Requirements for the Surprise Billing Under the No Surprises Act

On July 1, 2021, the U.S. Departments of Health and Human Services (HHS), Labor, and the Treasury, as well as the Office of Personnel Management, issued interim final rules for Requirements Related to Surprise Billing; Part I (“Rules”). These Rules implement portions of the No Surprises Act, which was contained in the COVID-19 relief bill signed into law at the end of 2020 (see our article here). The Rules are intended to protect individuals from surprise medical bills. The published version of the regulations is available here.

The agencies indicated that these regulations are part of a series of regulations (thus why they are referred to as “Part I”) that will be issued implementing the No Surprises Act. Future regulations will address other provisions of the law, such as the transparency provisions. The agencies acknowledged that some of these regulations will not be published before the effective date of the various provisions of the law, which for most provisions is the first day of the plan year that begins on or after January 1, 2022. Until guidance is provided, group health plans are expected to comply with the statutory requirements using a reasonable, good-faith interpretation of the law.

The Issue Addressed by the Rules – Surprise Billing and Balance Billing

Generally, when a covered individual uses an out-of-network facility or provider, the group health care plan will not cover the entire amount billed. Even if the individual uses a network facility, it is possible that one or more providers working at the facility are not participating in the plan’s network, which can result in the individual being billed for the amount in excess of what the plan will pay.

This can result in a surprise medical bill from a health care provider when a covered person receives medical services from a provider or facility that, usually unknown to the individual, is a non-participating provider or facility with respect to the individual’s coverage. Surprise billing can come from both emergency and non-emergency care.

Surprise billing is also referred to as “balance billing.”  As used in the Rule, balance billing refers to the practice of out-of-network providers billing patients for the difference between:

  1. The provider’s billed charges, and
  2. The amount collected from the plan or issuer plus the amount collected from the patient in the form of cost-sharing (such as a co-payment, co-insurance, or amounts paid toward a deductible).

The No Surprises Act and the Rules seek to eliminate surprise/balance billing in certain limited situations (discussed below) by imposing certain requirements on group health plans, insurance issuers, and health care providers and facilities.

Key Outcomes

The No Surprises Act, as implemented by the Rules:

  • Prohibits surprise billing for emergency services. Regardless of where they are provided, emergency services must be treated as in-network without requirements for prior authorization.
  • Prohibits high out-of-network cost-sharing for emergency and non-emergency services. Patient cost-sharing, such as co-insurance or a deductible, cannot be higher than if an in-network doctor provided such services, and any co-insurance or deductible must be based on in-network provider rates.
  • Prohibits out-of-network charges for ancillary care (like an anesthesiologist or assistant surgeon) at an in-network facility in all circumstances.
  • Prohibits other out-of-network charges without advance notice. Health care providers and facilities must provide patients with a plain-language consumer notice explaining that patient consent is required to receive care on an out-of-network basis before that provider can bill at the higher out-of-network rate.

This document is provided for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Readers are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.

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