The U.S. Departments of the Treasury, Labor, and Health and Human Services, along with the federal Office of Personnel Management, have jointly issued interim final regulations under the No Surprises Act. The regulations elaborate on the already detailed requirements in the Act, which was signed into law in December as part of the Consolidated Appropriations Act, 2021. The new rules apply to plan years beginning in 2022 and aim primarily to protect individuals from large medical bills that they might receive in certain situations from providers that do not participate in a health plan’s or health insurer’s network.
When the New Rules Apply
The rules apply in three specific sets of circumstances:
When a Non-Participating Provider Renders Emergency Care. The new rules apply to benefits provided for services rendered in a non-participating hospital’s emergency department or in an independent, freestanding emergency department to examine, evaluate, and stabilize a patient. The rules extend to other hospital departments to the extent that they perform examinations and provide treatment to stabilize the patient, even after admission. Certain post-stabilization services may also be treated as emergency services. Emergency services are, generally, those required under the Emergency Medical Treatment and Labor Act (EMTALA) to evaluate and stabilize a medical condition of sufficient severity such that a prudent layperson would consider immediate medical attention necessary.
Whether or not emergency services are provided by a participating provider, coverage must be provided without prior authorization or any other terms and conditions of the applicable plan or insurer. Plans and insurers may not impose administrative requirements on a non-participating provider that they do not impose on participating providers. However, exclusions, coordination of benefits, waiting periods, and cost-sharing requirements may still apply.
When a Non-Participating Provider Renders Non-Emergency Care at a Participating Facility. Particular rules apply to health plans and insurers and to health care facilities and other providers when a non-participating health care provider furnishes care (other than in an emergency) to a patient visiting a participating facility. For this purpose, facilities currently include hospitals, hospital outpatient departments, critical access hospitals, and ambulatory surgical centers. The list may be expanded to include, for example, urgent care centers. The non-participating provider does not need to be on-premises for the rules to apply. For example, the rules will apply to a non-participating laboratory that performs screening or diagnostic tests for an individual who is an inpatient at a participating hospital.
The rules do not apply if the individual consents to receive the items or services from a non-participating provider and to pay that provider’s rates. The provider and facility must meet specific requirements for providing notice and a consent form and for making certain disclosures for this exception to apply. See below.
When Air Ambulance Services Are Rendered by a Non-Participating Provider. The new rules apply to network-based plans and insurers that cover air ambulance services, even if the plan has no air ambulance service in its network. The rules apply only to claims by an air ambulance service provider that does not participate in the network.
The new rules will not apply to account-based plans (such as health reimbursement accounts), plans offering only excepted benefits, short-term limited duration insurance arrangements, and retiree-only plans.
The rules address the amount that will be paid by individuals who are enrolled in a group health plan or health insurance and amounts paid by the plans and insurers.
Cost-Sharing by Plan Participants. In each of the situations to which the rules apply, the cost-sharing requirements for the provision of out-of-network care must be the same as it would be for in-network care for such service. For example, if a 20% coinsurance rate applies to emergency services furnished by an in-network provider, a 20% coinsurance rate would apply to out-of-network emergency services.
The regulations also set rules for determining the amount to which cost-sharing applies. For emergency services furnished by a non-participating provider or non-emergency services furnished by a non-participating provider at a participating facility, the amount is the “recognized amount.” The recognized amount equals:
- An amount determined by the applicable All-Payer Model Agreement, if any, under section 1115A of the Social Security Act. All-Payer Model Agreements are agreements between states and the Centers for Medicare and Medicaid Services (CMS). The agreements vary significantly and participation in the agreements may be voluntary. An All-Payer Model Agreement will apply for these purposes only if it applies to the provider, the plan or insurer, and the item or service furnished. The All-Payer Model Agreement will not apply to air ambulance services.
- If there is no applicable All-Payer Model Agreement, the amount specified by state law, if any. State law will not apply to air ambulance services.
- If there is no applicable All Payer Model Agreement and no applicable state law, the lesser of the amount billed or the qualified payment amount (QPA). Generally, the QPA is the median of the contracted rates of the plan or insurer for the item or service in the geographic region. Ad hoc contractual arrangements with providers and rates that apply to excepted benefits; account-based plans; short term, limited duration insurance; Medicare Advantage plans; and certain other arrangements will not count in determining the QPA, but rates in rented networks will be taken into account. If sufficient data is available, the QPA will be set as of January 31, 2019, and indexed for inflation. If data is not sufficient as of that date, the regulations provide rules for making the determination using data from later years or, if necessary, alternative sources. There are detailed rules for determining the applicable insurance market, geographic area, indexing factor, and other matters affecting the QPA.
Cost-sharing amounts paid in these situations must count toward satisfying in-network deductibles and out-of-pocket maximums for in-network services.
Amount Paid by Plan. The regulations also establish a process for determining how much a group health plan or insurer will pay in these situations. Again, the determination is made by first looking to an applicable All-Payer Model Agreement or, if there is none applicable, the amount specified by state law. If neither of them make a determination, the plan or insurer may agree on an amount. If they do not agree, the amount will be determined through an independent dispute resolution (IDR) process. The entity making a determination under the IDR process is to take the QPA into account. The participant’s cost-sharing amount will be subtracted from the total cost determined for the care provided. Further guidance on the IDR process will be issued at a future date.
