Surprise Medical Billing Requirements for Health Plans, Health Insurers, and Health Care Providers and Facilities

Practical Law Article w-033-5632 (Approx. 17 pages)

Surprise Medical Billing Requirements for Health Plans, Health Insurers, and Health Care Providers and Facilities

by Practical Law Employee Benefits & Executive Compensation and Practical Law Health Care

Implementing Regulations

During 2021, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, Departments) issued several sets of implementing regulations under the No Surprises Act.

In July 2021, the Departments issued interim final regulations (IFRs) for group health plans, health insurers, providers, and facilities that address:

Cost-sharing amounts related to the surprise medical billing requirements.
Transparency in health coverage provisions.
The notice and consent exception process to the balance billing protections.
Disclosures that providers and facilities must provide.
Additional patient protections.

In September 2021, the Departments issued proposed regulations that would implement air ambulance services requirements under the No Surprises Act, compensation disclosure rules for health insurers, and enforcement of requirements for providers and facilities (see Article, Proposed Regulations on Air Ambulance Services Under the No Surprises Act, Health Insurer Compensation Disclosures, and Enforcement).

In October 2021, the Departments issued a second set of IFRs that address the federal IDR process for plans, insurers, providers, and facilities regarding:

Payment disputes over emergency services and certain other services.
The good faith estimates requirement for providers and facilities.
The patient-provider dispute resolution process.

For more information on the IFRs, see Legal Updates, Departments' IFRs Address Independent Dispute Resolution (IDR) Procedures and Surprise Medical Billing and Departments Implement Balance Billing Requirements Under No Surprises Act.

Requirements for Health Plans and Health Insurers

Key issues and requirements for employer-sponsored group health plans and health insurers relate to:

Coverage of emergency services.
The recognized amount calculation involving cost-sharing for OON services.
IDR procedures.
Complaint procedures for surprise medical bills.
Disclosures regarding air ambulance services.
Implementation and compliance.

Coverage of Emergency Services

The No Surprises Act's surprise medical billing protections apply to group health plans or health insurers (for both group and individual coverage) that provide or cover benefits regarding:

Services in a hospital's emergency department (including hospital outpatient departments that provide emergency services).
Emergency services in an independent freestanding emergency department.

Under the No Surprises Act, plans and insurers must cover emergency services regardless of whether the provider that furnishes the services is an in-network provider or facility.

For emergency services provided to a participant or beneficiary by an OON provider or emergency facility:

The services must be furnished without preauthorization (or other administrative requirements) or coverage limits under the plan that are more restrictive than those for emergency services provided in-network.
Cost-sharing requirements must not be greater than those that would apply for services furnished by an in-network provider (see Recognized Amount Calculation).

Emergency services also must be provided without regard to other plan terms or conditions, except for:

Coordination of benefit requirements.
Waiting periods.
Applicable cost-sharing.

Plans and insurers that cover emergency services may not deny benefits for a participant with an emergency medical condition that requires emergency care based on a general plan exclusion for items and services other than emergency services. For example, a plan or insurer cannot deny claims for emergency services provided to a dependent woman who is pregnant based on a general plan exclusion for dependent maternity care.

Cost-sharing generally refers to the amount a participant must pay for a covered item or service (for example, copayment, coinsurance, and deductibles). However, cost-sharing in this context does not include:

Amounts paid toward premiums.
Balance billing by OON providers.
The cost of items or services that are not covered under the plan or coverage.

Recognized Amount Calculation

Under the July 2021 IFRs, cost-sharing for OON services generally is limited to in-network levels. This restriction applies to covered services under the No Surprises Act, which include emergency services and non-emergency services delivered by OON providers at in-network hospitals.

Cost-sharing for these services must be calculated based on one of the following three amounts (which are collectively referred to as the recognized amount):

The recognized amount may be the lesser of:
- an amount known as the qualifying payment amount (QPA), which reflects the plan’s or insurer's median contracted rate (MCR) for an item or a service; and
- the amount that is billed by a provider or facility.
For a state that has an All-Payer Model Agreement (APMA), the recognized amount is the state-approved amount under the agreement. This assumes the APMA applies to:
- the plan or insurer and the item or service at issue; or
- the OON provider or emergency facility.
If there is no APMA, but a particular state has enacted a law for determining the payment amount for these services, the recognized amount is the amount determined under the state's law.

