Government agencies issue the first set of regulations restricting surprise billing

• A new rule implementing the No Surprises Act establishes various consumer billing protections for out-of-network care.
• The rule sets out the formula for determining provider payment rates when out-of-network care can’t be balance-billed. 
• Providers will be prohibited from balance-billing patients in many scenarios and face administrative requirements concerning notification.

In a development that many healthcare stakeholders have awaited for months, four federal agencies on Thursday, July 1 released new regulations prohibiting surprise billing in various scenarios.

An interim final rule with comment period implements some aspects of the No Surprises Act, which was passed as part of an expansive 2020 year-end legislative package. The provisions will take effect for health insurance plan and policy years that begin on or after Jan. 1, 2022. Requirements that apply to providers and facilities also start Jan. 1.

“These interim final rules implement provisions of the No Surprises Act that 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, nonemergency services from nonparticipating providers at participating facilities, and air ambulance services from nonparticipating providers of air ambulance services, under certain circumstances,” the rule states.

An “interim final rule with comment period” is issued when departments can’t release a proposed rule within the stipulated timeline. The rule can still be subject to change based on stakeholder feedback. A 60-day comment period for the new rule will begin after its publication in the Federal Register.

Still to be addressed in regulations later this year are several key aspects of the No Surprises Act, including a new federal arbitration process for instances when providers and health plans don’t agree on an out-of-network payment amount.

In addition, some regulations pertaining to transparency and the patient-provider dispute resolution process are still pending, as are enforcement procedures.

The basics of the new rule

As summarized in a news release from the U.S. Department of Health and Human Services, which joined the Departments of Labor and Treasury and the Office of Personnel Management to publish the new regulations, the 411-page rule includes bans on:

• Surprise billing for emergency services, coverage for which cannot be subject to prior authorization or consideration of network status
• Out-of-network cost-sharing rates for emergency and some nonemergency services
• Out-of-network charges for ancillary care provided at an in-network facility
• Other out-of-network charges in the absence of advance notice

Calculating cost sharing and out-of-network payments

For all emergency services as well as for some nonemergency services furnished by out-of-network providers at in-network facilities, cost sharing will be limited to in-network levels and must count toward deductibles and out-of-pocket maximums. The same is true for air ambulance services. In addition, balance billing by providers is prohibited in those situations.

The rule specifies that a patient’s cost sharing in those scenarios must be calculated based on the following mechanisms, in order:

• An applicable All-Payer Model Agreement that has been established by the Center for Medicare & Medicaid Innovation (as in Maryland and Vermont).
• An amount established by state law
• The lesser of the billed charge or the median contracted rate of the insurer, i.e., the qualifying payment amount

With balance billing largely prohibited, providers will be paid for out-of-network services based on an applicable All-Payer Model Agreement or state law, and in the absence of those, an amount agreed to with the insurer. If an amount can’t be negotiated, the yet-to-be-detailed arbitration process will apply.

The rule establishes a comprehensive process for consumers to file complaints with federal agencies regarding violations by both insurers and providers.

Keeping consumers informed

Protections that limit cost sharing and prohibit balance billing may not apply to post-stabilization services when different conditions apply, nor to many nonemergency services performed by out-of-network providers at in-network facilities. In those types of situations, the patient can still be balance-billed if the provider follows prescribed notice-and-consent procedures.

However, the notice-and-consent option isn’t available “in certain circumstances where surprise bills are likely to occur, such as for ancillary services provided by nonparticipating providers in connection with nonemergency care in a participating facility,” the rule states.

One administrative requirement established by the rule is to post information on a public website and provide a one-page notice to patients regarding the balance-billing prohibitions implemented by the rule and by state regulations. The information must include how to contact state and federal agencies about potential violations. Health plans similarly must publicize the relevant information for their members.

A “model disclosure notice” is being issued as an option for providers and insurers “to reduce burden and facilitate compliance with these disclosure requirements,” the rule states.

In general, the regulations are not meant to “universally protect individuals from every high or unexpected medical bill,” the rule adds. “For example, an individual may be enrolled in a group health plan or health insurance coverage that provides little or no coverage for their particular healthcare condition or the items and services necessary to treat that condition.”