Coordination with State Laws
Prior to the enactment of the No Surprises Act, some states and the District of Columbia enacted their own laws to address surprise billing. The new regulations accommodate those state laws. Even self-funded plans, where ERISA ordinarily preempts state law, may―if the state law allows―opt for the state law to apply. These plans will need to include a statement about the application of state law in materials that describe coverage for services rendered by out-of-network providers.
Health Plan and Insurer Requirements
Health Plans and insurers generally are required to notify a provider that a claim is denied or make an initial payment within 30 days after receiving a clean claim that is subject to the protections of the new rules. The initial payment is to be based on a reasonable calculation of what the plan or insurer believes is due for the item or service rendered. The regulations coordinate with applicable claims procedure rules under ERISA and the Affordable Care Act, generally deferring to those rules with respect to how much a plan participant must pay, but applying the new rules with regard to the matters affecting how much the plan will pay in addition to that cost-sharing amount.
Health plans and insurers are required to share certain information about the calculation of the QPA with the applicable provider. This information includes the amount of the QPA, a statement that the appropriate methodology was used in setting the QPA, and a statement that a 30-day negotiation period is available with a right to initiate the IDR process within four days of the end of a negotiation period that concludes without agreement. Certain other information about the QPA needs are to be disclosed upon the provider’s request.
In addition, health plans and insurers are required to provide clear information about the new requirements and prohibitions through postings on applicable websites and through the inclusion of information in applicable explanation of benefits forms (EOBs).
The disclosures required of health plans and insurers do not apply when a provider alerts them that an individual has agreed to accept balance billing and waive protections under the new rules.
Providers may not balance bill patients for services protected under the new rules, but may balance bill when a patient knowingly and voluntarily agrees to receive services from the provider and to waive the new protections. To obtain that consent, a provider must offer the patient a prescribed notice and consent form, with certain information completed based on the particular situation. This exception does not apply to emergency services (except in certain situations where the patient’s condition has stabilized), air ambulance services, and certain other situations, as where a patient has little choice with regard to the selection of an ancillary provider (such as an anesthesiologist, radiologist, or laboratory used by a hospital). Balance billing, unless prohibited by state law or contract, is still permitted in all instances to which the rules do not apply.
The notice and consent process is subject to particular rules. For example, the notice and consent form must be provided together, but physically separate from any other forms or documents. Patients may choose whether to receive the information on a paper form or electronically. Non-participating providers and their in-network facilities may agree that the facility will provide the notice for both of them. The notice must meet certain language requirements, including that it be available in the 15 most common languages in the state or other applicable geographic area. The notice and consent must be provided in accordance with specified rules for timing. The consent is revocable with regard to items and services that have not been provided. A provider may decline to treat a patient who does not agree to waive the protections. For example, a non-network surgeon at an in-network hospital may agree to perform a procedure for a patient only if the patient agrees to be responsible for certain fees in addition to applicable cost-sharing requirements. Under the new rules notice and consent records must be maintained for at least seven years.
Providers must notify health plans and insurers when the new protections apply. If a provider properly obtains a waiver of those protections, the provider must also notify the plan or insurer that the notice and consent criteria have been satisfied and provide a copy of the notice and waiver. A copy should also be provided to the patient.
Providers also must publicly disclose certain information about the new protections and any applicable state requirements related to amounts providers may charge for services. A clear, one-page (front and back) notice needs to be made available and, where applicable, posted prominently where the provider sees patients and on the provider’s public-facing website. The applicable federal Departments will establish a model disclosure notice that providers may choose to use for this purpose. Non-participating providers at a participating facility may coordinate with the facility regarding the posting of the notice. This disclosure requirement does not apply to air ambulance services.
Different government departments will implement programs to audit compliance with the new rules and will establish a coordinated complaint process for individuals to raise issues about compliance. Under this process, the responsible agency will have 60 days to respond to each complaint. In certain instances, civil monetary penalties may be imposed for a failure to comply with the new rules.
Given the looming deadline for compliance, health care providers, plans, and, insurers all need to consider the changes they need to make to comply with the new requirements. Non-participating health care providers that render services at participating health care facilities may seek to coordinate with those facilities in responding to the new guidance.
As with a number of recently introduced requirements, health plan sponsors will need to rely on their insurers and third-party administrators to take measures that allow them to comply. Those measures include calculating QPAs, communicating with providers and plan participants, making denial decisions and (for approved claims) initial payments, and managing or supporting efforts in negotiation and the IDR process. Sponsors of self-funded plans should be discussing these matters with their TPAs and considering changes that they will need to make to plan documents and descriptions. The new guidance contemplates an ongoing responsibility for plan fiduciaries to monitor TPA compliance with the rules.
The new regulations provide only the first installment of guidance under the No Surprises Act. The regulations solicit comments on a number of issues that may lead to additional guidance and, future regulations will address the IDR process for plans and providers to resolve disputes, the patient/provider dispute resolution process, certain transparency requirements, price comparison tools, and the reporting of air ambulance services.