On July 1, 2021, the Depart­ment of Health and Human Ser­vices (HHS), the Depart­ment of Labor, and the Depart­ment of the Trea­sury (col­lec­tive­ly, the Depart­ments), along with the Office of Per­son­nel Man­age­ment (OPM) released an inter­im final rule with com­ment peri­od (IFC), enti­tled “Require­ments Relat­ed to Sur­prise Billing; Part I.” This rule relat­ed to Title I (the No Sur­pris­es Act) of Divi­sion BB of the Con­sol­i­dat­ed Appro­pri­a­tions Act, 2021 estab­lish­es new pro­tec­tions from sur­prise billing and exces­sive cost-shar­ing for con­sumers receiv­ing health care items and ser­vices. This IFC imple­ments many of the law’s require­ments for group health plans, health insur­ance issuers, car­ri­ers under the Fed­er­al Employ­ees Health Ben­e­fits (FEHB) Pro­gram, health care providers and facil­i­ties, and air ambu­lance ser­vice providers.

Back­ground – Sur­prise Billing & the Need for Greater Protections

Most group health plans and health insur­ance issuers that offer group or indi­vid­ual health insur­ance cov­er­age have a net­work of providers and health care facil­i­ties (in-net­work providers) that agree to accept a spe­cif­ic pay­ment amount for their ser­vices. Providers and facil­i­ties that are not part of a plan’s or issuer’s net­work (out-of-net­work providers) usu­al­ly charge high­er amounts than the con­tract­ed rates the plans and issuers pay to in-net­work providers.

When a per­son with health insur­ance cov­er­age gets care from an out-of-net­work provider, their health plan or issuer usu­al­ly does not cov­er the entire out-of-net­work cost, leav­ing the per­son with high­er costs than if they had been seen by an in-net­work provider. In many cas­es, the out-of-net­work provider may bill the indi­vid­ual for the dif­fer­ence between the billed charge and the amount paid by their plan or insur­ance, unless pro­hib­it­ed by state law. This is known as “bal­ance billing.”

A “bal­ance bill” may come as a sur­prise for many peo­ple. A sur­prise med­ical bill is an unex­pect­ed bill from a health care provider or facil­i­ty. This can hap­pen when a per­son with health insur­ance unknow­ing­ly gets med­ical care from a provider or facil­i­ty out­side their health plan’s net­work. Sur­prise billing hap­pens in both emer­gency and non-emer­gency care.

In an emer­gency, an indi­vid­ual usu­al­ly goes (or is tak­en) to the near­est emer­gency depart­ment. Even if they go to an in-net­work hos­pi­tal for emer­gency care, they might get care from out-of-net­work providers at that facility.

For non-emer­gency care, an indi­vid­ual might choose an in-net­work facil­i­ty or an in-net­work provider, but not know that a provider involved in their care (for exam­ple, an anes­the­si­ol­o­gist or radi­ol­o­gist) is an out-of-net­work provider. In both emer­gency and non-emer­gency cir­cum­stances, the per­son might not be able to choose the provider or ensure that all of their care is from a par­tic­i­pat­ing provider. In addi­tion to get­ting a bill for their cost-shar­ing amount (like co-pay­ments, co-insur­ances, and any applic­a­ble deductibles), which tends to be high­er for these out-of-net­work ser­vices, the indi­vid­ual might also get a bal­ance bill from the out-of-net­work provider or facil­i­ty. This is espe­cial­ly com­mon in the con­text of air ambu­lance ser­vices, for which indi­vid­u­als gen­er­al­ly do not have the abil­i­ty to choose an air ambu­lance provider and have lit­tle or no con­trol over whether the provider is in-net­work with their plan or coverage.

When indi­vid­u­als do not have an oppor­tu­ni­ty to select in-net­work providers, their health care costs go up over­all. Sur­prise billing is often used as lever­age by providers to get high­er in-net­work pay­ments, which result in high­er pre­mi­ums, high­er cost shar­ing for con­sumers, and increased health care spend­ing over­all.[1] Stud­ies have shown that sur­prise bills can be high.

