On July 1, 2021, HHS, the DOL and the Treasury Department released interim final rules implementing the No Surprise Billing Act (the Act) that was part of the CAA passed by Congress in late 2020. An interim final rule is a rule that an agency promulgates when it finds that it has good cause to issue a final rule without first issuing a proposed rule. Although interim rules are often effective as of the date of their publication, they will have a comment period after which the interim rule may be amended in response to public comments. In this case, the interim final rules are effective 60 days from the date they are published in the Federal Register. The 60 days serve as the comment period for the interim final rules.
Note that when this summary refers to a “plan” it includes group health plans, as well as health insurance issuers offering group or individual health insurance.
Services and Providers Affected by the Act and Interim Final Rules
The Act addresses situations wherein a person covered by a health plan receives services from providers who are not in the plan’s network. In those circumstances, the out-of-network provider may bill the patient the difference between the amount the provider charges for the service and the amount the health plan will pay for that service, a practice called “balance billing.” This often happens when a patient receives emergency care (and post-stabilization care) and is not able to choose who provides them care, but it also happens when out-of-network providers provide services in network facilities (such as hospitals and ambulatory surgical centers) and when a patient is delivered to a hospital via air ambulance. These bills can be very expensive and come as a surprise to the patient, who may have thought that the health plan covered everything. The Act and the rules impose requirements addressing these services and circumstances.
Preventing Surprise Billing
The Act and these interim final rules tackle this problem in several ways. First, they require plans that provide or cover any benefits for emergency services to cover those services without any prior authorization and regardless of 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. In addition, plans must cover these services regardless of whether the provider is an in-network provider or an in-network emergency facility.
The rules also prohibit balance billing for items and services covered under the Act. Specifically, there can be no balance billing for emergency services, air ambulance services provided by out-of-network providers, and nonemergency services provided by out-of-network providers at in-network facilities in certain circumstances.
Determining Consumer Cost-Sharing Amounts
For the out-of-network services covered under the Act cost sharing that is greater than in-network levels is prohibited and such cost sharing must count toward any in-network deductibles and out-of-pocket maximums.
The rule provides a method by which plans determine how much a participant must contribute towards the services covered under the Act. The amount will be determined in one of three ways. First, the plan must look to the applicable All-Payer Model Agreement, which is the agreement between CMS and a state to implement systems of all-payer payment reform for the medical care of residents of the state by allowing Medicare, Medicaid and private insurers to pay the same price for services to hospitals in that state. Second, if there is no such applicable All-Payer Model Agreement, then the plan must look to state law. Finally, if there is no state law or All-Payer Model Agreement, the plan must charge the lesser amount of either the billed charge or the qualifying payment amount, which is generally the plan’s median contracted rate (note that this is the method for determining the cost sharing amount for air ambulances).
Determining the Amount Plans Pay Out-of-Network Providers
The rules also provide plans with three methods of determining the amount they must pay out-of-network providers who provide services to their participants. As described above, the plan must first look to the applicable All-Payer Model Agreement and, if no such agreement exists, to applicable state law. If neither option is available, then the plan and the out-of-network provider must come to an agreement regarding the price. If they cannot agree, then they go through an informal dispute resolution process (IDR) to determine the amount. The agencies plan to issue additional rules describing the IDR at a future date.
Note that in cases where the plan must pay the bill before the participant meets their deductible, the plan must pay the provider or facility the difference between the out-of-network rate and the cost-sharing amount (the latter of which in this case would equal the amount of either the billed charge or the qualifying payment amount, which is generally the plan’s median contracted rate), even in cases where the participant has not satisfied their deductible.
In an example provided in the interim rules, an individual is enrolled in a high deductible health plan with a $1,500 deductible and has not yet accumulated any costs towards the deductible at the time the individual receives emergency services at an out-of-network facility. The plan determines that the recognized amount for the services is $1,000. Because the individual has not satisfied the deductible, the individual’s cost-sharing amount is $1,000, which accumulates towards the deductible. The out-of-network rate is subsequently determined to be $1,500. Under the requirements of the statute and these interim final rules, the plan is required to pay the difference between the out-of-network rate and the cost-sharing amount. Therefore, the plan pays $500 for the emergency services, even though the individual has not satisfied the deductible. The individual’s out-of-pocket costs are limited to the amount of cost sharing originally calculated using the recognized amount (that is, $1,000). Even though such payments would normally cause a high deductible health plan to lose its status, the Act states that a plan shall not fail to be treated as a high deductible health plan by reason of providing benefits pursuant to the Act.
The interim rules provide for two different notice requirements. First, under certain circumstances, an out-of-network provider can provide notice to a person regarding potential out-of-network care, obtain the individual’s consent for that out-of-network care and extra costs, and thereby avoid the procedures under these rules. However, this notice and consent exception does not apply to certain types of providers, even if they are not providing services during an emergency, such as anesthesiology or radiology services provided at an in-network healthcare facility.
The second notice is required to be posted by group health plans and health insurance issuers offering group or individual health insurance coverage. It must be made publicly available, posted on a public website of the plan or issuer, and included in each explanation of benefits. It is one page and must provide information concerning requirements and prohibitions under the Act, any applicable state balance billing limitations or prohibitions, and contact information for appropriate state and federal agencies if someone believes the provider or facility has violated the requirements described in the notice.
The interim final rules are generally applicable to group health plans and health insurance issuers for plan and policy years beginning on or after January 1, 2022. Employers who self-insure their health plans, as well as those covered by fully insured plans, should be aware of these developments.
Interim Final Rules »
Fact Sheet »
Model Notice »