Interim Final Rule for No Surprises Act Issued – Impacting Out of Network Costs
On July 1st, the Biden Administration, through the U.S. Departments of Health and Human Services (HHS), Labor, and Treasury, and the Office of Personnel Management, issued “Requirements Related to Surprise Billing; Part I.” For anyone not familiar with this and not already preparing for it – surprise!
This is the interim final rule that will restrict excessive out of pocket costs to consumers from surprise billing and balance billing. Surprise billing happens when people unknowingly get care from providers that are outside of their health plan’s network and can happen for both emergency and non-emergency care. Balance billing, when a provider charges a patient the remainder of what their insurance does not pay, is currently prohibited in both Medicare and Medicaid and this rule will extend similar protections to Americans insured through employer-sponsored and commercial health plans.
For a detailed overview of the No Surprises Act, which goes into effect at the beginning of next year, please continue to our blog.
‘No Surprises’ Rule Imposes New Costs, Administrative Burdens
A recently finalized regulation spells out some of the costs and administrative hassles that plan sponsors will face when the No Surprises Act (NSA) takes effect on January 1, 2022.
The NSA, passed last December as part of the Consolidated Appropriations Act, aims to protect patients from unexpected medical bills by ensuring they have to pay only the in-network cost-sharing amount for out-of-network services provided on an emergency basis and in certain other situations.
If a group health plan covers any emergency services, it must cover all such services, whether in- or out-of-network, without preauthorization and pay the healthcare provider the difference between the in-network cost-sharing and the out-of-network rate.
An interim final rule (IFR) published July 13, 2021 (86 Fed. Reg. 36872), explains how to calculate the cost-sharing rate a participant will owe, and the amount the plan must pay the healthcare provider. The agencies also provided a model notice for meeting the disclosure requirements.
The cost-sharing is based on the “recognized amount,” which absent a relevant state law or model agreement means the lesser of the amount billed or the “qualifying payment amount.” This, in turn, is derived from a provider’s median contracted rates for a given item or service as of January 31, 2019, adjusted for inflation.
The plan then must pay the remainder up to the “out-of-network” rate, for which the plan and provider must go to independent dispute resolution (IDR) if they fail to agree on a rate within 30 days—again, absent a relevant state law or model agreement. A future regulation will spell out the IDR process in detail, but the NSA itself outlines the process and some of the tight deadlines involved. “The government wants this process to go really quickly,” said McAfee & Taft attorney Lake Moore in a July 22 webinar.
The Affordable Care Act already prohibited a plan from imposing greater cost-sharing for out-of-network emergency services than it does for in-network. The IFR now requires emergency coverage without pre-authorization requirements, whether or not the facility or provider participates in the plan, and without second-guessing the “emergency” based on diagnosis codes. The emergency provisions extend to “post-stabilization” services unless the patient/participant consents otherwise or is reasonably able to seek treatment from a participating provider.
Similar limits on cost-sharing apply to air ambulances (though the law does not address “ground” ambulances), and to nonemergency services performed by nonparticipating healthcare providers at participating facilities. The patient may opt out of the latter protections if notice and consent requirements are met, except for certain “ancillary” services such as anesthesiology.
The IFR is the first in a series of rules that the U.S. Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury are planning to implement the NSA—and all of these requirements are on top of the transparency rules the agencies issued last fall.
Plan sponsors should be conferring with vendors and third-party administrators to make sure they’re working on all of the required items, McAfee’s Brandon Long observed in the webinar. “It’ll be a miracle, frankly, if a lot of these vendors can get their plans in compliance” by the January 1, 2022, deadline, he said.
Concerns About Transparency Deadline
Employers are increasingly concerned about meeting the January 1, 2022, transparency deadline, especially given their limited access to the necessary data, a coalition of business groups warned in a July 9 letter to federal regulators.
“We support greater transparency in our nation’s health care system and providing Americans with more tools to be better consumers of their health care,” according to the letter from the Partnership for Employer-Sponsored Coverage (P4ESC). “However, since the Transparency in Coverage final rule was released and employers have begun to review and act on their obligations, we are very concerned about employers’ ability to comply with the machine-readable files requirement by January 1, 2022.”
For example, pricing information often resides with an insurer, third-party administrator (TPA), or pharmacy benefits manager (PBM), not the employer. “Because the employer does not own this network and drug pricing information, they must request it from the TPA/PBM or request that the TPA/PBM directly provide a compliant solution on the employer’s behalf,” P4ESC explained. “The employer is at the mercy of the TPA/PBM’s prerogative and schedule to obtain the information or provide a compliant solution.”
Even once it obtains this information, “the employer must either build an in-house information technology (IT) system to compile this information and convert it into machine-readable files or contract with a separate outside entity to do so on the employer’s behalf,” P4ESC continued. “We have heard from numerous employers that they are struggling to find specialized resources to produce, host, or otherwise ensure proper handling of these machine-readable files.”
P4ESC, which includes the Society for Human Resource Management, the Business Group on Health, and 15 other business organizations, asked DOL, HHS, and Treasury to “provide employers with a compliance safe harbor and/or good faith effort structure that would not penalize them while they are working to obtain and publicly report the information obligated under the Transparency in Coverage final rule.”
Article courtesy of content partner BLR. Author David A. Slaughter, JD, is a Senior Legal Content Specialist. His specialties include employee benefits and privacy compliance.