No More Surprises? New Rule on Surprise Medical Bills

The U.S. Departments of Health and Human Services, Labor, and Treasury, and the Office of Personnel Management have issued “Requirements Related to Surprise Billing; Part I,” an interim final rule to implement the No Surprises Act passed late last year as part of the Consolidated Appropriations Act, 2021. The No Surprises Act, which generally becomes effective January 1, 2022, minimizes the amounts that participants in a group health plan must pay for medical care received from physicians or other healthcare providers who are, unknown to the participant, outside of the plan’s network; this is referred to as “surprise billing.” In addition, the No Surprises Act limits situations in which out-of-network providers can bill directly for amounts not paid for by the group health plan; this is referred to as “balance billing.”

The rule implements portions of the No Surprises Act by placing restrictions on group health plans, as well as health insurance issuers, physicians, and other healthcare providers. The rule requires plans to treat certain services from out-of-network providers and facilities as in-network in applying cost-sharing, such as deductibles and co-insurance. Thus, the participant will have the same out-of-pockets costs for such services regardless of whether the facility or provider has a contract with the plan. Similarly, the rule forbids out-of-network providers from billing participants for amounts in excess of the participant’s in-network cost-sharing responsibility, subject to the participant’s ability to waive this protection in some situations.

Specifically, among other provisions, the rule implements certain consumer protection provisions of the No Surprises Act as follows:

• Bans high out-of-network cost-sharing for emergency services. A group health plan must treat emergency services provided by out-of-network providers or facilities as in-network for applying cost-sharing requirements. Out-of-network providers and facilities are prohibited from billing a participant for amounts more than the participant’s in-network cost-sharing responsibility, and this prohibition generally cannot be waived by a participant. However, such providers and facilities may balance bill participants for post-stabilization services if they provide notice to the participant and obtain his or her consent to be balance billed before such services are provided.

• Bans out-of-network charges for ancillary care at an in-network hospital or ambulatory surgery center. If a hospital or ambulatory surgery center is in-network, a group health plan must treat anesthesia, pathology, radiology, laboratory, neonatology, assistant surgeon, hospitalist, or intensivist services as in-network when applying cost-sharing requirements. Such providers are prohibited from billing a participant for amounts more than the participant’s in-network cost-sharing responsibility, and this prohibition cannot be waived by a participant.

• Bans other out-of-network charges without advance notice. If a hospital or ambulatory surgery center is in-network and services other than those described above are provided, a group health plan must still treat the services as in-network when applying cost-sharing requirements. However, the out-of-network providers may balance bill the participant for these services if they provide notice to the participant and obtain his or her consent to be balance billed before the services are provided.

The issuance of the rule is accompanied by fact sheets for health plans and issuers, as well as consumers. The Department of Labor has also issued instructions and a model notice that plans and issuers could use to meet requirements to make certain information publicly available, post on a public website, and include in each explanation of benefits.

The rule will take effect for healthcare providers and facilities on January 1, 2022. For group health plans, health insurance issuers, and Federal Employees Health Benefits Program carriers, the provisions will take effect for plan, policy, or contract years beginning on or after January 1, 2022. Comments on the rule are due within 60 days after the rule is published in the Federal Register. It is likely that this rule will generate significant comments. The rule may also change in response to those comments.