  • A recent study found that pay­ments made to providers by peo­ple who got a sur­prise bill for emer­gency care were more than 10 times high­er than those made by oth­er indi­vid­u­als for the same care.
  • Out-of-net­work cost shar­ing and sur­prise bills usu­al­ly do not count toward a person’s deductible and max­i­mum out-of-pock­et lim­it. Indi­vid­u­als with sur­prise bills may have to spend more out-of-pock­et because they have to pay their out-of-net­work cost shar­ing and sur­prise billing amounts regard­less of whether they have met their deductible and max­i­mum out-of-pock­et lim­its. Nine per­cent of indi­vid­u­als who got sur­prise bills paid more than $400 to providers, which may result in finan­cial dis­tress for con­sumers, giv­en recent find­ings that show 40% of Amer­i­cans strug­gle to find $400 to pay for an unex­pect­ed bill.[2][3],
  • Stud­ies have shown that in the peri­od from 2010–2016, more than 39% of emer­gency depart­ment vis­its to in-net­work hos­pi­tals result­ed in an out-of-net­work bill, increas­ing to 42.8% in 2016. Dur­ing the same peri­od, the aver­age amount of a sur­prise med­ical bill also increased from $220 to $628.[4]
  • Although some states have enact­ed laws to reduce or elim­i­nate bal­ance billing, these efforts have cre­at­ed a patch­work of con­sumer pro­tec­tions.[5] Even in a state that has enact­ed pro­tec­tions, they typ­i­cal­ly only apply to indi­vid­u­als enrolled in health insur­ance cov­er­age, as fed­er­al law gen­er­al­ly pre­empts state laws that reg­u­late self-insured group health plans spon­sored by pri­vate employ­ers. In addi­tion, states have lim­it­ed pow­er to address sur­prise bills that involve an out-of-state provider.

Sum­ma­ry of IFC

This IFC pro­tects indi­vid­u­als from sur­prise med­ical bills for emer­gency ser­vices, air ambu­lance ser­vices pro­vid­ed by out-of-net­work providers, and non-emer­gency ser­vices pro­vid­ed by out-of-net­work providers at in-net­work facil­i­ties in cer­tain circumstances.

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

  • With­out any pri­or autho­riza­tion (i.e., approval beforehand).
  • 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.

Emer­gency ser­vices include cer­tain ser­vices in an emer­gency depart­ment of a hos­pi­tal or an inde­pen­dent free­stand­ing emer­gency depart­ment, as well as post-sta­bi­liza­tion ser­vices in cer­tain instances.

This IFC also lim­its cost shar­ing for out-of-net­work ser­vices sub­ject to these pro­tec­tions to no high­er than in-net­work lev­els, requires such cost shar­ing to count toward any in-net­work deductibles and out-of-pock­et max­i­mums, and pro­hibits bal­ance billing. These lim­i­ta­tions apply to out-of-net­work emer­gency ser­vices, air ambu­lance ser­vices fur­nished by out-of-net­work providers, and cer­tain non-emer­gency ser­vices fur­nished by out-of-net­work providers at cer­tain in-net­work facil­i­ties, includ­ing hos­pi­tals and ambu­la­to­ry sur­gi­cal centers.

Cost-Shar­ing Amounts:

This IFC spec­i­fies that con­sumer cost-shar­ing amounts for emer­gency ser­vices pro­vid­ed by out-of-net­work emer­gency facil­i­ties and out-of-net­work providers, and cer­tain non-emer­gency ser­vices fur­nished by out-of-net­work providers at cer­tain in-net­work facil­i­ties, must be cal­cu­lat­ed based on one of the fol­low­ing amounts:

  • An amount deter­mined by an applic­a­ble All-Pay­er Mod­el Agree­ment under sec­tion 1115A of the Social Secu­ri­ty Act.
  • If there is no such applic­a­ble All-Pay­er Mod­el Agree­ment, an amount deter­mined under a spec­i­fied state law.
  • If nei­ther of the above apply, the less­er amount of either the billed charge or the qual­i­fy­ing pay­ment amount, which is gen­er­al­ly the plan’s or issuer’s medi­an con­tract­ed rate.

Sim­i­lar­ly, cost-shar­ing amounts for air ambu­lance ser­vices pro­vid­ed by out-of-net­work providers must be cal­cu­lat­ed using the less­er of the billed charge or the plan’s or issuer’s qual­i­fy­ing pay­ment amount, and the cost shar­ing require­ment must be the same as if ser­vices were pro­vid­ed by an in-net­work air ambu­lance provider.

Bal­ance Billing:

Under this IFC, sur­prise billing for items and ser­vices cov­ered by the rule gen­er­al­ly is not allowed.

Deter­min­ing Out-of-Net­work Rates:

Under this IFC, the total amount to be paid to the provider or facil­i­ty, includ­ing any cost shar­ing, is based on:

  • An amount deter­mined by an applic­a­ble All-Pay­er Mod­el Agree­ment under sec­tion 1115A of the Social Secu­ri­ty Act.
  • If there is no such applic­a­ble All-Pay­er Mod­el Agree­ment, an amount deter­mined by a spec­i­fied state law.
  • If there is no such applic­a­ble All-Pay­er Mod­el Agree­ment or spec­i­fied state law, an amount agreed upon by the plan or issuer and the provider or facility.
  • If none of the three con­di­tions above apply, an amount deter­mined by an inde­pen­dent dis­pute res­o­lu­tion (IDR) entity.

