Federal Guidance On Balance Billing: The No Surprises Act And Its Interim Final Rule: Part I – Food, Drugs, Healthcare, Life Sciences

On July 1, 2021, the Office of Personnel Management
(“OPM”), the Internal Revenue Service (“IRS”),
the Department of Treasury (“Treasury”), the Employee
Benefits Security Administration (“EBSA”), the Department
of Labor (“DOL”), the Centers for Medicare & Medicaid
Services (“CMS”), and the Department of Health and Human
Services (“CMS”) (collectively the
“Departments”) jointly issued the Interim Rule – Requirements Related to Surprise
Billing; Part 1
(hereinafter, the “Interim Rule” or
the “Rule”). This Interim Rule is the first implementing
regulation of the federal No Surprises Act (alternatively the
“Act”) which was enacted on December 27, 2020 as part of
the Consolidated Appropriations Act. Both this Interim Rule, and
the Act, are effective applicable for plan years beginning on or
after January 1, 2022.

The Affordable Care Act requires both fully-insured and
self-insured group health plans (hereinafter “Health
Plans”) to administer its emergency services benefits without
requiring prior authorization and without regard to the network
status of the healthcare provider administering the emergency
service. The No Surprises Act builds on the consumer protections
established by the ACA by prohibiting balance billing in many
situations and limiting out-of-network cost sharing in comment
situations where surprise bills often arise. Included within the
scope of this Act and Rule are group health plans, health insurance
issuers, carriers under the Federal Employees Health Benefits
(“FEHB”) Program, healthcare providers and facilities,
and air ambulance providers1. Specifically:

  1. Out-of-network providers, facilities, and providers of air
    ambulance services, are prohibited from balance billing Members for
    emergency services, for air ambulance services provided by
    out-of-network providers, or for items and services furnished at an
    in-network facility by an out-of-network provider. Balance billing
    may still, be allowed, on a limited basis, if the out-of-network
    provider or facility satisfies specific notice and consent
    requirements.
  2. Certain healthcare facilities and providers must provide
    individual disclosures, as well as publicly display information
    detailing federal and state patient protections against balance
    billing;
  3. Health Plans must calculate Member cost-sharing amounts using a
    defined set of factors and may not charge Members higher
    cost-sharing for items and services covered by the scope of the
    Act.
  4. Health Plans and out-of-network providers and facilities must
    calculate and negotiate payment amounts using a defined set of
    factors and must utilize an Independent Dispute Resolution
    (“IDR”) process for all disputes concerning payment
    rates.
  5. Violations of the both the Act and the Rule may be submitted to
    the appropriate regulatory agency through a process to be
    established through regulation.

The Departments are accepting comments on the Interim Rule until
5 p.m. 60 days after the Interim Rule is published in the Federal
Register.

Emergency Services: The terms “emergency
medical condition,” “emergency services,” and
“to stabilize,” generally have the meanings given to them
under the Emergency Medical Treatment and Labor Act
(“EMTALA”). However, the Interim Rule clarifies that the
definition of Emergency Services includes pre-stabilization
services which are provided after a patient is moved out of an
emergency department and admitted to the hospital, as well as
certain post-stabilization services. Furthermore, the definition of
Emergency Services specifically includes services provided at an
independent freestanding emergency department and is intended to
cover any healthcare facility which licensed to provide emergency
services.2 Generally:

  1. Emergency services must be covered without any prior
    authorization, without regard to whether the healthcare provider is
    in network, and without regard to any other term or condition of
    the plan or coverage other than the exclusion or coordination of
    benefits or a permitted affiliation or waiting
    period.3
  2. Emergency Services include services provided in an emergency
    department of a hospital or an independent freestanding emergency
    department and includes post-stabilization services in certain
    situations.
  3. Member cost-sharing amounts must be limited to in-network
    levels and must be counted towards any in-network deductibles and
    out-of-pocket maximums.
  4. Out-of-network providers may not balance bill the Member for
    the difference.

