The federal government has begun issuing regulations to implement provisions of the Consolidated Appropriations Act (CAA); the CAA included massive regulatory changes that will affect the environment in which healthcare providers, health plans, and health insurers operate.
The first regulation is an interim final rule addressing one component of the No Surprises Act (NSA). This is the first “blast” of a set of three regulations anticipated under the NSA.
When does the NSA take effect?
The rule is effective for plan years beginning on or after January 1, 2022.
What is the purpose of the NSA?
The NSA is intended to prevent patients from receiving large balance bills when treated by out-of-network providers, when the patient may be unable to reasonably elect an in-network provider. This typically occurs
- when a person seeks emergency treatment from an out-of-network facility or receives treatment from an out-of-network provider working at an in-network facility.
- In non-emergency situations, a person may seek treatment from an in-network provider, but may also receive services from non-network providers during the course of treatment – for example, a non-network radiologist or anesthesiologist may assist an in-network surgeon.
- The new rules also cover air ambulance services.
The NSA builds on the framework created by the Affordable Care Act. (ACA)
- Under the ACA, a non-grandfathered group health plan (or health insurance issuer) that covers emergency services, must do so without imposing any preauthorization requirements.
- Additionally, the plan or issuer may not impose any administrative requirement or limitation on benefits (including cost sharing) for out-of-network emergency services that is more restrictive than requirements or limitations applicable to in-network emergency services. The NSA expands this rule to grandfathered plans.
To whom does the NSA apply?
The rules apply to insured and self-insured group health plans other than excepted benefits; short-term, limited duration insurance and HRAs; and other account-based arrangements.
What’s this about “balance billing”?
- Out-of-network facilities may not balance bill patients for treatment provided by the facility for emergency services.
- Similarly, out-of-network providers working at in-network facilities may not balance bill patients at out-of-network rates for non-emergency services unless the patient consents.
- However, a patient may not be asked to consent to treatment from providers of ancillary services, defined as services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology. The rules prescribe the content and timing of patient consent requirements.
- Patients may not be balance billed for air ambulance services.
- Providers that illegally balance bill patients are subject to fines, and the rule permit consumers to complain to the Department of Health and Human Services over illegal balance bills.
- In short, all billing disputes involving matters covered by the NSA must be settled between the provider and insurer or plan.
The rule defines emergency services according to a prudent layperson standard; i.e., whether a person without specialized medical knowledge would think that immediate medical attention is needed. Emergency services includes those needed to stabilize the patient, as well as post-stabilization services furnished as part of outpatient observation, or an inpatient or outpatient stay with respect to the visit in which the other emergency services are furnished.
Formulas for Calculating Payment:
The patient’s health plan must pay the out-of-network provider an amount calculated in accordance with one of the following formulas:
F1: an amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act, currently active in:
- Maryland; and
- certain rural areas in Pennsylvania;
F2: if there is no such applicable All-Payer Model Agreement, an amount determined by a specified state law:
- this is defined as a state law that provides for a method for determining the total amount payable.
- The rule asserts that 14 states have established some payment standards for services provided by nonparticipating providers or nonparticipating emergency facilities but does not list them.
- The state laws in question would not be applicable to self-insured ERISA plans, but the states are not prohibited from allowing such plans to voluntarily adopt those standards.
F3: if there is no applicable All-Payer Model Agreement or specified state law, the lesser of the billed charge or the plan’s or issuer’s median contracted rate, referred to as the qualifying payment amount (QPA).
- This is based on the median rate (for 2019 and indexed for inflation) for all networks used by the plan or issuer, based on a minimum of three contracts within a geographic region. Special rules apply to situations where a plan does not have sufficient data based on 2019 rates.
- A self-insured plan may use its own networks but may also elect to use all the networks administered by its TPA. This will be important for plans that may not have the minimum of three networks.
- The methodology for calculating the QPA is not trivial, and the government acknowledges that self-insured plans (or their TPAs) will incur “significant costs” to modify their claims system to accommodate the QPA (or other applicable amount) as required by the NSA.
- Plans must pay the claim (less applicable in-network cost-sharing amounts) calculated in accordance with the process described above within 30 days after receipt of a clean claim.
- At the time of payment, the plan must disclose the QPA (if applicable) and notify the provider of it’s right to open a 30-day negotiation period regarding the payment, along with the right to initiate independent dispute resolution process (IDR) within 4 days after the end the negotiation period.
If requested, the plan must provide:
- Information about whether the QPA includes contracted rates that were not set on a fee-for-service basis for the specific items and services at issue, and whether the QPA for those items and services was determined using underlying fee schedule rates or a derived amount.
- If a related service code was used to determine the QPA for a new service code, a plan or issuer must provide information to identify which related service code was used.
- Similarly, if an eligible database was used to determine the QPA, a plan or issuer must provide information to identify which database was used to determine the QPA; and
- If applicable, a statement that the plan’s or issuer’s contracted rates include risk-sharing, bonus, penalty, or other incentive-based or retrospective payments or payment adjustments for the items and services involved that were excluded for purposes of calculating the QPA.
If the provider or facility disagrees with the amount paid, it may initiate the negotiation period for purposes of determining the final payment amount. If an accord is not reached as a result of the negotiations, the provider or facility may initiate IDR. Regulations regarding the IDR process have not yet been issued but are expected later this year.
Notice Requirements & Next Steps:
Plans are required to provide notice of the requirements of the NSA.
- The notice must be posted on a public website of the plan or issuer, and included on each explanation of benefits for an item or service which is subject to the NSA.
- A model notice is available at CMS.
The rule is effective for plan years beginning on or after January 1, 2022.
Plan sponsors: contact your TPAs to ensure they will be able to comply with requirements of the NSA. Topics for discussion include:
- What database will be used to calculate the amount the plan has to pay?
- How will the TPA engage in negotiations over disputed payments?
- How will the TPA engage with the IDR?
- What additional expenses must the plan sponsor absorb to compensate its TPA for the additional burdens imposed by the NSA?