The Consolidated Appropriations Act of 2021 (CAA), passed in late December 2020, included measures to mitigate surprise balance billing (this portion of the law was called the No Surprises Act).  Suprise billing would encompass unexpected bills from out-of-network providers where the patient didn’t have a choice to utilize in-network facilities, such as for:

  • An emergency, including air ambulance, or
  • When some of the services at an in-network facility are performed by out-of-network providers (typically things like lab/imaging, anesthesiology, or other specialty services essential to the in-network visit but not directly handled by the in-network facility).

With new surprise billing prohibitions taking effect within just one year (so late December 2021), regulators are issuing guidance in phases, starting with a July 1, 2021, interim final rule with public comment (IFC) which bypasses the typical proposed rule approach (due to time constraints) but still allows changes after reviewing public comment.  And they are asking for comments on a LOT of material.  This first phase of 411 pages of guidance address rules for plan years beginning on/after January 1, 2022.  The IFC was officially published in the federal register here on July 13.

Everything discussed below is largely applicable to health insurers and third party administrators (TPAs), but if you sponsor a self-funded plan it’ll be important to ensure your TPA is going to comply on behalf of your plan.

Services Covered by the Rule
  • The new rules apply to both grandfathered and non-grandfathered health plans nationwide.
    • “The No Surprises Act amended section 1251(a) of the Affordable Care Act to specify that sections 2799A-1, 2799A-2, and 2799A-7 of the PHS Act apply to grandfathered health plans for plan years beginning on or after January 1, 2022.”
    • So as a side impact, “with respect to plan years beginning on or after January 1, 2022, … the No Surprises Act extends the applicability of the patient protections for choice of health care professionals to grandfathered health plans.”
  • The plan must treat emergency services as subject to in-network cost-sharing, must follow prescribed formulas for determining how much to pay the provider/facility, cannot require prior authorization, and cannot consider or impose other restrictions/limitations not allowed by the new rules.  And the emergency services provider/facility cannot balance bill the patient, so any payment disputes must be taken up with the plan, not the patient.
    • Emergency services could be provided not only by an emergency department in a hospital but also by an “independent freestanding emergency department.”
    • Emergency services include “pre-stabilization services that are provided after the patient is moved out of the emergency department and admitted to a hospital” as well as when “the individual requires medical transportation to travel, including transportation by either ground or air ambulance.”
    • Emergency services will continue until such time as:
      • The attending provider determines it is safe for the patient to be transported without medical assistance to an in-network facility within a reasonable distance,
      • The patient (or their authorized representative) is in a condition to receive notice with ample time to evaluate their options and provide informed consent about whether they agree to out-of-network balance billing or would prefer to move to an in-network facility, and
      • The out-of-network “provider or facility furnishing post-stabilization services” satisfies the notice and consent criteria of this rule and any applicable state law that would allow them to balance bill for out-of-network care.
    • An emergency medical condition is defined under a prudent layperson standard and includes acute mental health and substance use symptoms, so plans will not be able to determine the nature of the emergency based on final diagnosis codes, the passage of a certain amount of time between the event and onset of symptoms, or even plan exclusions that might ordinarily apply in a non-emergency.  For instance, a plan that generally excludes coverage for dependent pregnancy/delivery cannot deny covering emergency services for a pregnant dependent.
  • Air ambulance is subject to the same emergency service rules “where a plan or coverage generally has a network of participating providers and provides or covers any benefits for air ambulance services, even if the plan or coverage does not have in its network any providers of air ambulance services. With respect to air ambulance services furnished by nonparticipating providers (including inter-facility transports), plans and issuers must comply with the requirements regarding cost sharing, payment amounts, and processes for resolving billing disputes…if such services would be covered if provided by a participating provider.”
  • Similarly, the plan must treat non-emergency services performed by nonparticipating providers at participating facilities as subject to in-network cost-sharing, and must follow prescribed formulas for determining how much to pay the provider/facility.  The nonparticipating provider generally cannot balance bill the patient for services provided at a participating facility.
    • Facilities covered under this rule include a hospital, a hospital outpatient department, a critical access hospital, or an ambulatory surgical center.
    • All items and services related to such a “visit” will be subject to this rule, even if some parts of the service are provided at another location.  For example, if a lab is drawn at the facility but sent to an off-site lab, the lab work is part of the visit and subject to these rules.
    • Ancillary services might possibly be exempt from these rules (and thus allowed to balance bill the patient) if proper notice and consent rules are followed.
      • “However, providers and facilities may not provide such notice or seek consent from individuals in certain circumstances where surprise bills are likely to occur, such as for ancillary services provided by nonparticipating providers in connection with non-emergency care in a participating facility. In such circumstances, balance billing is prohibited, and the other protections of the No Surprises Act, such as in-network cost-sharing requirements, continue to apply.”