If there is no applicable APMA or state law, the plan and provider or facility must work towards an agreed-on amount using the following steps:

The nonparticipating provider or facility may accept an initial payment made by the payor based on the QPA.
The parties may engage in open negotiations for a 30-day period to attempt to reach an agreement.
The parties may enter the IDR process where a determination is made by a certified IDR entity (essentially an arbitrator) (see IDR Procedures).

The July 2021 IFRs also address:

The method that plans and insurers must use to determine the QPA (which distinguishes the large group, small group, and individual insurance markets).
Information that plans and insurers must share with OON providers when making QPA determinations.
The relevant geographic regions for QPA determinations, considering access to services in rural and underserved areas (including areas that have experienced provider shortages).
A process to receive complaints regarding potential noncompliance by plans and insurers (see Complaint Procedures for Surprise Medical Billing).

For more information on the rules for calculating MCRs and QPAs, see Practice Note, Surprise Medical Billing for Group Health Plans: Qualifying Payment Amounts (QPAs).

Group Health Plans and Health Insurance Toolkit

The Group Health Plans and Health Insurance Toolkit offers a collection of resources to assist group health plans and health insurers and their advisors in complying with the surprise medical billing requirements. The Toolkit features a range of continuously maintained resources, including:

IDR Procedures

The No Surprises Act and July 2021 IFRs include procedural requirements for plans and insurers to ensure that items and services subject to the balance billing requirements (and which may become the topic of billing disputes) are timely resolved. For example, the law includes open negotiation and IDR procedures for use by plans, insurers, and OON providers to determine the amount that will be paid for a provided item or service.

The parties can participate in a 30-day open negotiation process that begins on the day the provider receives a plan’s initial payment (or denial notice) for the service. If the plan or insurer and provider cannot agree on a payment amount during the 30-day open negotiation period, either party may invoke the IDR process by providing notice to the other party and HHS. If this occurs, a certified IDR entity will determine the payment amount for the service.

The Departments issued implementing regulations in October 2021 that address several aspects of the No Surprises Act's IDR process, including:

Timeframes for the open negotiation period.
Requirements for certifying IDR entities.
A presumption that the QPA is the OON rate.
Use of a federal portal to administer the IDR process (see Federal IDR Portal).
Confidentiality standards based on privacy, security, and breach notification requirements under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) (see Confidentiality Standards Based on HIPAA).

Federal IDR Portal

Under the October 2021 IFRs, the Departments are establishing a federal IDR portal to administer the IDR process. The federal IDR portal will serve various functions related to the IDR process, including:

Initiating the IDR process by submitting a Notice of IDR Initiation through the portal.
Submitting applications to be a certified IDR entity (see CMS Webpage Addresses Arbitrator Certification Under Surprise Medical Billing Rules).
Providing supporting documentation for payment disputes to certified IDR entities.
Complying with reporting requirements.

The portal also will contain a list of certified IDR entities from which parties to a payment dispute can select, including basic information about the entities (for example, contact information). Certified IDR entities must submit their written decisions regarding parties’ disputes (along with the underlying rationales) to the Departments using the portal. The written determination also must be provided to the parties.

Confidentiality Standards Based on HIPAA

The October 2021 IFRs include confidentiality standards involving privacy, security, and breach notification with which certified IDR entities must comply. Under the privacy standards, for example, entities may create, collect, handle, disclose, transmit, and store individually identifiable health information (IIHI) only to conduct:

Functions consistent with the entity's required duties.
Related obligations as required under federal or state laws or regulations.

Certified IDR entities also must maintain the security of IIHI they obtain by:

Ensuring the confidentiality of all IIHI they create, obtain, maintain, store, and transmit.
Guarding against reasonably anticipated threats or hazards to the IIHI's security.
Preventing reasonably foreseeable unauthorized uses or disclosures of the information.
Ensuring compliance by any of their personnel (for example, contractors and subcontractors that are assigned to a payment determination).

To comply with these requirements, entities must adopt policies and procedures to:

Properly use and disclose IIHI.
Identify when IIHI should be destroyed or disposed of.
Correctly store and maintain the confidentiality of IIHI that is accessed or stored electronically.
Identify the steps that will be taken if there is a breach of IIHI.

These standards were based on requirements for HIPAA covered entities, which include group health plans (see HIPAA Privacy, Security, and Breach Notification Toolkit).

For more information on the No Surprises Act's IDR requirements, see Practice Note, Surprise Medical Billing for Group Health Plans: Independent Dispute Resolution (IDR) Process.

