No Surprise Billing 101

Written By Ann Ford

A new law that aims to protect healthcare consumers from surprise billing went into effect on January 1, 2022.

When an individual with health insurance coverage receives care from an out-of-network provider at an in-network facility, their insurer typically does not cover the out-of-network cost. This then leaves the person with paying the “balancing billing” where the out-of-network provider bills the patient for the difference between the billed charge and the amount paid by their insurance.

Individuals commonly are faced with these surprise bills where they unknowingly undergo medical care from a provider or facility outside their insurance’s network. This can occur during emergent care and non-emergent care.

On December 27, 2020, former President Trump signed into law the No Surprises Act, which Congress passed as part of the Consolidated Appropriates Act, 2021, which became effective at the start of 2022.


First Interim Rule

On July 1, 2021, the Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury issued the “Requirements Related to Surprise Billing: Part I” interim final rule to restrict surprise billing for patients in individual health plans who get emergency care, non-emergency care from out-of-network providers at in-network facilities, and air ambulance services (not ground ambulance services) from out-of-network providers.

If a plan or coverage provides or covers any benefits for emergency services, this Rule requires emergency services to be covered:

  • Without any prior authorization.

  • Regardless of whether the provider is an in-network provider or an in-network emergency facility.

  • 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.

The rule bans balance billing for emergency services. Instead, providers must determine what patients are in-network versus out-of-network, and negotiate payments for out-of-network care with the patient’s health plan rather than billing the patient and forcing the patient to negotiate with their insurer. It also requires that patient cost-sharing (i.e., copayments or a deductible) for emergency services and certain non-emergency services provided at an in-network facility cannot be higher than if such services were provided by an in-network provider, and any cost-sharing obligation must be based on in-network provider rates.

Importantly, this interim final rule also bans out-of-network charges for ancillary care (such as anesthesiologist or assistant surgeon) at an in-network facility in all circumstances. Of note, patients can waive protections with regard to certain non-emergency services. However, patients cannot agree to waive out-of-network care for any complications that may arise, for example, during a surgical procedure that would require assistance from an out-of-network provider.

Healthcare providers and facilities are required to provide a one-page disclosure (to both the public and patients with applicable health plans) providing a plain-language explanation of the No Surprises Act and its requirements.

The disclosure must be publicly posted, available on a public portion of the provider’s website, and be provided to applicable patients prior to the patient receiving a bill. Notably, patients can give written consent to waive their rights by voluntarily signing a waiver form. This form must include the following pertinent information:

  • A statement that the patient is not required to waive protections, and can try to find an in-network provider instead;

  • A statement that the out-of-network provider can refuse to treat if the patient refuses to waive surprise billing protections;

  • A statement that waiving protections could cost the patient more money in out-of-network charges; and

  • A description of the out-of-network services to be provided, along with billing codes and a good faith (nonbinding) estimate of costs the patient may owe.


Second Interim Rule

On September 30, 2021, the Centers for Medicare & Medicaid Services (CMS) issued a second interim rule which provides additional protections against surprise medical bills.

Some of the protections include requiring good-faith estimates of medical items or services for self-paying individuals, establishing an independent dispute resolution process to determine out-of-network payment amounts between providers or facilities and health plans, and providing additional ways to appeal certain health plan decisions.

To make a good faith estimate, providers must:

  • Provide a good faith estimate to a self-paying individual

    • Within 1 business day after scheduling or no later than 3 business days after scheduling; or

    • Within 3 business days after a self-paying consumer requests a good faith estimate

  • Include an itemized list of each item or service, grouped by each provider or facility offering care;

  • Provide a paper or electronic copy of the good faith estimate;

  • Provide the good faith estimate using clear and understandable language.


Legal Challenge

The American Hospital Association (AHA) and American Medical Association (AMA) sued the federal government on December 9, 2021, challenging a provision of the September 30, 2021 rule asserting that the provision ignores requirements specified in the No Surprises Act which would result in reduced access to care for patients.

According to the AHA and AMA, who are suing on behalf of hospitals, health systems, and physicians nationwide, the new rule places significant weight on the independent dispute resolution process which ultimately benefits commercial health insurance companies.
The lawsuit argues that federal regulators have directed arbiters under independent dispute resolution to presume that the median in-network rate is the appropriate out-of-network rate without considering other factors.

Therefore, according to the lawsuit, the regulations are a deviation from the law as written which will lead to providers being routinely undercompensated by commercial insurers and patients will have fewer choices for access to in-network services. As of the date of this posting, the lawsuit is currently pending in the pleadings stage in the United States District Court for the District of Columbia.


Third Interim Rule

On November 17, 2021, CMS issued a third interim final rule (currently open for public comment until January 24, 2022) implementing new requirements for group health plans and issuers to submit certain information about prescription drugs and health care spending. This focuses on issues such as the most frequently dispensed and costliest drugs.


Compliance

These regulations took effect on January 1, 2022. It is anticipated that states will have the primary enforcement authority of these new regulations with the federal government as a secondary enforcer. It is currently unclear which state agencies will enforce these requirements but to be in compliance with them, hospitals should be aware of and prepare to do the following:

  • Draft and have readily available a (1) one-page disclosure form to be posted online and provided to each patient for whom is provided covered services, and (2) consent form for out-of-network patients;

  • An out-of-network provider must notify a patient of its out-of-network status and obtain the patient’s written consent to receive out-of-network services more than 72 hours prior to the services delivered;

  • For services covered by the No Surprises Billing Act, providers cannot bill patients more than the applicable in-network cost-sharing amount (or may face $10,000 per violation); and

  • Provide a good faith estimate for expected charges for items and services to an uninsured (or self-pay) individual.


Do you have questions about the new No Surprises Billing Act? Please contact Ann Ford and Nicolette Taber.


Sources


Disclaimer: This publication is not intended to provide legal advice but to provide general information on legal matters. Transmission is not intended to create and receipt does not establish an attorney-client relationship. Readers should seek specific legal and/or medical advice before taking any action with respect to matters mentioned in this publication. The attorneys responsible for this publication are Ann Ford and Nicolette Taber. This post constitutes a form of attorney advertising as defined by some state bar associations.

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