On Thursday, July 1, 2021, the Department of Labor (DOL) issued interim final rules governing the prohibition on surprise billing contained in the Consolidated Appropriations Act, 2021 (CAA). Under the CAA and these new rules, “surprise billing” is prohibited for plan years beginning on or after January 1, 2022.
A surprise bill is an unexpected bill from a health care provider or facility that occurs when a covered person receives medical services from a provider or facility that, usually unknown to that person, does not participate in their medical plan. Under the new rules, these surprise bills are no longer permitted for emergency services, services provided at an in-network facility by an out-of-network provider unless consent has been provided, and air ambulance services (the “protected services”).
What does this mean for participants?
Plan participants can still be billed for protected services, but their cost sharing responsibilities (i.e., copayments, coinsurance, and deductibles) will apply as if the protected services were provided in-network. Health plans will be required to pay any balance to the out-of-network facilities directly.
Additionally, these rules require that health plans:
- Cover emergency services without requiring prior authorization.
- Provide an explanation of benefits showing that participant cost-sharing for protected services was based on in-network rates.
- Count any amounts participants pay towards protected services provided out-of-network towards their in-network deductibles and out-of-pocket limits.
- Make a notice that explains the surprise billing rules publicly available. The regulations include a template for this notice, which must be posted on the plan’s public website and be included with each explanation of benefits for protected services.
How is emergency care defined?
Emergency care is defined broadly for purposes of these rules. Specifically, emergency services include:
- An appropriate medical screening to determine if an emergency medical condition exists; and
- Further medical examination and treatment to stabilize the individual.
These services also expressly include:
- Pre-stabilization services provided after the patient is moved out of the emergency department and admitted to the hospital; and
- Post-stabilization services, unless:
- The attending emergency physician or treating provider determines the patient can travel using nonmedical or nonemergency medical transportation, and the patient can travel to an available participating provider or facility located within a reasonable travel distance taking into account the patient’s medical condition;
- The provider or facility satisfies the notice and consent criteria (described below);
- The patient (or their authorized representative) is in a condition to provide informed consent under applicable state law; and
- Any other requirements or prohibitions that exist under applicable state law are met.
The new rules also limit a plan’s ability to deny emergency claims. Specifically, they provide that plans may not automatically deny emergency claims based on a list of final diagnosis codes. Instead, plans must review claims on a case-by-case basis to determine if the “prudent layperson” standard has been met before denying an emergency services claim. Under this standard, a claim for emergency services must be covered if treatment is sought due to:
“A medical condition [including mental health or substance use disorders] of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in a condition…(1) placing the health of the individual (or with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, (2) serious impairment of bodily functions, or (3) serious dysfunction of any bodily organ or part.
Also notable for these purposes, plans are prohibited from:
- Restricting coverage based on the time elapsed from the onset of symptoms until when care is sought; and
- Denying coverage for qualifying emergency services based on other general plan exclusions.
What will health plans have to pay providers?
The new rules do not require health plans to pay providers based on billed charges. Instead, they introduce a complex set of rules for determining what the in-network rate “should be” for out-of-network services. The rules are similar but not identical for purposes of determining participant cost-sharing versus provider payments.
For participant cost sharing, the “in-network rate” is:
- The amount determined by an applicable All-Payer Model Agreement. These are agreements that certain states, most notably Maryland, have reached with the Centers for Medicare & Medicaid Services (CMS) that set specific pricing which all payers in the state abide by in paying for certain services; or
- If no All-Payer Model Agreement exists, the amount determined under a specified state law; or
- If neither of the above applies, the lesser of the actual billed charge or the “qualified payment amount,” which is generally the plan’s median contracted rate.
For purposes of paying providers and facilities:
- Plans have 30 days from the date they receive a bill from an out-of-network provider/facility to send a payment or deny the claim;
- If the provider/facility does not accept the plan’s payment as payment in full, the parties have 30 days to resolve the matter privately.
- If the plan and provider/facility do not resolve the billing issue within 30 days, the plan must pay the provider/facility based on the “in-network rate” calculation described above for determining participant contributions.
- If the provider/facility does not accept this additional payment as payment in full, the final payment amount will be determined by an independent dispute resolution (IDR) entity.
These rules for determining in-network rates will add significant complexity to claims administration surrounding the protected services. There are many outstanding questions related to the IDR process that will be addressed in forthcoming regulations.
What are the notice and consent rules, and how do they work?
