Surprise Billing Interim Final Rule: What You Should Know

Earlier this month, healthcare providers and insurance plans got a more detailed look at how the No Surprises Act (NSA) will be implemented when the departments of Health and Human Services (HHS), Labor, and Treasury released a 411-page interim final rule that will go into effect on January 1, 2022.

Essentially, the law protects patients from balance billing of emergency and other surprise out-of-network (OON) services and creates an independent dispute resolution (IDR) process to ensure that healthcare providers are paid fairly for their services.

The law applies to services rendered in hospitals, by doctors, and by the large majority of other healthcare providers, including air ambulances (though not ground ambulances). It also covers insurance plans in the individual and small group market, including both insured and self-insured group health plans, private employment-based group health plans subject to ERISA, non-federal governmental plans, church plans, plans offered in the individual market (through or outside of an Exchange), student health insurance coverage, and Federal Employees Health Benefits plans. Violators can be fined up to $10,000 per billing violation by the federal government.

Emergency and Ancillary Services

For emergency services, including pre-stabilization services regardless of where they are provided, as well as any out-of-network ancillary services provided at in-network facilities, including services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology, whether provided by a physician or non-physician practitioner, patient cost-sharing must be equivalent to in-network services.

Cost-sharing amounts are determined through the following process:

If the state has an applicable All-Payer Model Agreement with the Center for Medicare & Medicaid Innovation (CMMI), then that amount is used.
If there is no All-Payer Model Agreement, then the amount is determined by any applicable state law.
If there is no applicable All-Payer Model Agreement or state law, the cost-sharing amount will be the lesser of the amount billed or the Qualifying Payment Amount (QPA), which generally is the median of the contracted rates of the plan or issuer for the service in the geographic region.

Patient cost-sharing payments also must be counted toward any in-network deductible or out-of-pocket maximums applied under the plan or coverage.

In addition to the patient cost-sharing amount, the insurance plan must also issue payment to the provider. The total amount is determined through the following process:

If the state has an applicable All-Payer Model Agreement with the Center for Medicare & Medicaid Innovation (CMMI), then that amount is used.
If there is no All-Payer Model Agreement, then the amount is determined by any applicable state law.
If there is no applicable All-Payer Model Agreement or state law, the payment amount will be the amount agreed on by the plan or issuer and the provider or facility.
If none of those three conditions apply, and the parties enter into the IDR process and do not agree on a payment amount before the date when the IDR entity makes a determination of the amount, the amount will be determined by the IDR entity.

Insurance plans are required to send an initial payment (total out-of-network amount minus any patient cost-sharing) or notice of a denial within 30 calendar days after the nonparticipating provider or facility submits a bill. The initial payment should be the plan’s best effort to make a full payment, not merely a “first installment,” and denial notices must explain the reason for denial.

Non-Emergency and Post-Stabilization Services

The No Surprises Act provisions that limit cost sharing and prohibit balance billing do not apply to certain non-emergency services by out-of-network providers at in-network facilities or to certain post-stabilization services provided in the context of emergency care if the nonparticipating provider or facility complies with certain notice and consent requirements.

Providers must give patients written notice that they are receiving services out of network and get their consent to proceed at least 72 hours before the date of the appointment in most cases and no earlier than 3 hours before a procedure if notice is provided on the same day. The notice should also include a good faith estimate of what the provider and facility will charge and include information as to whether prior authorization is necessary.

In the case of post-stabilization services, the emergency physician or treating provider also must determine that the patient is able to travel using nonmedical transportation or nonemergency medical transportation to an available in-network provider or facility located within a reasonable travel distance, and the patient must be in a condition to receive the notice and information and provide consent.

Disclosure Requirements

Disclosures of the out-of-network patient protections also are required by the interim final rule. Providers and facilities must make publicly available a one-page notice about the balance billing requirements, posting them on a public website and providing them to patients. Plans and issuers also must provide information in plain language on the prohibition against balance billing and information on contacting appropriate state and federal agencies in the case that an individual believes that a provider or facility has violated the prohibition against balance billing.

Dispute Resolution

Disputes arising from out-of-network billing can be handled in one of two ways. When the patient’s cost-sharing is involved, appeals should go through the plan’s traditional appeals process. When the dispute involves payment between the plan and the provider, it should go through the independent dispute resolution (IDR) process.

While the interim final rule did not provide details about the IDR, additional rulemaking addressing that process is expected later this year. Within the law itself, arbiters already are prohibited from taking Medicare and Medicaid rates, or the provider’s billed charges, into consideration when deliberating an out-of-network charge. They can, however, take into account the median in-network rate for an item or service.

Prudent Layperson Standard

Finally, the interim final rule also reinforces the Prudent Layperson Standard, a federal policy requiring payers to cover ER care based on presenting symptoms and not the final diagnosis, and insists that prudent layperson determinations must be made on a case-by-case basis before an initial denial of an emergency services claim.