Departments Issue Interim Final Rule on Surprise Billing Ban

On July 1, 2021, the U.S. Departments of Health and Human Services, Labor, and Treasury (“the Departments”), and the Office of Personnel Management issued Requirements Related to Surprise Billing; Part I, an interim final rule (IFR) that will restrict excessive out of pocket costs to consumers from surprise billing and balance billing. 

Among other provisions, the interim final rule:

Bans surprise billing for emergency services. Emergency services, regardless of where they are provided, must be treated on an in-network basis without requirements for prior authorization.

Bans high out-of-network cost sharing for emergency and non-emergency services. Patient cost-sharing, such as co-insurance or a deductible, cannot be higher than if such services were provided by an in-network doctor, and any coinsurance or deductible must be based on in-network provider rates.

Bans out-of-network charges for ancillary care (like an anesthesiologist or assistant surgeon) at an in-network facility in all circumstances.

Bans other out-of-network charges without advance notice. Health care 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 at the higher out-of-network rate.

Cost Sharing Determination

According to the IFR fact sheet, cost sharing is limited 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. The cost sharing amounts 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.

Likewise, 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.

Out-of-Network Rate Determination

Under the IFR, 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.

Consumer Notice

The IFR requires that health plans provide participants with a notice regarding these new regulations. The Departments are issuing a model disclosure notice for this purpose.

The rule will take effect for health care providers and facilities on January 1, 2022. For group health plans, health insurance issuers, and Federal Employees Health Benefits (FEHB) Program carriers, the provisions will take effect for plan, policy, or contract years beginning on or after January 1, 2022. 

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you follow the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 678-439-6236.

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