Surprise Medical Billing Guidance (Part 1) and Model Notice Released; Expectations for Future Guidance Addressed

The DOL, HHS, and the IRS have released the first round of agency guidance on the surprise medical billing requirements of the No Surprises Act (NSA), enacted in December 2020 as part of the Consolidated Appropriations Act, 2021 (see our Checkpoint article). Building on patient protections for emergency services originally included in the Affordable Care Act (ACA), the comprehensively revised and expanded requirements protect individuals from surprise bills for emergency services, air ambulance services furnished by a nonparticipating provider (i.e., an out-of-network provider or other provider that does not have a contractual relationship with the plan), and non-emergency services furnished by a nonparticipating provider at an in-network facility in certain circumstances (see our Checkpoint Question of the Week). Broadly, the surprise billing rules restrict cost-sharing for out-of-network services that fall within the surprise billing protections to in-network levels, require such cost-sharing to count toward in-network deductibles and out-of-pocket maximums, establish requirements for initial payments to nonparticipating providers, and prohibit surprise balance billing (i.e., seeking to collect from the patient more than the applicable cost-sharing amount). Here are highlights from the lengthy and detailed regulations, which are generally applicable to group health plans and insurers for plan and policy years beginning on or after January 1, 2022:

• Applicability. The regulations clarify that the NSA applies to both grandfathered and non-grandfathered group health plans, as well as grandmothered plans and traditional indemnity plans without a network (although some rules may not be relevant). The rules do not apply to health reimbursement arrangements, excepted benefits, short-term, limited-duration insurance, and retiree-only plans. The agencies request comments on whether other plans should be exempt.
• Cost-Sharing Amounts. The regulations explain that participants in group health plans will pay cost-sharing for items and services that fall within the NSA’s scope based on the “recognized amount,” which generally will be the lesser of the “qualifying payment amount” (QPA) (i.e., the plan’s median in-network rate for an item or service) and the amount billed by the provider—unless an amount is prescribed by state law or an all-payer model agreement between CMS and a state. An in-depth description of the methodology for calculating the QPA is provided, including rules for determining the median contracted rates for items and services and the option for a self-insured plan to have its TPA calculate the QPA. [EBIA Comment: By requiring the cost-sharing amount to be calculated using the recognized amount, rather than the amount ultimately paid to the nonparticipating provider, the regulations limit the effect of provider-payer payment disputes on participants.]
• Initial Provider Payments. The regulations establish rules for determining the amounts payable by a plan or insurer for items and services within the NSA’s scope, referred to as the “out-of-network rate.” The plan must pay an initial amount to the nonparticipating provider (or provide a notice of denial) within 30 days after receiving all information necessary to decide a claim for the services. The regulations clarify that this “initial payment” does not refer to a first installment, but rather the amount that the plan or insurer reasonably intends as payment in full. Although the regulations do not specify a minimum initial payment amount, comments are requested for consideration of future rulemaking on whether and how to set a minimum payment rate.
• Plan’s Notice to Provider. When a plan determines that the QPA is the recognized amount, additional information about the QPA must be furnished to the nonparticipating provider. The notice must identify the plan’s contact person if the provider wishes to initiate a 30-day negotiation period with respect to the plan’s total payment, and explain the deadline to initiate independent dispute resolution (IDR) if agreement cannot be reached. While these regulations mention the IDR process, the IDR requirements will be addressed in future rulemaking. The agencies highlight the distinction between the ERISA claims and appeals procedures (which are applicable to adverse benefit determinations when participants may be personally liable to a provider) and the IDR process (which is applicable to disputes between plans and providers, when the provider has no recourse against a participant). The agencies note that the timeframes under the different processes “may not always align.”
• Notice and Consent Exception. Non-emergency services furnished by a nonparticipating provider at a participating health care facility are generally exempt from the NSA’s balance-billing and cost-sharing protections when the provider satisfies certain advance notice requirements and obtains the patient’s consent. To enable a plan or insurer to apply cost-sharing correctly, a provider (or facility, as applicable) relying on the notice and consent exception must timely notify the plan or insurer and provide the plan or insurer a signed copy of any binding notice and consent documents.
• Model Notice. A model notice is provided for plans and insurers to post and include in all explanations of benefits to which the NSA applies. The regulations lay out the process for providing the notice, which is intended to serve as good faith compliance with the NSA requirement that, beginning in 2022, a plan or insurer disclose the prohibition on surprise billing and the entities to contact in the event of a violation.

EBIA Comment: These regulations represent an opening salvo in the process of implementing the extensive surprise billing requirements in the NSA. The agencies intend to issue guidance later this year on the IDR process and some of the surprise billing disclosure requirements (including rules for price comparison tools); however, they caution that regulations on many of the NSA transparency requirements might not be provided in 2021 (but will include a prospective applicability date and an expectation of good faith compliance before then). This first round of regulations will give plans, insurers, and providers plenty to do in the meantime. For more information, see EBIA’s Health Care Reform manual at Section XII.B.4 (“Expanded Patient Protections: Surprise Medical Billing (Emergency and Non-Emergency Services)”) and EBIA’s Group Health Plan Mandates manual at Section XIII.B (“Patient Protections”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.C (“Federally Mandated Benefits”).

Contributing Editors: EBIA Staff.