Federal “No Surprises Act”

The federal No Surprises Act (the “Act”) was signed into law as part of the Consolidated Appropriations Act of 2021 on December 27, 2020, and authorizes select government agencies to promulgate rules that, among other things, address surprise bills and balance billing practices.  The Office of Personnel Management, Employee Benefits Security Administration, Centers for Medicare & Medicaid Services, and Internal Revenue Service, along with the Department of the Treasury, Department of Labor, and Department of Health and Human Services (“HHS”), collectively referred to herein as the “Departments”, announced interim final rules related to the Act titled “Requirements Related to Surprise Billing; Part I” on July 13, 2021 (the “Interim Final Rules”), and proposed rules titled “Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement” on September 16, 2021.  Most of the Act is effective as of January 1, 2022.
 

Patient Protections Against Surprise Billing Practices

A surprise bill can arise in a few different circumstances, but will typically occur when a patient receives care at an out-of-network (“OON”) emergency department, or receives care at an in-network (“IN”) facility that is furnished by an OON provider such as an anesthesiologist, radiologist, or pathologist.  The Interim Final Rules lay out three scenarios to which the patient protections will generally apply: (a) emergency services provided by OON providers at OON facilities; (b) certain non-emergency services provided by OON providers at IN facilities such as hospitals or ambulatory surgery centers; and (c) OON providers of air ambulance services (the “Surprise Billing Scenarios”).

The Act provides the Secretary of HHS with the authority to impose civil monetary penalties for violations of the Interim Final Rules once effective.  Proposed enforcement rules were published on September 16, 2021.  The public may comment on the proposed rules until October 16, 2021.
 

Cost-sharing and Out-of-Network Rates

The Departments also addressed cost-sharing and out-of-network rates in the Interim Final Rules.  In short, cost-sharing amounts cannot be higher than the amount that would be charged if the facilities and providers were in the patient’s network.  The Interim Final Rules prescribe that a patient’s cost-sharing amounts will be determined by using: (a) an applicable All-Payer Model Agreement (“APMA”) under section 1115A of the Social Security Act; (b) if no APMA, an amount determined by a specified state law; or (c) if no APMA or state specification, the lesser of the billed charge, or the plan's median contracted rate for the same or similar item or service in a given geographic region, referred to as the qualifying payment amount (“QPA”).  The Interim Final Rules provide detailed guidance for determining the QPA.  

Likewise, the Interim Final Rules require the above to apply to determine the amounts that a payer must reimburse an OON provider.  However, a payer and provider are also allowed to mutually agree to the reimbursement and if they are unable to do so, an independent dispute resolution entity will determine the amount.
 

Notice and Consent Exception

OON providers at IN facilities may nonetheless balance bill a patient if adequate notice and consent is achieved via furnishing to the patient (a) a written notice and consent form at least 72 hours in advance of the appointment, or on the day the appointment is made if the appointment takes place within 72 hours from when it is made, or within three hours from when the patient is to receive care if the appointment is made the same day; (b) a good faith estimate of the costs involved; and (c) a list of IN providers at the IN facility, along with information on care management limitations.  Note that the written notice must make clear that consent is optional, and also be written in the 15 most common languages in the applicable geographic region.  

There are circumstances that are not eligible for the notice and consent exception, which generally consist of non-emergency ancillary services or urgent care services.  Ancillary services in non-emergency settings generally include services related to (a) emergency medicine, anesthesiology, pathology, radiology, and neonatology, whether provided by a physician or non-physician practitioner; (b) services and items provided by assistant surgeons, hospitalists, and intensivists; (c) diagnostic services, including radiology and laboratory services; and (d) services and items provided by an OON provider when there is no IN provider who can furnish such a service or item at given facility.  Additionally, this exception does not apply to services or items that are furnished when unforeseen or urgent medical needs arise from services or items that are already furnished or in the process of being furnished that the patient has already waived after the applicable provider or facility has fulfilled the notice and consent exception requirements.  
 

Impact on Benefit Plans, Employers, and Patients

Regardless of whether the emergency provider is IN or OON, if a plan covers emergency services, it must do so without preauthorization and with the same access, restrictions, and cost-sharing methods that apply to both IN and OON providers.  In addition, with respect to all three Surprise Billing Scenarios, any out-of-pocket costs experienced by the participant must be credited to a participant’s IN deductible and out-of-pocket maximum, even if the services were from an OON provider.  Out-of-pocket amounts are based on the “recognized amount”, which is either set via an APMA, state specification, or the QPA as described above.  The plan must also send the OON provider an initial payment of the plan’s allowed amount or a denial of payment within 30 days of the provider’s transmittal of a bill.
 

Independent Dispute Resolution Process

If a provider is not satisfied with a plan’s initial payment or a plan’s denial of payment, it may initiate a 30-day open negotiation period within 30 days after the initial payment or denial thereof as described above.  If the parties cannot agree and this window expires, then either party has four days after the expiration to initiate the independent dispute resolution (“IDR”) process.  From there, the parties must jointly select an IDR entity not later than the last day of the three-business day period following the date of the initiation of the IDR process.  If the parties cannot agree on the selection of an IDR entity, then the Secretary of HHS shall select one not later than six days after the initiation of the IDR process.  

Each party will submit their respective offers for a payment amount within 10 days from the selection of the IDR entity.  The IDR entity must choose between only one of the two offers and will notify the parties of its decision within 30 days of the IDR entity’s selection.  In making its decision, the IDR entity may consider the QPA in question (if any); the level of training, experience, and quality or outcome measurements of the provider; the market share held by the provider or plan; the acuity of the individual receiving the services; the teaching status, case mix, and scope of services of the provider; and the good faith efforts of the provider or plan to enter into a network agreement with one another.  Conversely, the IDR entity may not consider usual and customary charges, or Medicare, Medicaid, CHIP, or TRICARE rates.

HHS will implement a certification process for IDR entities once such a process has been established through rulemaking.  IDR entities must have sufficient medical or legal expertise and sufficient staffing to make its determinations on a timely basis.  Stay tuned for further guidance on the IDR process that will be addressed in subsequent rulemakings.  

For more information, contact Taryn Stone, Kevin Woodhouse, Myra Selby, Chris Sears, Jacob Butz or the Ice Miller Health Care attorney with whom you normally work.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.