Complaint Procedures for Surprise Medical Billing

The No Surprises Act required the Departments to create procedures for receiving and resolving complaints that a plan or an insurer may be noncompliant with certain QPA-related requirements. Evidence of noncompliance may warrant further investigation by the Departments. The July 2021 IFRs expand on these requirements by implementing complaint procedures applicable to the law's consumer protections and balance billing requirements.

Under the complaint procedures:

Complaints may be brought by an individual or authorized representative.
A complaint is a written or an oral communication indicating that a plan or an insurer has potentially violated the surprise medical billing rules.

After an individual submits a complaint, the DOL will notify the individual (orally or in writing) that it has received the complaint within 60 business days of receipt. In its response, the DOL may request additional information needed to process the complaint, such as:

An explanation of benefits (EOB).
Processed claims information.
Information about:
- the plan or insurer that covers the individual;
- the provider, facility, or provider of air ambulance services at issue; and
- whether the service involved was an emergency service or a non-emergency service.
The summary plan description (SPD), policy, certificate, insurance contract, membership booklet, outline of coverage, or other evidence of coverage the plan or insurer furnishes to participants.

The DOL will attempt to inform individuals of how their complaints are resolved. Depending on the nature of the complaint and the plan or insurer involved, the DOL may:

Refer the individual to another appropriate federal or state resolution process.
Refer the plan or insurer for an investigation for enforcement action.
Provide the individual with an explanation of how the complaint was resolved, along with any corrective action taken.

Disclosures Regarding Air Ambulance Services

The No Surprises Act requires plans and insurers to report claims data (and related information) to the Departments concerning providers of air ambulance services. The air ambulance data reporting rules apply for two years.

This requirement is intended to address a perceived lack of comprehensive national data on air ambulance costs, transports, and contractual arrangements between air ambulance service providers, plans, and insurers. However, under the Departments' September 2021 proposed regulations, plans and insurers would not need to report information if they did not receive claims (or either make or expect to make payments) for air ambulance services regarding the reporting period. (For more information, see Proposed Regulations on Air Ambulance Services Under the No Surprises Act, Health Insurer Compensation Disclosures, and Enforcement.)

Implementation and Compliance

The No Surprises Act's surprise medical billing requirements generally apply for plan years beginning on or after January 1, 2022. Given this applicability date, plan sponsors have little time to prepare to comply with the new rules. For employers with insured health plans, the plan's health insurer will handle implementation of the new requirements. Employers with self-funded arrangements should work with their third-party administrators (TPAs) for these arrangements to determine:

What functions the TPAs can and cannot carry out.
How much TPAs will charge to perform these functions.
What changes must be made to the parties' service provider agreements.

The surprise medical billing requirements also may require revisions to governing plan disclosure documents (including SPDs) and open enrollment materials.

Requirements for Health Care Providers and Facilities

Key issues and requirements for health care providers (including physicians, billing practitioners, and air ambulance service providers) and facilities (including hospitals, freestanding emergency departments, and urgent care centers) relate to:

Balance billing prohibitions for certain types of services (see Services Covered).
The notice and consent exception process and disclosure requirements (see Notice and Consent Exception Process and Disclosure Requirements).
Good faith estimates (see Good Faith Estimates).
The patient-provider dispute resolution process (see Patient-Provider Dispute Resolution Process).
Determination of OON rates and the IDR process (see Determination of OON Rates and the IDR Process).
Certain additional considerations (see Additional Considerations).
Implementation and compliance (see Implementation and Compliance).

Services Covered

The protections against surprise medical billing in the No Surprises Act and IFRs apply to:

Emergency services.
Certain non-emergency services.
Air ambulance services.

The prohibitions against balance billing include not billing or holding an individual responsible for more than the cost-sharing requirements when an individual receives emergency services from:

A nonparticipating emergency facility (including hospital outpatient departments that provide emergency services) or freestanding emergency department.
A nonparticipating provider providing emergency services at a participating facility (including hospital outpatient departments that provide emergency services) or freestanding emergency department.

A nonparticipating provider providing non-emergency items or services at a participating facility cannot bill or hold an individual liable for more than the cost-sharing requirements for the services unless the notice and consent requirements are satisfied. Air ambulance service providers cannot balance bill an individual for more than in-network cost-sharing amounts.

For more information on the No Surprises Act's requirements on providers and facilities, see Practice Note, Surprise Medical Billing for Providers and Facilities: Overview.