The Depart­ments intend to issue reg­u­la­tions soon regard­ing IDR enti­ties and the IDR process.

In lim­it­ed cas­es, a provider or facil­i­ty can pro­vide notice to a per­son regard­ing poten­tial out-of-net­work care, and obtain the individual’s con­sent for that out-of-net­work care and extra costs. How­ev­er, this excep­tion does not apply in cer­tain sit­u­a­tions when sur­prise bills are like­ly to hap­pen, like for spec­i­fied ancil­lary ser­vices con­nect­ed to non-emer­gency care, such as anes­the­si­ol­o­gy or radi­ol­o­gy ser­vices pro­vid­ed at an in-net­work health­care facility.

Notice to Consumers:

This IFC requires cer­tain health care providers and facil­i­ties to make pub­licly avail­able, post on a pub­lic web­site, and pro­vide to indi­vid­u­als a one-page notice about:

  • The require­ments and pro­hi­bi­tions applic­a­ble to the provider or facil­i­ty under Pub­lic Health Ser­vice Act sec­tions 2799B‑1 and 2799B‑2 and their imple­ment­ing regulations.
  • Any applic­a­ble state bal­ance billing lim­i­ta­tions or prohibitions.
  • How to con­tact appro­pri­ate state and fed­er­al agen­cies if some­one believes the provider or facil­i­ty has vio­lat­ed the require­ments described in the notice.

Applic­a­bil­i­ty Date & Com­ment Period

The reg­u­la­tions are gen­er­al­ly applic­a­ble to group health plans and health insur­ance issuers for plan and pol­i­cy years begin­ning on or after Jan­u­ary 1, 2022. The HHS-only reg­u­la­tions that apply to health care providers, facil­i­ties, and providers of air ambu­lance ser­vices are applic­a­ble begin­ning on Jan­u­ary 1, 2022. The OPM-only reg­u­la­tions that apply to car­ri­ers under the FEHB Pro­gram are applic­a­ble to con­tract years begin­ning on or after Jan­u­ary 1, 2022. Writ­ten com­ments must be received by 5 p.m. 60 days after dis­play in the Fed­er­al Reg­is­ter to be considered.

Vis­it https://www.cms.gov/files/document/cms-9909-ifc-surprise-billing-disclaimer-50.pdf to read more about the inter­im final rule.

Orig­i­nal­ly post­ed on CMS.gov

[1] Coop­er, Z. et al., Sur­prise! Out-of-Net­work Billing for Emer­gency Care in the Unit­ed States, NBER Work­ing Paper 23623, 20173623; Duffy, E. et al., Poli­cies to Address Sur­prise Billing Can Affect Health Insur­ance Pre­mi­ums. The Amer­i­can Jour­nal of Man­aged Care 26.9 (2020): 401–404; and Brown E.C.F., et al., The Unfin­ished Busi­ness of Air Ambu­lance Bills, Health Affairs Blog (March 26, 2021), doi: 10.1377/hblog20210323.911379, avail­able at https://www.healthaffairs.org/do/10.1377/hblog20210323.911379/full/.

[2]Biener, A. et al., Emer­gency Physi­cians Recov­er a High­er Share of Charges from Out-of-net­work Care than from In-net­work Care, Health Affairs 40.4 (2021): 622–628.

[3]Board of Gov­er­nors of the U.S. Fed­er­al Reserve Sys­tem. Report on the Eco­nom­ic Well­be­ing of U.S. House­holds in 2018. (May 2019). Avail­able at https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf.

[4] Sun, E.C., et al. “Assess­ment of Out-of-Net­work Billing for Pri­vate­ly Insured Patients Receiv­ing Care in In-net­work Hos­pi­tals.” JAMA Inter­nal Med­i­cine, 179.11 (2019): 1543–1550. Doi:10.1001/jamainternmed.2019.3451.

[5] States that have enact­ed bal­ance billing pro­tec­tions include Ari­zona, Col­orado, Delaware, Indi­ana, Iowa, Maine, Mass­a­chu­setts, Min­neso­ta, Mis­sis­sip­pi, Mis­souri, New Mex­i­co, North Car­oli­na, Penn­syl­va­nia, Rhode Island, Texas, Ver­mont, and Washington.