Surprise Medical Billing Requirements for Group Health Plans and Health Insurers: Key Takeaways and Compliance Considerations | Practical Law

Surprise Medical Billing Requirements for Group Health Plans and Health Insurers: Key Takeaways and Compliance Considerations | Practical Law

Enacted in December 2020, the No Surprises Act (NSA) (part of the Consolidated Appropriations Act, 2021 (CAA-21)) aims to reduce the potentially devastating financial burden to individuals of unexpected medical bills from out-of-network health care providers and facilities. Group health plans, health insurers, and health care providers and facilities must understand the surprise medical billing requirements, ensure compliance beginning in 2022, and prepare for potential enforcement activity by the federal administrative agencies.

Surprise Medical Billing Requirements for Group Health Plans and Health Insurers: Key Takeaways and Compliance Considerations

by Practical Law Employee Benefits & Executive Compensation
Law stated as of 03 May 2022 • USA (National/Federal)
Enacted in December 2020, the No Surprises Act (NSA) (part of the Consolidated Appropriations Act, 2021 (CAA-21)) aims to reduce the potentially devastating financial burden to individuals of unexpected medical bills from out-of-network health care providers and facilities. Group health plans, health insurers, and health care providers and facilities must understand the surprise medical billing requirements, ensure compliance beginning in 2022, and prepare for potential enforcement activity by the federal administrative agencies.
Enacted in December 2020, the No Surprises Act (NSA) (part of the Consolidated Appropriations Act, 2021 (CAA-21)) includes numerous protections intended to reduce the consequences of surprise medical billing for individuals who receive emergency medical care and certain related services (Pub. L. 116-260, 134 Stat. 1182 (2020)). Before the NSA became effective, surprise medical billing commonly occurred when covered participants in health plans received health care in situations where the individuals had little or no ability to choose a participating (in-network) provider or facility. Surprise billing could therefore lead to unexpected bills for health care services from a provider or facility that an individual did not realize was out-of-network (OON) regarding the individual's plan. These OON rates typically were higher than a plan's contracted rates for in-network services.
This Article addresses key takeaways and compliance requirements regarding the NSA's surprise medical billing protections.

Key Takeaways Regarding the NSA's Surprise Medical Billing Protections

The NSA imposes significant compliance obligations for group health plans and health insurers (for more information on group health plan compliance, see Group Health Plans and Health Insurance Toolkit). The NSA restricts certain surprise medical billing practices for group health plan participants who receive services at OON health provider facilities in emergency contexts. The legislation also restricts surprise medical billing for services furnished by health providers at in-network facilities and includes protections involving air ambulance services. The NSA's surprise medical billing protections apply for plan years beginning on or after January 1, 2022. The NSA also imposes limits on OON cost-sharing for health plans.

Surprise Medical Billing Was Part of Broader Health Plan Legislation

The requirements for health plans and insurers under the NSA and CAA-21, which include surprise medical billing and numerous other requirements, were among the most far-reaching changes for health plans and insurers since the Affordable Care Act's (ACA's) enactment in 2010. The NSA's surprise medical billing provisions apply to group health plans and health insurers through amendments to the Employee Retirement Income Security Act of 1974 (ERISA), the Internal Revenue Code, and the Public Health Service Act (PHSA). As a result, health plans and insurers must navigate an evolving regulatory and litigation landscape as they carry out compliance efforts for the NSA's surprise medical billing requirements.
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The NSA also includes:
  • Initial payment requirements for emergency services and certain non-emergency services provided by OON providers and facilities.
  • A federal independent dispute resolution (IDR) process for use by plans, insurers, and OON providers and facilities to resolve disputes about rates for items or services provided OON.
  • Requirements for providers and facilities to provide individuals with good faith estimates of charges before providing certain types of items and services (see Practice Note, Surprise Medical Billing for Providers and Facilities: Good Faith Estimates and the Patient-Provider Dispute Resolution Process).
  • A patient-provider dispute resolution process for uninsured and self-pay individuals to use for billing disputes with providers and facilities concerning charges in excess of good faith estimates.
For more information on the surprise medical billing requirements for plans, insurers, and providers, see Surprise Medical Billing for Health Plans, Health Insurers, and Health Care Providers and Facilities Toolkit.

Meaning of Surprise Medical Billing

Before the NSA, surprise medical billing commonly occurred after a plan participant received services at an OON health care facility in emergency situations. Surprise billing also could occur when an individual was:
  • Taken by ambulance to an OON facility.
  • Transported by an air ambulance service provider that was OON due to limited network participation.
Under the pre-NSA rules, plans or insurers could either:
  • Pay an amount for OON services that was substantially less than the billed amount.
  • Decline to reimburse the charges altogether.
OON providers and facilities also could charge individuals the difference between amounts that:
  • The provider charged for the service.
  • The plan or insurer paid (in addition to cost-sharing paid by the participant).
This practice is known as balance billing.
Although the ACA imposed cost-sharing requirements on group health plans in the emergency services context, those rules (which were replaced by the NSA's requirements) did not eliminate balance billing (see Practice Note, Patient Protections and Clinical Trials Under the ACA and CAA-21: ACA Patient Protections for Coverage of Emergency Services). In addition, while some states have enacted balance billing protections, these laws (by operation of ERISA's broad preemption rule) apply primarily to participants in insured health plans but not to self-funded arrangements (see Practice Note, ERISA Litigation: Preemption of State Laws: Overview).
The NSA generally prohibits surprise medical billing in these and other situations. In its place, the NSA establishes a structure under which participants pay cost-sharing for covered items and services based on an amount called the qualifying payment amount (QPA) and cannot be charged for additional amounts (see Practice Note, Surprise Medical Billing for Group Health Plans: Qualifying Payment Amounts (QPAs)).

