New Federal Rule Sets Limits on Balance Billing and Cost-Sharing for 2022

A new federal law sets up protections from surprise billing and excessive cost-sharing for consumers receiving health care items and services. The Department of Health and Human Services (HHS), the Department of Labor and the Department of the Treasury published the interim final rule with comment period (IFC), called “Requirements Related to Surprise Billing; Part I,” on July 1 as part of the Consolidated Appropriations Act of 2021. Health plans and providers need to comply with most of these changes by Jan. 1, 2022.

General Provisions and Requirements

The IFC implements provisions of the No Surprises Act as follows:

• Applies to group health plans, health insurance issuers offering group or individual health insurance coverage, and carriers in the FEHB Program. It protects against balance billing and out-of-network cost sharing for emergency services, non-emergency services furnished by non-participating providers at certain participating health care facilities, and air ambulance services furnished by non-participating providers of air ambulance services.
• Prohibits non-participating providers, health care facilities, and providers of air ambulance services from balance billing participants, beneficiaries and enrollees in certain situations. These providers and facilities can balance bill individuals if certain notice and consent requirements are met.
• Requires certain health care facilities and providers to give disclosures of federal and state patient protections against balance billing.
• Recodifies certain patient protections that first appeared in the Affordable Care Act and that the No Surprises Act applies to grandfathered plans.
• Sets forth complaint processes with respect to violations of the protections against balance billing and out-of-network cost sharing under the No Surprises Act.

The IFC rules require emergency services to be covered without prior authorization, without regard to whether the provider is a participating provider or emergency facility with respect to the services, and without regard to plan terms or coverage conditions other than the exclusion of coordination of benefits or a permitted affiliation or waiting period. 

Cost-Sharing Amounts

This IFC states that consumer cost-sharing amounts for emergency services provided by out-of-network emergency facilities and out-of-network providers, and certain non-emergency services from out-of-network providers at certain in-network facilities, must be calculated based on one of the following amounts:

• An amount specified by an applicable All-Payer Model Agreement under Section 1115A of the Social Security Act
• If there is no such applicable All-Payer Model Agreement, an amount determined under a specified state law
• If neither of the above 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

Out-of-Network Rates

Under this IFC, surprise billing for items or services covered by the rule generally is not allowed. The total amount paid to the provider or facility, including cost sharing, is based on the following:

• An amount determined by an applicable All-Payer Model Agreement under Section 1115A of the Social Security Act
• If there is no such applicable All-Payer Model Agreement, an amount determined by a specified state law
• If there is no such applicable All-Payer Model Agreement or specified state law, an amount agreed on by the plan or issuer and the provider or facility
• If none of these three conditions apply, an amount determined by an independent dispute resolution (IDR) entity

There are several exemptions to the limits on cost sharing and the bans on balance billing. For example, these limits do not apply to certain post-stabilization services or to certain non-emergency services performed by non-participating providers at participating facilities, as long as the provider or facility provides a notice to the patient and gets their consent to waive the balance billing protections. 

Notice to Consumers

This IFC also requires that certain health care providers and facilities make publicly available, post on a public website, and provide a one-page notice to patients about:

• The requirements and prohibitions that apply to the provider or facility under Sections 2799B-1 and 2799B-2 of the PHS Act and their implementing regulations
• Applicable state balance billing requirements
• How to contact appropriate state and federal agencies if the individual believes the provider or facility has violated the requirements described in the notice

To reduce burden and help providers, plans and facilities comply with these requirements, the departments will issue a model disclosure notice. Use of the model notice in line with the accompanying instructions will count as good faith compliance, as long as they also meet all other applicable requirements.

Effective Date

This IFC generally applies to group health plans and health insurance issuers for plan and policy years beginning on or after Jan. 1, 2022. The HHS-only regulations that apply to health care providers, facilities, and providers of air ambulance services kick in on Jan. 1, 2022. The departments intend to issue regulations soon regarding IDR entities and the IDR process.

Please contact Jeff Moore or any member of Phelps’ Health Care team if you have questions or need compliance advice and guidance.