Post-Stabilization and Non-Emergency Services:
With respect to certain types of non-emergency services provided at
in-network facilities, the prohibition on balance billing applies
without exception. However, obtaining a waiver through informed
consent will be prohibited for ancillary services provided by
nonparticipating providers in connection with non-emergency care in
a participating facility. Ancillary services include items and
services related to emergency medicine, anesthesiology, pathology,
radiology, and neonatology, as well as items and services provided
by assistant surgeons, hospitalists and intensivists, and
diagnostic services including radiology and laboratory services.
Similarly, if there is no participating provider who can furnish an
item or service at a facility, the protections will apply.

The Interim Rule does allow out-of-network providers to balance
bill Members in limited situations. Before an out-of-network
provider may balance bill a Member post-stabilization, or
non-emergency, services, the provider must give notice to the
Member, and the Member must acknowledge receipt of the information
as well as give informed consent to waive the balance billing
protections. The prohibitions on balance billing will apply to
healthcare services provided after a Member is stabilized unless
all of the following are present:

  1. The attending physician, or treating healthcare provider,
    determines that the Member is able to travel using nonmedical
    transportation, or non-emergency medical transportation, to an
    available in-network provider or facility. The in-network provider,
    or facility, must be within a reasonable travel
    distance4 and the determination must take into
    consideration the Member’s mental and physical condition.
  2. The out-of-network provider or facility provides appropriate,
    and timely, notice to the Member regarding the provider’s
    network status, and
  3. The out-of-network provider or facility obtains the
    Member’s voluntary and informed consent to receive care on an
    out-of-network basis. In determining whether a Member is able to
    provide informed consent, the out-of-network provider must take
    into consideration the Member’s mental and physical condition,
    as well as any cultural and contextual factors that may affect the
    Member’s informed decision-making and consent process. The
    provider must consider historical inequities, misinformation about
    the informed consent process, and potential barriers to
    comprehension of the information given, when considering whether
    informed consent has been given.
  4. The out-of-network provider must satisfy any additional
    requirements or prohibitions which may exist under applicable state
    law.

With respect to non-emergency visits at an in-network facility,
the Departments define a covered “visit” to include the
provision 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 present at the facility. Generally, the
same notice and informed consent protections apply to non-emergency
services as apply to post-stabilization services.

Furthermore, out-of-network providers (or the in-network
facility on behalf of the out-of-network provider) must timely
notify the Health Plan that such an item or service was provided on
an out-of-network basis, as well as notify the Health Plan whether,
and when, the requirements for notice and informed consent were
met.

Calculation of Member Cost-Sharing Amounts:
Generally, items or services covered by the scope of the Act or
Rule which are performed by an out-of-network provider must not be
greater than the amount that would apply if such items or services
were provided by an in-network provider or facility. Any
coinsurance amounts charged to the Member must be counted towards
any in-network deductible or out-of-pockets maximums and applied in
the same manner as if such cost-sharing payments were made with
respect to services furnished by an in-network provider or
facility.

The Interim Rule requires Health Plans to calculate Member
cost-sharing using the below method (the “Recognized
Amount”) as opposed to the amount the Health Plan ultimately
pays the out-of-network provider. Calculating Member cost-sharing
using the Recognized Amount is intended to limit the effect of
provider-Health Plan disputes about payment amounts on the Member.
To calculate the Recognized Amount, Health Plans must use:

  1. An amount determined by an applicable All-Payer Model Agreement
    under Section 1115A of the Social Security Act; or
  2. If there is no such All-Payer Model Agreement, an amount
    determined by a specified state law; or
  3. If there is no All-Payer Model Agreement or state law, then the
    lesser of the billed charge, or the health plan’s median
    contracted rate (the Interim Rule refers to the median contracted
    rate as the Qualifying Payment Amount5 (“QPA”)
    in an insurance market6.

Air Ambulance Services: The Recognized Amount is not used for
determining Member cost-sharing. Instead, Health Plans must apply
the lesser of the billed charge of the QPA, with the cost-sharing
that would apply if the air ambulance services were provided by a
participating provider.

Calculation of Amount Paid to the Provider or
Facility
: Generally, balance billing is prohibited, and
the total amount paid including cost-sharing, must be based on:

  1. An amount determined by an applicable All-Payer Model Agreement
    under Section 1115A of the Social Security Act7;
  2. If there is no such All-Payer Model Agreement, an amount
    determined by a specified state law8;
  3. If there is no All-Payer Model Agreement or state law, then an
    amount agreed upon by the plan or issuer and the provider or
    facility; or
  4. If none of the above apply, then an amount determined by an IDR
    entity.

