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July 6, 2021

Our take: Here's what's in CMS' 411-page plan to ban surprise medical bills

Daily Briefing

    CMS on Thursday released an interim final rule as part of the No Surprises Act which will effectively ban surprise medical billing for emergency services, as well as out-of-network cost-sharing for both emergency and non-emergency services.

    Radio Advisory: The biggest transparency and surprise billing policies coming your way


    According to Politico Pro, this interim final rule is the first of a series the Biden administration will release to enforce the new law. The rest of the rules are expected to be released before a January 1, 2022, deadline for the law's provisions to take effect.

    The interim rule applies to "providers, air ambulance providers, group health plans, health insurance issuers and Federal Employees Health Benefits Program carriers," Modern Healthcare reports. The rule do not apply to ground ambulance providers.

    Most of the rule's provisions will not take effect until January 1, 2022, but the rule itself technically takes effect in 60 days. CMS is accepting comments on the rule through September 1.

    Details on the rule

    Under the interim rule, health plans covering emergency services will no longer be permitted to require prior authorization for those services and will be required to pay their part regardless of whether the health care provider is in-network or an emergency facility.

    Insurers will also not be allowed to charge patients out-of-network rates for "ancillary" care, in which an out-of-network provider treats a patient at an in-network facility. All cost-sharing for emergency services will also have to count toward a patient's in-network deductible and out-of-pocket maximums, according to the rule.

    In addition, insurers will have to calculate out-of-pocket expenses based on state law or a state's all-payer model. "If neither … apply, the lesser amount of either the billed charge or the qualifying payment amount, which is generally the plan's or issuer's median contracted rate" will apply, according to CMS.

    Similarly, if state laws do not say how much insurers should pay for a service, providers and insurers will need to agree upon an amount or do so through a dispute-resolution process. According to Modern Healthcare, the Biden administration is still determining how such a dispute-resolution process would work, although the No Surprises Act in broad terms gives providers and insurers 30 days to agree on a price for medical services rendered. If they cannot agree, they must enter arbitration, during which an arbitrator will pick between the final offers provided by each side.

    In addition, the rule states that if a patient elects to see an out-of-network provider, the provider will not be permitted to bill the patient the balance unless they have notified the patient that they are out-of-network and given the patient an estimate of charges in advance. The patient would then need to consent to paying higher rates for out-of-network care.

    "No patient should forgo care for fear of surprise billing," HHS Secretary Xavier Becerra said in a statement. "Health insurance should offer patients peace of mind that they won't be saddled with unexpected costs. The Biden-Harris Administration remains committed to ensuring transparency and affordable care, and with this rule, Americans will get the assurance of no surprises." (Brady, Modern Healthcare, 7/1; Luhby, CNN, 7/1; Armour, Wall Street Journal, 7/1; Roubein, Politico Pro [subscription required], 7/1)


    Advisory Board's take

    First regulation provides needed clarity—but leaves some questions unanswered

    Heather BellBy Heather Bell, Senior Consultant

    The Biden administration on Thursday released the first of three rules to implement the No Surprises Act—and while the rule leaves several questions unanswered, it offers providers and insurers more clarity on key definitions.

    For example, the rule more clearly defines emergency and post-stabilization services that will be protected from balance billing. The rule also details the methodology insurers will use for calculating the qualifying payment amount—which will be used to determine patients’ cost-sharing—as well as the information related the qualifying payment amount that insurers must be prepared to share with providers.

    While we're still waiting for regulations on the newly created independent dispute resolution (IDR) process for providers and insurers, the rule offers more clarity on the steps providers and insurers must take to notify patients about out-of-network care costs, as well as steps that must be completed before providers and insurers can enter the IDR process. For example, the law allows certain eligible out-of-network providers to balance bill patients if they receive the patient's written consent. This consent form must be provided at least 72 hours before the date of service, and the rule specifies requirements related to the notice. Providers should pay close attention to this requirement and their transparency practices and find ways to alleviate tension the process could create with patients. In addition, the rule gives insurers 30 days after the provider submits a bill—and any applicable consent forms—to send "an initial payment or notice of denial of payment."

    But there are a few policies that the Biden administration is collecting comment on before it makes a final proposal. For example, the Biden administration included requests for comment on whether to set a minimum payment rate and how such a rate should be defined and calculated, alternative approaches to calculating cost-sharing for out-of-network air ambulances, and additional ancillary services that should be barred from balance billing.  

    As we await future rulemaking, providers and insurers should take the opportunity to share feedback with the departments on the interim final rule's proposals. If you haven't yet, health care organizations should evaluate their current exposure by auditing billing data to identify how much of your revenue comes from surprise billing.

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