As noted above, post-stabilization services can revert to out-of-network rates if certain conditions are met and the provider/facility gives notice that they are out-of-network and receive informed consent to continue treatment. Certain out-of-network providers at in-network facilities can also charge out-of-network rates if they follow these procedures.
For these purposes, the provider/facility notice must:
- State that the provider/facility is out-of-network;
- Include a good faith estimate of the amount that will be charged for the services;
- State that the estimated charges do not constitute a contract;
- Provide information about whether prior authorization or other care management requirements may apply; and
- State that the patient is not required to provide consent and that they may instead seek treatment from an in-network facility/provider.
To be valid, the notice must:
- Be provided separately from, and not attached to or incorporated into any other documents;
- Be written and provided on paper, or, as practicable, electronically as selected by the patient; and
- Be provided:
- At least 72 hours before the appointment (if the appointment is made 72 hours or more in advance); or
- On the day the appointment is made and at least 3 hours before services are rendered (if the appointment is made less than 72 hours before services are to be provided).
The regulation does not include a model consent notice but specifies that the federal Department of Health and Human Services will release one shortly.
For a consent to be valid, it must:
- Be provided voluntarily;
- Follow the standard format provided by the Department of Health and Human Services;
- Be signed (including by electronic signature) by the patient or their authorized representative;
- Meet applicable language access requirements;
- Acknowledge that the patient has been notified that any payments made by them may not accrue towards their in-network deductible or out of pocket maximum;
- State that the patient agrees to be treated by an out-of-network provider/facility and understands they may be balance billed;
- Include the date notice was provided and the date and time at which the consent was signed; and
- Be provided to the patient in-person, or through mail or e-mail as selected by the patient.
Even if these complex notice and consent procedures are followed, surprise billing protections cannot be waived relative to:
- “Ancillary services,” which include:
- Items or services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology (whether provided by a physician or non-physician practitioner);
- Items or services provided by assistant surgeons, hospitalists, and intensivists;
- Diagnostic services, including radiology and laboratory services; and
- Items or services provided by an out-of-network provider if no in-network provider can provide such item or service at the facility.
- Items or services furnished as a result of unforeseen, urgent medical needs that arise during the course of treatment;
- Items or services by a provider/facility not listed in the notice; or
- Consent that is withdrawn in writing before an item or service has been provided.
Providers/facilities that do provide notice and receive consent must notify the patient’s health plan so that claims can be administered appropriately and provide the plan with a signed copy of the written notice and consent documents.
What are the next steps for plan sponsors?
It is admittedly a hectic year for health plan sponsors and their service providers—and requests have been made to extend many of the forthcoming deadlines impacting plans. Note, however, that considering the issuance of the interim final rules described above, it is improbable that the implementation of the surprise billing prohibition will be delayed.
For fully insured plans, carriers will be responsible for ensuring compliance with these new rules, and no direct action is needed at this time. Self-funded plan sponsors, however, are legally responsible for ensuring compliance. To that end, plan sponsors should work closely with their claim’s administrators in the coming months to ensure the plan is in a position to comply on a timely basis and that plan participants will get appropriate notifications.
 These rules do not apply to health reimbursement arrangements or other account-based plans; plans consisting solely of excepted benefits; short-term, limited duration insurance; or retiree-only plans. The rules do apply to traditional indemnity plans that do not have networks of providers or facilities. This means the rules will apply to reference-based pricing plans. However, there are many open questions on how this will work and the regulators have requested public comments on this issue.
 The guidance seeks additional public comments on this rule as it is the intent of the regulators to add additional requirements related to how an individual’s location, social risk, and other risk factors may impact their access to transportation. For example, the regulators note that individuals may not have the ability to pay for a taxi, may not have access to a car, may not be able to safely take public transportation due to their medical condition, or may not have public transportation available.
 For example, emergency claims for a pregnant dependent cannot be denied based on a general plan exclusion for dependent maternity care.
 For this purpose, self-funded plans subject to ERISA are permitted to “opt-in” to an All-Payer Agreement or a formula established by state law. Alternatively, they can simply calculate the in-network amount based on the lesser of the billed charges or the qualified payment amount.
 All references to the patient in this section apply to the patient or their authorized representative.
 For post-stabilization services, the notice must also include a list of in-network providers/facilities who are able to furnish the items or services involved.
 Notice and consent materials must be made available in the 15 most common languages in the geographic region in which the applicable facility is located.