        • These “include items and services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology, whether provided by a physician or non-physician practitioner; items and services provided by assistant surgeons, hospitalists, and intensivists; diagnostic services, including radiology and laboratory services; and items and services provided by a nonparticipating provider, only if there is no participating provider who can furnish such item or service at such facility.”
        • Also, “any notice provided and consent obtained with regard to the furnishing of certain items or services does not extend to additional items or services furnished in response to unforeseen, urgent medical needs either in the context of a nonparticipating provider in a participating facility, or of post-stabilization services.”
      • Regulators are “concerned that individuals may be less likely to review the notice carefully if it is embedded within other information or provided with additional consent forms. Therefore, these interim final rules require that the notice be provided with the consent document, and together these documents be given physically separate from, and not attached to or incorporated into any other documents.”  The notice must:
        • Be written (electronic is okay if selected by the individual) to fit on one double-sided page in no smaller than 12-point font
        • Be provided timely (typically at least 72 hours before, but occasionally 3 hours in cases where such notice and consent cannot be provided until the day of a service)
        • Meet applicable language access requirements (providers have grown accustomed by now to providing certain communications in the top 15 languages in that state, but this also requires the nonparticipating provider furnish an interpreter if the individual is not comfortable with those 15 languages)
        • Be provided by either the nonparticipating provider (or collection of nonparticipating providers that would like to jointly provide their notice), or be provided by the participating facility on their behalf
        • “Include the good faith estimate for such items or services that would reasonably be expected to be provided…the good faith estimated amount should reflect the amount the provider or facility expects to charge for furnishing such items or services, even if the provider or facility intends to bill the plan or coverage directly”
        • “Make clear that the provision of the good faith estimate in the notice, or the individual’s consent to be treated, does not constitute a contract with respect to the charges estimated for such items and services, or a contract that binds the [individual] to be treated by that provider or facility”
        • “Provide information about whether prior authorization or other care management limitations may be required in advance” (the provider/facility is encouraged to contact the plan for this information, but if necessary can use generic disclaimer language to meet this need)
        • Clearly state that the individual is not required to consent to non-network services and may seek out in-network care for some or all of the listed items/services (“in cases where post-stabilization services are being furnished by a nonparticipating provider at a participating emergency facility, the notice must include a list of any participating providers at the participating emergency facility who are able to furnish the items or services involved”)
      • The standard consent document must be voluntarily completed, and “an incomplete consent document will be treated as a lack of consent and balance billing protections will still apply”
      • Such notice and consent documentation must be promptly shared with the plan and must be kept for 7 years.
Calculating Payments to Nonparticipating Providers
  • With respect to emergency services, air ambulance services furnished by nonparticipating providers, and non-emergency services furnished by nonparticipating providers at participating facilities, the plan must treat the costs as counting toward in-network cost-sharing (and the provider cannot balance bill the patient).
    • Plans must calculate cost-sharing for nonparticipating emergency facilities and nonparticipating providers at participating facilities based on:
      1. An All-Payer Model Agreement if applicable (such as in MD where it applies to hospitals but not physicians, or VT where it is completely voluntary for plans, facilities, and providers and would therefore only be relevant if all parties have opted in)
      2. In the absence of that, as determined by state law (if it applies to the plan or allows the plan to opt in, applies to the provider/facility, and applies to the services rendered)
        • Note that “a self-insured plan that has chosen to opt in to a state law must prominently display in its plan materials describing the coverage of out-of-network services a statement that the plan has opted in to a specified state law, identify the relevant state (or states), and include a general description of the items and services provided by nonparticipating facilities and providers that are covered  by the specified state law”
      3. In the absence of that, by the lesser of:
        • Billed charges, or
        • “The plan’s or issuer’s median contracted rate, referred to as the Qualifying Payment Amount (QPA).”
          • To reduce the burden on self-funded plan sponsors and ensure they have a large enough “network” to find a median contracted rate for each service, the employer may allow their third party administrator to identify the median contracted rate “using the contracted rates recognized by all self-insured group health plans administered by the third-party administrator (not only those  of the particular plan sponsor).”
          • “Under the methodology established in these interim final rules, plans and issuers must calculate separate median contracted rates for CPT code modifiers that distinguish the professional services component (“26”) from the technical component (“TC”). This will result in separate median contracted rates being calculated for services when billed by a facility versus a provider.”
          • Plans are not allowed “to separately calculate a median contracted rate based on other characteristics of facilities that might cause contracted rates to vary, such as whether a hospital is an academic medical center or teaching hospital…given that [individuals] with emergency medical conditions typically go (or are taken) to the nearest or most convenient emergency department.”
          • “For items and services other than air ambulance services, a geographic region is generally defined as one region for each metropolitan statistical area (MSA) in a state and one region consisting of all other portions of the state” (so urban vs. rural costs may be differentiated).
