New surprise billing rule released

Oct. 1, 2021

The Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury, along with the Office of Personnel Management (OPM), released an interim final rule on surprise billing.

The interim final rule is the second set of regulations, or Part II, that the departments have released on surprise billing.

Specifically, Part II implements provisions related to the independent dispute-resolution process, good faith estimates for uninsured (or self-pay) individuals, the patient-provider dispute resolution process, and expanded rights for external review.

In conjunction with the release of this interim final rule, the government launched a website focused primarily on providing general information about provisions in the No Surprises Act. It will include a federal portal for organizations to apply to become certified independent dispute resolution entities and for providers and payers to participate in the federal independent dispute resolution process:

The website’s address is: https://www.cms.gov/nosurprises/Help-resolve-payment-disputes.

After the government released the rule, the American Hospital Association released a statement, saying “Disappointingly, the administration’s rule has moved away from congressional intent and brought new life to harmful proposals that congress deliberately rejected. Today’s rule is a windfall for insurers. The rule unfairly favors insurers to the detriment of hospitals and physicians who actually care for patients.”

When a person with health coverage gets care from an out-of-network provider, such as a pathologist, his or her 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 charge and the amount paid by their plan or insurance, unless prohibited by state law. This is known as “balance billing.”

According to the Centers for Medicare & Medicaid Services (CMS), studies have shown that in the period from 2010-2016, more than 39% of emergency department visits to in-network hospitals resulted in surprise bills, increasing to 42.8% in 2016. During the same period, the average amount of a surprise medical bill also increased from $220 to $628.

On July 13, 2021, the government issued “Requirements Related to Surprise Billing; Part I," which is designed to restrict excessive out-of-pocket costs to consumers resulting from surprise billing and balance billing. This rule goes into effect for healthcare providers and facilities, and providers of air ambulance services on January 1, 2022, and for plan, policy, or contract years starting on or after January 1, 2022, for group health plans, health insurance issuers, and Federal Employees Health Benefits (FEHB) program carriers. 

Part I requires that patient cost-sharing, such as copayments, co-insurance, 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.

It also prohibits out-of-network charges for items or services provided by an out-of-network provider at an in-network facility unless the patient gives his or her consent beforehand. Providers and facilities must provide patients with a plain-language consumer notice explaining that patient consent is required to receive care on an out-of-network basis before that provider can bill the patient more than in-network cost-sharing rates.

Part II of the rule, which was released September 30, establishes the federal independent dispute-resolution process that out-of-network providers, facilities, providers of air ambulance services, plans, and issuers in the group and individual markets may use to determine the out-of-network rate for applicable items or services after an unsuccessful open negotiation.

Before initiating the federal independent dispute resolution process, disputing parties must initiate a 30-day “open negotiation” period to determine a payment rate. In the case of a failed open negotiation period, either party may initiate the federal independent dispute resolution process.

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