These requirements apply even in situations where a Member has
not met their deductible prior to receiving out-of-network
services. This means that when the surprise billing protections
apply, and the out-of-network rate exceeds the amount on which
cost-sharing is based, the Plan must pay the out-of-network
provider or facility the difference between the out-of-network rate
and the cost-sharing amount.

Disclosures Required: The Departments seek to
ensure transparent and meaningful disclosure about the cost-sharing
amounts payable by Members, as well as the calculation of the QPA
as it relates to provider and facility reimbursement. With respect
to Member cost-sharing, certain healthcare providers and facilities
must provide a one-page notice to individuals, and must post on a
public website, the following information:

  1. The requirements and prohibitions of the No Surprises Act which
    are applicable to the provider or facility;
  2. Any applicable state balance billing requirements; and
  3. How to contact appropriate state and federal agencies to report
    a violation of the Act’s requirements.

With respect to calculating the QPA, health plans and issuers
must disclose the QPA for each item or service with each initial
payment or notice of denial of payment, as well as make additional
information available to the provider, or facility, upon request.
The health plan must provide the contact information to enable an
out-of-network provider to initiate a 30-day open negotiation
period for the purpose of determining the amount of total payment,
as well as include a statement that the provider may initiate the
IDR process within 4 days of the end of the open negotiation
period.

Future Rulemaking: The Interim Rule is the
first of several upcoming guidance materials on the following:

  1. A model disclosure that providers, facilities, health plans,
    and health insurance issuers may use to satisfy the disclosure
    requirements for the balance billing protections.
  2. Procedures governing the Independent Dispute Resolution
    (“IDR”) process to resolve reimbursement disputes without
    impacting the Member.
  3. Directions regarding disclosure requirements, provider network
    directories, cost reporting, continuity of care, as well as good
    faith compliance with the Act’s requirements.

The Departments confirm that states have primary enforcement
authority for fully-insured plans, while the DOL and Treasury have
primary enforcement authority over private sector employment-based
group health plans. The IRS has enforcement authority over certain
church plans, HHS has enforcement authority over non-federal
governmental plans and the OPM has jurisdiction over FEHB
plans.

Footnotes

1 With respect to air ambulance services, these
requirements apply to services received from a nonparticipating
provider of air ambulance services including both rotary-wing air
ambulances and fixed-wing air ambulances and including
inter-facility transports. Additionally, these requirements apply
regardless of whether a Health Plan has a network of providers of
air ambulance services.

2 To the extent urgent care centers are permitted to
provide emergency services, such centers will fall within the scope
of the Interim Rule.

3 Health Plans may not limit the what counts as an
emergency medical condition solely on the basis of diagnosis codes.
Instead, a coverage determination for services rendered in an
emergency department of a hospital or freestanding emergency
department, must be based on all pertinent documentation and
focused on the presenting symptoms, as opposed to the final
diagnosis. Similarly, health plans may not restrict coverage by
imposing a time limit between the onset of symptoms and when the
Member seeks emergency services, or because the patient did not
experience a sudden onset of the condition.

4 In cases where the Member cannot travel, or where there
are no in-network facilities or providers located within a
reasonable travel distance, the balance billing protections will
continue to apply.

5 The Interim Rule defines the QPA as the median of the
contracted rates of the plan or issuer for the item or service in
the geographic region.

6 The Interim Rule contains specific requirements
regarding the calculation of the QPA which must be considered
before determining the appropriate QPA for a particular item or
service.

7 An All-Payer Model Agreement is an agreement between
CMS and a state to test and operate payment reform systems. Such
agreements can vary significantly by state and often contain
different approaches for approving payment amounts.

8 The Interim Rule specifies that States may continue to
apply state law requirements to issuers except to the extent it
prevents the application of federal law, including imposing
requirements on issuers that are more restrictive than federal law,
or offer additional compliance options regarding determining
cost-sharing amounts or total amounts payable.

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.

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