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No Surprises Act – Interim Final Rule

The passage of the Consolidated Appropriations Act of 2021, last December, contains federal action to prohibit surprise medical bills by its inclusion of the No Surprises Act.

These interim final rules amend and add provisions to existing rules to “protect participants, beneficiaries, and enrollees in group health plans and group and individual health insurance coverage from surprise medical bills when they receive emergency services, non-emergency services from nonparticipating providers at participating facilities, and air ambulance services from nonparticipating providers of air ambulance services, under certain circumstances.”

Background

Most health plans are made up of managed care components incenting providers, e.g. hospitals, physicians, etc. to join a health insurer’s network of providers in exchange for discounting the cost of services. The intent in this partnership is thought to help manage the costs of healthcare.

However, there are always unintentional consequences to any system. Surprise medical bills from an out-of-network provider, especially for emergency care or air ambulance transport, can be staggering and financially devastate patients and their families. The law also provides important notice and consent protections in non-emergency circumstances where patients may learn, after the fact, that their care was received by an out-of-network provider in an in-network hospital. Individuals who receive services from a non-network facility or physician incur much higher out-of-pocket expenses. Although plan information includes notice to participants that use of non-network providers results in higher out-of-pocket costs, participants are not always in control of the providers who treat them. For instance, patients often receive treatment from non-network providers involuntarily, such as when a hospital assigns anesthesiologists, radiologists, pathologists, and emergency room providers to render services to patients.

There are three specific circumstances this new rule addresses in conjunction with treatment by a non-network provider:

  • An emergency;
  • Treatment in a network facility by physicians or providers that are not in the network and for which individuals do not have a choice of selection, e.g. anesthesiologist, radiologist, pathologist, etc.; or
  • Charges for air ambulance services

When does this rule apply?

The rule applies to group health plans and health insurance issuers for plan years beginning on or after January 1, 2022.

What plans are covered by the interim final rule?

The rule applies to health insurance carriers that offer group or individual coverage and includes:

  • Fully insured plans
  • Self-insured plans
  • Group health plans subject to ERISA
  • Grandfathered plans
  • Government plans not offered by the federal government
  • Church plans
  • Traditional indemnity plans

Major provisions of the interim final rule

The interim final rule:

  • 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 coinsurance 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. Health care 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.
  • Bans surprise billing for air ambulance services provided by out-of-network providers. Cost sharing amounts are calculated using the lesser of the billed charge or the plan’s qualifying payment amount.

How is billing determined?

The total amount a consumer will pay to an out-of-network provider or facility is determined an All-Payer Model Agreement (APM) under Section 1115A of the Social Security Act. Some states, such as Maryland and Pennsylvania, already have APMs in place. For states that do not, the amount charged will be based on state law.

If there is no APM or applicable state law, the patient will be billed an amount agreed upon by the plan and the provider or facility. If none of the preceding apply, the amount will be determined by an independent dispute resolution entity (IDR). Future regulations will soon be given about what entities qualify as an IDR and what process they will need to follow.

What about cost sharing?

Cost sharing calculations are similar to total billing. If an APM is in place, that will cover cost sharing. If not, state law governs. If there is no APM or state law, cost sharing will be based on the lesser of the billed charge or the qualifying payment amount (QPA). Typically, the QPA is the plan’s median contracted rate.

What notices must providers and group or individual health plans give to patients?

The rule requires facilities and providers to provide patients with a one-page notice. The notice must contain:

  • The requirements and prohibitions applicable to the provider or facility under Public Health Service Act sections 2799B-1 and 2799B-2 and their implementing regulations.
  • Any applicable state balance billing limitations or prohibitions.
  • How to contact appropriate state and federal agencies if someone believes the provider or facility has violated the requirements described in the notice.

This notice must also be published on a publicly available website. Additionally, group health plans and health insurers must make the notice publicly available, post on a public website of the plan or issuer, and include on each explanation of benefits for an item or service.

The Departments provide a model notice that plans and providers may use, in good faith, to meet their obligation.

Stay up to date on the latest developments impacting health care and the impact on employer benefits plans. Register for the upcoming Legislative and Regulatory Update here.

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