor Department and the Treasury Department generally have primary enforcement authority over private-sector employment-based group health plans. The IRS has jurisdiction over certain church plans. HHS has primary enforcement authority over nonfederal governmental plans. Office of Personnel Management has jurisdiction over FEHB plans, i.e., federal governmental plans. The departments will generally use these existing processes and authorities to ensure compliance. HHS intends to address enforcement in future rulemaking.
In instances where a provider or facility does balance bill in violation of the statute and IFC, HHS may impose civil money penalties in states where HHS is directly enforcing the balance billing provisions. However, it will waive penalties for providers/facilities that do not knowingly violate and could not have been expected to reasonably know, provided they withdraw the bill within 30 days.
Affordable Care Act Patient Protections
The No Surprises Act extends the applicability of the patient protections for choice of healthcare professionals to grandfathered health plans.
This rule is intended to provide relief from some of the most common scenarios with high and unexpected medical costs. It does not universally protect individuals from every high or unexpected medical bill (such as high deductible plans) and does not cover all nonemergency services provided by nonparticipating providers at participating healthcare facilities.
For more information and questions on the IFC and its impact, please contact the authors.
Appendix: Calculating Median Contracted Rates
What Counts and What Doesn't?
If a plan or issuer has a single contract with a provider group/facility, the negotiated rate is treated as a single contracted rate if the same rate applies to all providers regardless of the number of claims paid at that rate. If a plan or issuer has a contract with multiple providers, each unique contracted rate constitutes a single contracted rate regardless if the paid amount is the same or different under different contracts. Contracted rates between providers and third-party entities hired to manage provider networks count. A single case agreement or ad hoc arrangement does not constitute a contract and does not count. Rates negotiated under other limited forms of coverage such as excepted benefits, short-term, limited-duration insurance and account-based plans, including health reimbursement arrangements, do not count. In cases of rates negotiated under APMs, such as bundled or capitated arrangements, rates should be calculated using underlying fee schedule rates. If unavailable, plans should use a derived amount, which is the price assigned for the purpose of internal accounting or provider reconciliation. Prices would be indexed for inflation. Policies for calculating anesthesiology and air ambulance service rates can be found on pages 84-86 of the IFC.
How Much Data Is "Sufficient?"
Three contracted rates are considered sufficient to determine a median. Generally, plans/issuers will calculate rates based on pricing data prior to Jan. 31, 2019. If insufficient data is available or it is a new service, plans/issuers must use the first sufficient information year in which 1) at least three contracted rates on Jan. 31 of the immediately preceding year; and 2) contracted rates account for at least 25 percent of the total number of claims paid for that item or service for that year for all plans offered by the issuer in the same market. (Note: This 25 percent threshold does not apply to pre-2019 rates.) In the case of new service codes, the plan/issuer must first identify a reasonably related service code that existed in the immediately preceding year then calculate a cost "relatively ratio" based on Medicare rates, or if unavailable, the plan's reimbursement amount. In cases in which a plan/issuer does not have "sufficient information" to calculate a median contracted rate, the Consolidated Appropriations Act directs the plan/issuer to determine the QPA through the use of any database that does not have conflicts of interest and has sufficient pricing information and the ability to distinguish in-network and out-of-network providers/facilities. State all-payer claims databases are categorically eligible.
How Are "Same or Similar Services" and "Geographic Regions" Defined?
Under the No Surprises Act, plans and issuers must calculate the median contracted rate for an item or service using contracted rates for "the same or similar item or service" provided in the "geographic region" in which the item or service is furnished. "Same or similar item or service" means a healthcare item or service billed under the same Current Procedural Terminology (CPT), Healthcare Common Procedure Coding System (HCPCS) or Diagnosis-Related Group (DRG) service code, or a comparable code under a different procedural code system. If contracted rates vary due to a modifier, medical specialty or facility type, they must be calculated separately. However, plans/issuers should not calculate separate median contracted rates based on other characteristics of facilities that might cause contracted rates to vary, such as whether a hospital is an academic medical center or a teaching hospital. For items and services other than air ambulance services, a "geographic region" is generally defined as one region for each metropolitan statistical area (MSA) in a state and one region consisting of all other portions of the state, unless there is insufficient information, in which case all MSAs in the state would constitute one geographic region, and all other portions of the state would constitute a different region. If still insufficient, geographic regions will be based on census divisions. One region consists of all MSAs in the census division, and one region consisting of all other portions of the census division. For air ambulances, the latter state- and census-based approaches would apply.
1. The No Surprise Act and this IFC could spur many states to consider adopting All-Payer Model Agreements similar to those adopted by Maryland, Pennsylvania and Vermont. Those states have laws that regulate how providers and payors should handle out-of-network medical bills.
2. Note as of June 2021, approximately 18 states have implemented broad-based surprise billing laws, while others have state laws that address specific elements of surprise billings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.