Surprise billing occurs when patients receive care from out-of-network providers without their knowledge.
On July 1, the Biden Administration passed an interim final rule: the first portion of the “Requirements Related to the Surprise Billing Act,” in an attempt to curb excessive costs patients are required to pay in relation to surprise billing. The rule is scheduled to be effective Jan. 1, 2022 and will only affect those who are enrolled in insurance via their employers, as federal healthcare programs already prohibit this type of billing.
Surprise billing occurs when patients receive care from out-of-network providers without their knowledge. This results in higher prices for medical services that would otherwise be cheaper if rendered by providers inside their health plan’s network, resulting in the patient being responsible to cover what was not covered by their insurance.
According to the Centers for Medicare & Medicaid Services (CMS), in 2016, a total of 42.8 percent of emergency-room visit bills were subject to an out-of-network charge, even though the visit was to an in-network hospital. While some may believe that this only occurs in emergency situations, it can occur in non-emergency situations as well (i.e., someone involved in the patient’s care is not in-network).
In addition to cutting down these surprise costs, the rule is also focused on the following:
- No longer allowing surprise billing in emergencies;
- Banning high cost-sharing for both emergency and non-emergency services (i.e., cost-sharing cannot be higher for out-of-network services than in-network cost-sharing);
- Banning out-of-network charges for ancillary care; and
- Banning out-of-network charges without notice in advance (providing patients a plain-language consumer notice).
This last bullet point above has been given as a reprieve to the announced deadline of July 1, 2022, due to a lack of data interfacing between hospitals, payers, and providers. Currently, this information, such as in-network lists of providers or services that are covered in-network or out of network (or cost sharing for ancillary services), is not always current or updated when the patient arrives for emergency care.
Will the feds be issuing regulations addressing the Advanced Explanation of Benefits prior to the effective date of Jan. 1, 2022?
No. Officials have received feedback from the public about the challenges of developing the technical infrastructure necessary for providers and facilities to transmit information to plans and issuers, starting Jan. 1, 2022. Those officials agree that compliance with this section is likely not possible by this deadline, and therefore they intend to undertake notice-and-comment rulemaking in the future to implement the provision, including establishing appropriate data transfer standards. Until that time, the feds will defer enforcement of the requirement that plans, and issuers must provide an Advanced Explanation of Benefits until July 1, 2022; the Medical Group Management Association (MGMA) is pushing for a 2023 implementation date. However, the U.S. Department of Health and Human Services (HHS) has stated that it will investigate whether interim solutions are feasible for insured consumers.
Also, enforcing the issuance of an accurate “notice” to the consumer/patient, as outlined below, may be impossible and could force a false estimate, with transparency on pricing being resisted at the hospital level, and likened to reimbursement transparency at the payer level. As it currently stands, a physician would be guesstimating costs to patients, which could over- or underestimate the reality of patient costs and physician reimbursements.
First, providers and/or health facilities are expected to have a standard notice that can be given to out-of-network patients when they seek services, which must be given to such patients within 72 hours of the scheduled appointment or service (or within three hours for same-day-services). These notices should include the following:
- A statement that the provider (or facility) is out-of-network;
- An estimate of the cost of services (which must be calculated in good faith); and
- Information on prior authorization/utilization management limitations.
This document must be given to the patient separate from any other documents given to them, and must be available in 15 of the most common languages where the provider is located (in addition to maintaining adherence to language requirements under state and federal law).
Requiring out-of-network providers to provide potential patients with notice that they are outside of their health plan’s network is a large part of the No Surprises Act’s purpose. Essentially, patients can waive paying out-of-network prices for non-emergency services as long as they consent, something that is not permitted in emergency situations or for certain ancillary services (i.e., anesthesia) under the Act.
Additionally, if the notice is given for post-stabilization services, it must also include a list of in-network providers that can provide the needed services, and a statement that the patient will be referred to an in-network provider at the patient’s discretion. How can this be done if the list of in-network providers by the payer is outdated?
There is also a requirement that out-of-network providers notify health plans when they provide a patient service, and they must certify that they have met the required notice and consent requirements. These records must be kept for a minimum of seven years, either by the provider or the health facility.
HHS is expected to offer additional guidance as the effective date of the Act nears, so stay tuned for more out-of-network provider requirements regarding consumer notice and consent.
The AHA (American Hospital Association) has strongly urged federal officials to carefully reconsider some aspects of the rule that could create a financial windfall for insurers while financially destabilizing providers, thus removing access points for patients without any guarantee that savings will be passed on to them.
An example of a problem that needs to be addressed prior to January 2022 implementation is the:
Interim Payment (or Notice of Denial) to Providers
Per the AHA, the regulations establish requirements regarding health plans’ initial payment (or notice of denial) to providers. Health plans have 30 calendar days to make an initial payment or issue a notice of denial. The 30-day window begins when the health plan determines it has received a “clean claim.”
Federal officials have noted that they expect health plans to act in good faith, but will consider additional standards if they become aware of abuse or gaming by plans. The problem is that the regulations do not establish any requirements related to how much plans must reimburse providers, and the regulations’ creators are seeking comment on whether they should establish a minimum payment amount. (Of course, they should, or this could be a major blow to physicians.)
Also of Note: Emergency Services versus Commercial Plan Policies
Officials have noted that they are aware that some commercial health plans have implemented policies that restrict coverage for emergency services, inconsistent with the prudent layperson standard.
For example, they note that some plans have implemented policies to deny coverage based on the patient’s final diagnosis, or using general plan coverage exclusions. Federal officials unequivocally state that these policies are inconsistent with the requirements of the No Surprises Act, as well as the prudent layperson standard established by the Patient Protection and Affordable Care Act.
The Emergency Medical Treatment and Labor Act (EMTALA) requires that emergency services include an appropriate medical screening examination and any such further examination and treatment required to stabilize the individual, including services provided after a patient has been moved from the emergency department and admitted to the hospital. To deny coverage or payment to hospitals and providers based on final diagnoses is in direct conflict with applicable regulations.
Application of Balance Billing Protections in Instances of Denied Claims
The law and regulations permit health plans to deny payment on certain claims, and the AHA has sought clarification on the instances in which a provider may bill a patient when a claim is denied. For example, one interpretation of the regulation is to permit providers to bill a patient in instances where a claim was denied because the service is not covered by the patients’ health plan (including in instances where the patient has exhausted the scope of their benefits).
However, there are many other instances in which a plan or issuer may deny payment. Denials frequently occur when the plan or issuer unilaterally classifies a service as not “medically necessary.” The AHA interprets the regulations to permit patient balance billing in these instances, and for the plan and provider to adjudicate any disputes through existing plan appeal processes and not the IDR (informal dispute resolution) process created under the law. However, this raises the question of whether all denials are to be adjudicated through existing processes and not the IDR process. We request clarity on this issue as part of the regulations implementing the IDR process.
There will be more to this discussion in the coming weeks, and even after implementation. Protecting patients from surprise medical billing is of utmost importance; however, it should not be at the expense of the physician or facility that is providing services in good faith, or by allowing payers to manipulate this system to their financial advantage by undercutting reimbursement to providers or delaying the process.
The other question that has not been asked is this: “does any of this protect an uninsured patient?” No, it does not, with the HHS exception of estimating costs associated with emergency care within a reasonable period.