For more information on requirements under the No Surprises Act for air ambulance service providers, see Practice Note, Surprise Medical Billing for Providers and Facilities: Requirements for Air Ambulance Service Providers.

Notice and Consent Exception Process and Disclosure Requirements

The No Surprises Act and IFRs allow an individual to waive balance billing protections for certain post-stabilization and non-emergency services if the nonparticipating provider or facility has provided the individual with notice and the patient consents. This allows individuals to knowingly seek OON care if they agree in advance to being balance billed for the services. For example, an individual may opt to waive the protections if the individual wants to receive care from a specialist who is OON.

The notice and consent exception does not apply to:

Emergency services, except certain post-stabilization services.
Air ambulance services.
Certain ancillary services (whether provided by a physician or non-physician practitioner (NPP)).
Diagnostic services.
Items and services provided by:
- assistant surgeons;
- hospitalists (physicians that specialize in caring for hospitalized patients);
- intensivists (physicians that specialize in caring for critically ill hospitalized patients, most often in the intensive care unit);
- a nonparticipating provider if there is no participating provider able to provide the item or service at the facility; and
- a nonparticipating provider resulting from unforeseen, urgent medical needs that arise when an item or a service is provided by a nonparticipating provider or nonparticipating facility that satisfied the notice and consent process.

To meet the notice and consent requirements, a nonparticipating provider, a participating facility on behalf of a nonparticipating provider, or a nonparticipating emergency facility must obtain an individual's written consent to be treated and balance billed. An individual may revoke consent by notifying the provider or facility in writing before receiving the items or services. Nonparticipating providers and nonparticipating emergency facilities must timely notify health plans or insurers (payors) when the balance billing protections and the limitations on cost-sharing do not apply because the notice and consent process has been completed.

HHS has:

Developed model notice and consent forms that providers and facilities must customize, but cannot modify except as necessary as indicated in the forms or to reflect applicable state law. If a state develops notice and consent documents that meet the requirements, HHS allows the use of those state documents.
Implemented regulations regarding:
- the timing of when the notice form must be provided;
- signature requirements for consent;
- language access details; and
- timely notification requirements.

Providers (except air ambulance service providers) and facilities must provide disclosures to patients about the balance billing protections.

HHS has:

Developed a model notice that providers and facilities may, but are not required to, use to meet the disclosure requirements.
Implemented regulations for the format and content of the disclosure, the timing of when it has to be provided, and how it needs to be made available to patients.

For more information on the No Surprises Act's notice and consent process and disclosure requirements for providers and facilities, see Practice Note, Surprise Medical Billing for Providers and Facilities: Notice, Consent, and Disclosure Requirements.

Good Faith Estimates

The No Surprises Act requires providers and facilities to make good faith estimates of charges for items and services that are scheduled at least three days in advance or when requested by the patient. A good faith estimate is a notification of expected charges for a scheduled or requested item or service, including items or services that are reasonably expected to be provided in connection with the scheduled or requested item or service.

Providers and facilities must include in the good faith estimate:

The total expected charges for providing the scheduled item or service.
Any expected ancillary items or services reasonably expected to be provided with the scheduled item or service and the items or services reasonably expected to be provided by another provider or facility.
Expected billing and diagnostic codes.

Insured Individuals

HHS will not promulgate regulations regarding good faith estimates for insured individuals until 2022 and will defer enforcement of this requirement. The delay is for development of the technical infrastructure for providers and facilities to transmit necessary data to payors.

Uninsured and Self-Pay Individuals

If an individual is not insured or is self-pay (an individual who has insurance coverage for the item or service, but does not seek to submit a claim for the item or service) and requests a good faith estimate or wants to schedule an item or a service to be provided, the convening provider or facility must share the good faith estimate with the individual.

The convening provider or facility is the one that receives the initial request for the good faith estimate and who would be responsible for scheduling the primary item or service. A co-provider or co-facility provides items or services that are generally provided with the primary item or a service. Convening providers or facilities are required to provide good faith estimates that include estimates from co-providers or co-facilities.

The requirements to provide good faith estimates apply to more types of facilities than are impacted by the balance billing protections and include institutions in any state in which applicable state or local law provides for the licensing of the institution, such as:

Hospitals.
Hospital outpatient departments.
Critical access hospitals.
Ambulatory surgical centers.
Rural health centers.
Federally qualified health centers.
Laboratories.
Imaging centers.

Providers that must provide good faith estimates include:

Physicians.
NPPs.
Other health care providers acting within the scope of practice of their licenses or certifications under applicable state law.
Air ambulance service providers.

