The Consolidated Appropriations Act of 2021 (the “Act”), passed by Congress in late December of 2020, contains provisions intended to protect patients from “surprise” medical bills. Surprise medical bills occur when a patient receives care at a facility that is in the patient's insurance plan network from a provider that is not in the patient's health insurance plan network. Patients often assume that all providers providing medical care at an in-network facility are also in-network. However, that is often not the case and under those circumstances, the patient may receive a "surprise" bill that is much higher than the patient expects due to the provider's out-of-network status.
Surprise medical bills can also occur when a patient has not been provided clear pricing by an out-of-network provider. Unlike in-network providers, out-of-network providers are not contractually prevented from "balance-billing" patients for the amount of their bills not covered by the patient's group health plan or insurance policy. While various states have passed laws to try to prevent surprise medical bills, the Act imposes some solutions to this problem that will apply on a national level to health care providers and group and individual health insurance plans. The Act's surprise billing and price transparency requirements are generally effective beginning on or after January 1, 2022.
Some of the specific provisions of the legislation are as follows:
- In-Network Treatment of
Out-of-Network Emergency Services. Under the Act, if an
insurance plan covers any benefits for services in an emergency
department (hospital based or free-standing), then the plan must
cover these services without the need for any prior authorization
determination and without regard as to whether the health care
provider furnishing the services is an in-network or out-of-network
provider or facility. In addition, if a plan participant receives
services from an out-of-network provider or facility, the plan may
not impose any restrictions or limitations that are more
restrictive than those that apply to emergency services received by
in-network providers and facilities, and the patient's
cost-sharing requirements (such as copayments and coinsurance)
cannot be greater than the cost-sharing requirements for in-network
providers and facilities. The emergency services subject to these
requirements include a medical screening examination, stabilization
of the patient's emergency medical condition, and in some
cases, outpatient observation or an inpatient or outpatient stay
with respect to the visit in which the services were
provided.
Significantly for health care providers, out-of-network providers and facilities cannot balance bill the patient for any amount above the patient's cost-sharing requirements. But once the provider submits its bill for services, the patient's insurance plan must make an initial payment to the provider, or deny the claim, within 30 days of the transmittal of the bill. The insurance plan must then pay the provider the "out-of-network rate" (minus the initial payment and any participant cost-sharing), which is either an amount set out in state law, an amount to which the plan and the provider agrees, or an amount established by an independent dispute resolution entity through an arbitration process.
- Out-of-Network Providers at
In-Network Facilities. In those situations where an
out-of-network provider provides non-emergency
services to a patient at an in-network facility (such as when an
out-of-network anesthesiologist provides services during a surgery
performed at an in-network hospital), the Act requires the
out-of-network provider (other than an ancillary provider, see
below) to give the patient a detailed written notice of the
provider's estimated out-of-network charges at least 72 hours
before services are rendered and obtain the patient's consent
to the out-of-network care. This notice must also contain
information that includes, among other things, a clear disclosure
that the patient can receive the care from an in-network provider
and, if the service is being provided at an in-network facility, a
list of in-network providers who can provide the services at the
facility. If these requirements are met and the patient consents to
the treatment, the provider can presumably balance-bill the
participant for any amounts not covered by the patient's health
plan.
The above notice and consent requirement does not apply to an ancillary service provider, which is an out-of-network provider that provides specified services at in-network facilities, as defined by the Act, such as professionals who provide services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology. In all cases involving ancillary out-of-network providers and in cases involving other out-of-network providers that do not comply with the notice and consent rules, neither the insurance plan nor the provider can require the patient to pay more than the plan's usual cost-sharing for an in-network provider. In such cases, the plan must follow the prompt payment rules described above that apply to out-of-network emergency services. Any cost-sharing amounts paid by the patient must count toward his or her in-network deductible and maximum out-of-pocket limit.
- Other Patient
Protections. The Act also includes a number of other
patient protections that discourage surprise billing and encourage
more transparency in pricing for medical services, including:
- Surprise Billing Notices. Group health plans and health care providers and facilities must post on their websites and provide to plan participants notice regarding the protections against surprise billing described above, any additional protections under applicable state law, and information on contacting state and federal agencies if the individual believes the provider or facility has violated the surprise billing requirements.
- Air Ambulance Surprise Billing. The Act imposes surprise billing requirements that are similar to those described above to out-of-network air ambulance providers, which have been subject to severe criticism for excessive charges to plans and patients. This provision protects patients who will not have to pay more than in-network cost sharing and will have that cost sharing counted toward their in-network deductible and out-of-pocket maximum. Out-of-network air ambulance providers are prohibited from balance billing participants. Air ambulance providers and health plans will also be required to report cost and claims data to the federal government to provide more transparency in air ambulance charges to patients and plans. The Act does not impose similar requirements on ground ambulance providers, but it does establish an advisory committee for the purpose of reviewing options to improve the disclosure of charges and fees for ground ambulance services, better inform consumers of insurance options for such services, and protect consumers from balance billing.
- Cost Information on ID Cards. Health insurance plans must include the following information, in clear writing, on any physical or electronic plan or insurance identification card issued to participants: (a) any deductible applicable to such plan or coverage; (b) any out-of-pocket maximum limitation applicable to such plan or coverage; and (c) a telephone number and internet website address through which the individual may seek consumer assistance information.
- Advance Notice of Estimated Costs and Other Information. Health care providers and facilities are required to provide a notice to a health plan at least three days before an item or service is to be provided to an individual. The notice must include a good faith estimate of the expected charges for furnishing the item or service, with the expected billing and diagnostic codes for any such item or service. If the individual is not covered by a health plan, the notice must be provided to the individual. Generally, within one day of receiving the notice, the health plan must provide a notice to the patient with information that includes (but is not limited to): (a) whether the provider or facility is in-network and, if so, the contracted rate for the item or service and, if not, where the patient can get information on in-network providers that furnish the same item or service; (b) the provider's good faith estimate; (c) a good faith estimate of the amount the plan is responsible for paying and the patient's cost-sharing for the item or service; (d) a good faith estimate of the amount that the patient has incurred toward meeting the limit of his or her financial responsibility under the plan or coverage as of the date of the notification; and (e) whether the item or service is subject to any medical management requirements, such as pre-authorization or step therapy.
- Price Comparison Tools. Health plans must offer their participants price comparison guidance by telephone and make available a price comparison tool on their websites.
- Updating Provider Directories. Plans must update their in-network provider directories at least every 90 days and respond to requests from participants regarding a provider's network status within one day of the request. If a participant believes that an out-of-network provider is in-network because the directory information was faulty or the plan failed to respond to a request regarding a provider's network status, the plan must treat the provider as in-network for participant cost-sharing purposes.
- Restricting Gag Clauses. The Act places restrictions on so-called "gag clauses" in provider network contracts. Group health plans are prevented from entering into agreements with providers, networks, third-party administrators, or other service providers that restrict plans from providing provider-specific cost or quality of care information or data through consumer engagement tools or other means to referring providers, plan sponsors, participants, or eligible employees. While there can still be protections from widespread public disclosure, this will be a significant change to network contracts which typically have strong confidentiality provisions protecting network providers' pricing from disclosure.
The Act also provides for an independent dispute resolution (“IDR”) process to be used when state law does not define the rates that plans must pay to out-of-network providers or when a plan and an out-of-network provider are unable to otherwise negotiate a payment. Regulations on this IDR process are to be issued by the end of 2021. Those regulations will include a process for selecting and certifying independent entities that will conduct the IDR process.
Originally Published by Ice Miller, January 2021
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
