- The Biden administration on Thursday issued a highly anticipated regulation codifying surprise billing legislation passed last year, thought to be one of the most significant consumer protections in healthcare in a decade.
- The interim final rule, issued through HHS, the Labor and Treasury departments and the Office of Personnel Management, bans surprise out-of-network and balance billing beginning in 2022 for people in employer-sponsored or individual marketplace plans.
- Notably, the rule does not set a "fair price," or a baseline for arbiters to consider in determining how much a provider should be reimbursed for out-of-network services. HHS officials said on Thursday it was the first of several regulations to be issued this year implementing the requirements of the law.
Surprise billing occurs when a patient inadvertently receives out-of-network medical care at an in-network facility. The practice can result in extremely expensive unexpected bills that can be financially devastating for Americans: Two-thirds of all bankruptcies filed in the U.S. are tied to medical expenses.
And it's is unfortunately a common occurrance. Research has found that among large group health plan enrollees, one in five emergency room visits and one in six admissions to an in-network hospital led to a surprise medical bill.
Despite heavy industry lobbying from hospitals and insurers, Congress was able to pass bipartisan legislation barring this practice in December, viewed as the most significant consumer protection in healthcare since the Affordable Care Act.
The No Surprises Act prohibits surprise out-of-network billing beginning in 2022. The legislation requires plans to apply in-network cost sharing to surprise medical bills and prohibits out-of-network providers from balance billing patients for the unexpected costs. It resolves any disputes between payers and providers over out-of-network bills via third-party arbitration, a method preferred by providers.
Insurers hoped instead to tie payments to in-network rates in the eventual fix, which had been deliberated on Capital Hill since 2018. But doctors and physician staffing companies, many backed by deep-pocketed private equity groups, spent millions lobbying against the idea.
Insurers and providers alike have been eagerly waiting additional rulemaking from HHS to clarify details on the arbitration process.
The interim final rule says the total amount paid to a provider will be based on a state's all-payer model agreement — a rate-setting system applicable to all payers — and if a state doesn't have one, an amount determined by state law. If both are missing, the provider will be reimbursed an amount agreed to by the plan and the provider, or — if all three are lacking — an amount determined by the arbiter.
The 400-page-plus regulation issued Thursday failed, however, to set a baseline for arbiters to consider. That baseline is key for both providers and payers, as it'll determine how much reimbursement a provider eventually nets.
Biden administration officials said HHS would issue regulations "soon" regarding what entities would serve as arbiters and giving more details on the process.
"We certainly have to work on this whole issue of arbitration, and the cost. There will be a need to make further clarifications on definitions," HHS Secretary Xavier Becerra told reporters Thursday.
The No Surprises Act does prohibit the arbiter from taking Medicare and Medicaid rates into consideration when deliberating an out-of-network charge, a win for hospitals and a loss for insurers.
However, arbiters were told to take the median in-network rate for an item or service into account, and they're banned from considering providers' billed charges, which are often significantly higher than what a patient eventually pays.
For patients, the rule limits cost-sharing to in-network levels, requires it to count toward any deductible and prohibits balance billing. The rule says any cost-sharing for out-of-network services must be based on an applicable all-payer agreement, state law or — if neither exist — whichever is a lower amount between the billed charge or the plan's median contracted rate.
The interim final rule also requires providers to make a one-page notice publicly available about the new regulations prohibiting balance billing, and any state prohibitions or limitations.
Providers also have to inform patients how to contact state and federal agencies if they believe they've received an illegal surprise bill.
In limited cases, a provider can inform a patient about potential out-of-network care, and — if a patient consents to the out-of-network services and any extra costs — can bill them. However, the exception doesn't apply in most situations where surprise bills are likely to happen, like non-emergency specialist services, such as anesthesiology, provided at an in-network facility.
The interim final rule is the first in a series to stand up the No Surprises Act.
Later this year, the Biden administration plans to issue regulations regarding the independent dispute resolution process, the patient-provider complaint and dispute resolution process and price comparison tools, according to the rule.
Under the law, the federal government has the authority to fine up to $10,000 per billing violation. It protects patients for services rendered in hospitals and by doctors and the large majority of providers, but left out ground ambulances.
Critics said at the time it was a notable oversight, as a large proportion of emergency rides result in surprise bills. Slightly more than half of emergency ground ambulance rides resulted in an out-of-network bill, according to a recent analysis from the Kaiser Family Foundation.
Comments on the interim final rule are due 60 days after its publication in the Federal Register.