Providers and facilities must include in good faith estimates items and services related to:

Dental health.
Vision.
Substance abuse disorders.
Mental health.

HHS has implemented requirements for convening providers and facilities and co-providers and co-facilities, as well as the content, timing, method of provision, and retention of good faith estimates.

HHS will exercise enforcement discretion from January 1, 2022 through December 31, 2022 if a good faith estimate provided to an uninsured or a self-pay individual does not include expected charges from co-providers or co-facilities. This gives providers and facilities time to develop systems and processes to transmit the necessary information between entities.

For more information on the No Surprises Act's good faith estimates requirements, see Practice Note, Surprise Medical Billing for Providers and Facilities: Good Faith Estimates and the Patient-Provider Dispute Resolution Process.

Patient-Provider Dispute Resolution Process

The patient-provider dispute resolution process applies to uninsured or self-pay individuals who received a good faith estimate of the expected charges for scheduled or requested items or services and after being provided the item or service are billed by the provider or facility an amount substantially in excess of the estimate (an amount of at least $400 more than the total amount of expected charges). A selected dispute resolution (SDR) entity determines the amount the individual should pay the provider or facility.

HHS has implemented regulations detailing the patient-provider dispute resolution process, including:

How individuals can initiate the process.
Certification and selection of an SDR entity.
Determination of payment amount:
- if the parties settle during the process; or
- by the SDR entity through dispute resolution.
Administrative fees.

For more information on the patient-provider dispute resolution process, see Practice Note, Surprise Medical Billing for Providers and Facilities: Good Faith Estimates and the Patient-Provider Dispute Resolution Process.

Determination of OON Rates and the IDR Process

The No Surprises Act and the IFRs require that providers and facilities work with payors to determine the total amount that a payor must pay a nonparticipating provider or nonparticipating emergency facility for items and services subject to the balance billing requirements (see Recognized Amount Calculation).

There is an initial open negotiation process for the parties to attempt to determine a payment amount for OON items or services. If there is still disagreement after the open negotiation period, the parties use the IDR process to determine the payment amount (see IDR Procedures).

For more information on the No Surprises Act's IDR requirements, see Practice Note, Surprise Medical Billing for Providers and Facilities: Independent Dispute Resolution (IDR) Process.

Additional Considerations

Additional considerations for providers and facilities include:

Provider directories. The No Surprises Act requires providers and facilities to submit certain provider directory information to payors, including when:
- the provider or facility enters into or terminates a network agreement with a plan;
- there are material changes to the content of the provider directory information; and
- the payor requests this information or any time that the payor, provider, or facility determines to be appropriate.
Enforcement of provider and facility requirements. The No Surprises Act expects states to ensure providers and facilities comply with the balance billing requirements. If a state does not implement enforcement or HHS finds that a provider, a facility, or an air ambulance service provider violates the requirements, HHS can apply civil monetary penalties not to exceed $10,000 per violation.
The consumer complaint process. Consumer complaints can be submitted to HHS about violations of the requirements by providers, facilities, and air ambulance service providers. There is no statute of limitations on submitting a complaint.

Implementation and Compliance

Providers and facilities must comply with the new requirements by January 1, 2022.

Providers and facilities should:

Determine if and under what circumstances the new requirements apply.
Refrain from billing patients directly until a determination is made regarding whether the balance billing protections apply.
Avoid balance billing patients unless the notice and consent process is satisfied.
Adopt a decision-making process regarding when it is financially prudent to accept a payor's initial payment as payment in full to reduce administrative costs by avoiding the open negotiation period and the IDR process.
Create a cross-functional implementation team, including representatives from legal, compliance, billing, finance, operations, the provider network, and information technology to:
- create and update relevant policies, standard operating procedures, and workflows;
- train frontline and billing staff;
- consider alternative options to decrease reliance on balance billing;
- analyze existing state laws to determine whether the requirements apply or are preempted; and
- track changes in requirements and revise processes as needed.

Surprise Medical Billing for Health Plans, Health Insurers, and Health Care Providers and Facilities Toolkit

The Surprise Medical Billing for Health Plans, Health Insurers, and Health Care Providers and Facilities Toolkit offers a collection of resources to assist providers and facilities and their advisors in complying with the surprise medical billing requirements. The Toolkit features a range of continuously maintained resources, including:

Surprise Medical Billing Requirements for Health Plans, Health Insurers, and Health Care Providers and Facilities | Practical Law