          • “To calculate the QPA for anesthesia services furnished during 2022, these interim final rules require the plan or issuer to, first, take the median contracted rate for the anesthesia conversion factor (determined in accordance with the methodology for calculating median contracted rates for service code-modifier combinations) for the same or similar item or service as of January 31, 2019, and increase that amount to account for changes in the CPI-U, using the methodology described earlier… This amount is referred to as the indexed median contract rate. The plan or issuer must then multiply this indexed median contracted rate for the anesthesia conversion factor by the sum of the base unit (using the value specified in the most recently published edition (as  of the date of service) of the American Society of Anesthesiologists Relative Value Guide), time unit, and physical status modifier units of the [individual] to whom anesthesia services are furnished to determine the QPA.  To calculate the QPA for anesthesia services furnished during 2023 or a subsequent year, the plan or issuer must use the indexed median contracted rate for the  anesthesia conversion factor, and adjust that amount by the percentage increase in the CPI-U over the previous year using the methodology described earlier,” then multiply that indexed median contract rate accordingly.
          • All Claims Payer Databases may be used, or other third party databases meeting certain criteria (such as no conflict of interest, in-network payment data, ability to focus solely on group health plan claims without other plan data like Medicaid in the mix, etc.).
    • Plans must calculate cost-sharing for nonparticipating air ambulance providers based on the lesser of:
      • Billed charges,
      • QPA
        • “For air ambulance services, a geographic region means one region consisting of all MSAs in the state, and one region consisting of all other portions of the state…or broader regions based on Census divisions” if necessary
        • “The plan or issuer must…multiply the indexed median air mileage rate by the number of loaded miles provided to the [individual] to determine the QPA”
      • Or an amount that would be charged if the provider had been a participating provider (however, regulators do recognize that plans often have limited or no participating air ambulance providers)
    • There are prescribed formulas for calculating the QPA as starting with the median contracted rate as of January 31, 2019, and indexing it by each year’s CPI-U ending August 31.  Indexes will be published soon for 2019, 2020, and 2021.
    • When QPA is used to determine the rate for a service, the plan must:
      • Disclose the QPA to the provider in writing (either paper or electronic) for each respective item/service,
      • Provide a statement certifying “(1) the QPA applies for purposes of the recognized amount (or, in the case of air ambulance services, for calculating the [individual’s] cost sharing), and (2) each QPA shared with the provider or facility was determined in compliance with the methodology outlined in these interim final rules,”
      • Notify the facility/provider how to initiate negotiations during the next 30 days or how to initiate the IDR process within 4 days following the close of the negotiation period,
      • And certain other required information upon request.
  • Within 30 calendar days of receipt of a clean claim, the plan must pay the provider what it considers to be full payment or provide an explanation why the claim is denied.  Given that “balance billing for services covered by the rules generally is prohibited,” the plan and provider will have the following structure to follow in determining how much these providers should ultimately be paid:
    1. All-Payer Model Agreement amount if present
    2. In the absence of that, as determined by state law
    3. In the absence of that, an amount agreed upon by the plan and provider or facility (which can be negotiated during the 30 days of claims adjudication plus the 30 days negotiation period following initial payment)
    4. Otherwise, an amount determined by an IDR entity via the CAA’s prescribed independent dispute resolution (IDR) process
      • More detailed guidance on this process will be forthcoming, but this process generally must be initiated by either the plan or the facility/provider within 4 days following the 30-day negotiation period.
Complaint Procedures
  • For group health plans, “these interim final rules establish a process by which the Departments will receive complaints regarding violations by plans and issuers.”
  • The Department of Health and Human Services (HHS) will separately “establish a process to receive consumer complaints regarding violations by health care providers, facilities, and providers of air ambulance services regarding balance billing requirements” and respond to such complaints within 60 business days.

Naturally, providers/facilities are expected to post a notice on their public website and prominently in their physical locations where patients are most likely to see it.

There was a press release, fact sheet 1 and 2, and a ZIP file of model documents provided.  Group health plans will want to take note of the model disclosure notice provided in that ZIP file, as utilizing it will be considered good faith compliance with the requirement to post notification on the plan’s public website, in plan materials, and with each explanation of benefits (EOB).

Future Rulemaking

Later phases of guidance this year will address the federal IDR process, patient protections through transparency and the patient-provider dispute resolution process, price comparison tools, and air ambulance reporting.  Since that’s already a hefty lift, regulators mention they might not issue guidance until next year “regarding transparency in plan and insurance identification cards, continuity of care, accuracy of provider network directories, and prohibition on gag clauses that are applicable for plan years beginning on or after January 1, 2022; and pharmacy benefit and drug cost reporting that is required by December 27, 2021.”  In the meantime, plans and providers must make good faith efforts to comply with the CAA statutory requirements on these initiatives, and regulators will be sure to provide ample time to comply with any new requirements they might issue.

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.