Implementing Guidance Under the NSA

Beginning in 2021, the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (collectively, Departments) issued several sets of implementing regulations and related guidance under the NSA.
In July 2021, the Departments issued interim final regulations (IFRs) for group health plans, health insurers, providers, and facilities that address:
In September 2021, the Departments issued proposed regulations that would implement the NSA's air ambulance services requirements (among other provisions) (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 procedures for plans, insurers, and providers regarding payment disputes over emergency services and certain other services under the NSA. For more information on these IDR procedures, see Practice Notes:
In addition to implementing regulations for the NSA's requirements, the Departments issued related guidance and several model notices.

Items and Services Covered by the NSA

The NSA includes protections against balance billing and OON cost-sharing regarding:
  • Emergency services.
  • Non-emergency services delivered by OON health care providers at certain participating (in-network) health care facilities.
  • Air ambulance services provided by OON providers.
For more information on NSA-covered items and services, see Practice Note, Surprise Medical Billing for Group Health Plans: Overview.
However, for non-emergency, non-ancillary services delivered by OON providers at participating facilities, a provider may ask for the participant's consent to waive the NSA's surprise medical billing protections.

IDR Procedures for Surprise Medical Billing

The NSA established a federal IDR process that plans, insurers, and OON providers may use to determine the OON rate for NSA-covered services. Before accessing the IDR process, a plan or insurer and provider must engage in a 30-business-day open negotiation period to reach agreement on the OON rate. If open negotiations fail, the parties may initiate the IDR process, under which an IDR arbitrator determines the payment amount by choosing either an offer amount proposed by the plan or a competing offer proposed by the provider. The arbitration is baseball style, meaning that only one party's offer is chosen.

Qualifying Payment Amounts (QPAs) Are Central to the NSA's Structure

The QPA requirements were addressed in lengthy implementing regulations issued in July 2021, which included (among other topics) complicated rules for how the QPA is calculated and inflation-adjusted over time, and rules for consumer complaints (see Practice Note, Surprise Medical Billing for Group Health Plans: Qualifying Payment Amounts (QPAs)).
The QPA is a key concept under the NSA. For example, how much a plan participant pays for cost-sharing concerning NSA-covered services is based not on the plan's OON cost-sharing but on an amount that is generally the lesser of the QPA (that is, the plan's median in-network rate for the service) and the amount billed by the provider (subject to exceptions). Also, in choosing which party's payment offer will govern, implementing regulations included a presumption that the QPA is the correct OON rate for the medical item or service involved. However, this rebuttable presumption was challenged in litigation brought by health providers and invalidated in a February 2022 district court ruling (see Legal Update, Texas District Court Vacates Rebuttable Presumption Under No Surprises Act Regulations).

Complying with Surprise Medical Billing Requirements

The NSA's surprise medical billing rules impose extensive compliance obligations on group health plans and health insurers and, derivatively, their third-party service providers.

Update Plan Disclosures on Surprise Medical Billing Protections

Effective beginning January 1, 2022, plans and insurers must make disclosures regarding the NSA's surprise medical billing requirements. These disclosures must be publicly available, posted on the plan's or insurer's public website, and included in each explanation of benefits (EOB) for any item or service to which the NSA's surprise medical billing requirements apply (see Standard Document, Surprise Medical Billing for Group Health Plans and Health Insurers: Plain Language Disclosure).

Ensure That Third-Party Administrators (TPA) Have Bandwidth for NSA Work

Self-funded health plans that rely on third-party administrators (TPAs) to assist with plan compliance need to coordinate with their TPAs regarding the NSA. For example, plans will need to determine whether their TPAs can timely perform QPA calculations and implement (and administer as necessary) the IDR procedures.

Establish IDR and QPA Strategies

Plans with TPAs should also discuss how they will approach making initial payments for NSA-covered items or services. For example, paying a low payment amount (relative to the applicable QPA) may increase the likelihood that a provider will initiate the IDR process. If a plan or insurer loses the IDR process (that is, its payment offer is not accepted by the IDR arbitrator), the plan or insurer must pay the IDR arbitrator's fees for the IDR process.

Update Plan Documents, Including Claims Procedure Requirements

The surprise medical billing rules require updates to governing health plan documents, including summary plan descriptions (SPDs), and open enrollment materials (see Summary Plan Description (SPD) Toolkit). Plan descriptions of emergency services and OON coverage likely will require amending for the NSA, and plan claims procedures should address the NSA's IDR procedures.

Expect Enforcement Activity from Federal Administrative Agencies

The Departments have adopted procedures to audit plans and insurers regarding QPA compliance, with enforcement authority divided among the DOL, HHS, and Treasury. The Departments also established complaint procedures for receiving and resolving complaints (including from participants) that a plan or insurer may be noncompliant with the NSA's surprise medical billing rules. Informally, the DOL has indicated that their enforcement efforts (beginning in 2022) may focus on whether plans and insurers are compliant with the NSA's requirements for QPA calculations, as implemented.