Federal Guidance on Balance Billing: The No Surprises Act and its Interim Final Rule: Part I

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 providers[1]. Specifically:

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.
Certain healthcare facilities and providers must provide individual disclosures, as well as publicly display information detailing federal and state patient protections against balance billing;
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.
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.
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:

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]
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.
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.
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:

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 distance[4] and the determination must take into consideration the Member’s mental and physical condition.
The out-of-network provider or facility provides appropriate, and timely, notice to the Member regarding the provider’s network status, and
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.
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:

An amount determined by an applicable All-Payer Model Agreement under Section 1115A of the Social Security Act; or
If there is no such All-Payer Model Agreement, an amount determined by a specified state law; or
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 Amount[5] (“QPA”) in an insurance market[6].

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:

An amount determined by an applicable All-Payer Model Agreement under Section 1115A of the Social Security Act[7];
If there is no such All-Payer Model Agreement, an amount determined by a specified state law[8];
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
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:

The requirements and prohibitions of the No Surprises Act which are applicable to the provider or facility;
Any applicable state balance billing requirements; and
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:

A model disclosure that providers, facilities, health plans, and health insurance issuers may use to satisfy the disclosure requirements for the balance billing protections.
Procedures governing the Independent Dispute Resolution (“IDR”) process to resolve reimbursement disputes without impacting the Member.
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.

If you have any questions regarding the specific requirements of the No Surprises Act, or this Interim Rule, please contact Noreen Vergara or your Husch Blackwell attorney.

[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.