“Surprise” medical bills have been a problem for patients and providers for many years. Essentially, patients are said to receive a surprise bill when services provided are “out-of-network”—either the facility or the practitioner is not contracted with their payer—and the patient unexpectedly incurs significant out-of-pocket costs. Currently, patients receive bills, many for thousands of dollars, for services they did not know were out-of-network. New legislation signed into law in December 2020 in the Consolidated Appropriations Act (CAA), eliminates surprise billing, effective January 1, 2022. The law applies to a broad category of providers including physicians/practitioners, hospitals, ambulatory surgical centers, and air ambulance transports. A committee to be established in the spring of 2021 will review whether the law will apply to ground ambulance.
The new law pertains to services received in an emergency department of a hospital or an independent freestanding emergency department, as well as certain non-emergency services provided by a non-participating practitioner at a participating or in-network hospital. Key provisions of the law include the following:
Regardless of whether the healthcare provider furnishing the services is a participating practitioner or the facility is a participating emergency facility, and without the need for any prior authorization determination, the patient cost-sharing for emergency services is limited to the amount that would apply if the services were provided by a participating practitioner or at a participating emergency facility. The term “emergency services” includes all services furnished by a nonparticipating practitioner or nonparticipating emergency facility (regardless of the department of the hospital in which such items or services are furnished) after the patient is stabilized, whether as an outpatient in observation or as an inpatient, and until the provider or facility determines that the patient can travel using non-medical transportation.
In the case of non-emergency services furnished by nonparticipating practitioners at participating facilities, absent notice to and consent of the patient, cost-sharing is limited to the amount that would have been due under the applicable health plan had such items or services been furnished by a participating practitioner. To protect patient rights, the law allows certain out-of-network providers to notify prospective patients of their non-participation with a particular payer and for the patient to then consent to receive services from the non-participating provider and assume financial responsibility. The provision allowing patient consent for out-of-network billing does not apply to anesthesiologists, pathologists, radiologists, laboratory services, hospitalists, assistant surgeons, and neonatologists. They are prohibited from surprise billing, even with consent.
Settling Payment Disputes
The law establishes an Independent Dispute Resolution (IDR) process for settling payment disputes between payers and out-of-network providers. The process is outlined in the law, although implementing regulations have not been released, but are required no later than July 1, 2021. As described, the payer must send to the provider an initial payment or notice of denial of payment no later than 30 calendar days after the bill is submitted.
If the provider is not satisfied with the amount the payer has paid, the following timeline details the IDR process:
- Provider/payer negotiation: occurs during the 30-day period beginning on the day the provider or facility receives the payment or denial from the payer.
- Initiation of IDR process: must be initiated within the 4-day period beginning on the day after the 30-day open negotiation period ends.
- Both the payer and the provider must provide the IDR entity with the amount that they believe is appropriate payment for the services provided.
- IDR entity review period: allowed 30 days to determine the appropriate payment amount.
- IDR entity must select one of the offers submitted.
Note that the IDR entity cannot consider provider charges or payment rates under a public payer, such as the Medicare or Medicaid programs. Both the payer and the provider are encouraged to provide information to support their payment request. This additional information includes the following:
- From the payer, in-network rates with other providers.
- From the provider, information related to the quality of care and outcome measures; the level of training, experience, and patient and facility acuity; and facility teaching status.
- From both parties, information on good faith efforts (or lack thereof) by either the payer or the provider in reaching an agreement.
The law provides for “batching” of claims related to a single payer and for similar items and services furnished during the 30-day period following the date the first item or service was furnished.
The determination of the certified IDR entity is binding on the parties involved in the absence of a fraudulent claim or evidence of misrepresentation of the facts presented. Payment must be made directly to the provider no later than 30 days after the date the determination is made. The “losing” party is responsible for paying all fees charged by the IDR entity. If, however, the parties settle after initiating the IDR process, each party is required to pay half of the fees charged, unless they otherwise agree to a different arrangement.
Application of State Law
Currently, 33 states have enacted laws to protect patients from surprise bills. Deference will be afforded to those state laws that provide a method for determining the total amount payable under these scenarios. State laws, however, do not apply to employer self-funded plans. The new federal law will be used to determine payment rates for those plans and will be applied in states without applicable law.
Transparency: Notice of Expected Charges
Effective January 1, 2022, providers will be required to provide a good faith estimate, in clear and understandable language, of the expected charges for the provision of scheduled items and services, including any expected billing and diagnostic codes, to the applicable health plan in the case of an insured individual, and to the individual if uninsured. This estimate must include any items or services reasonably expected to be provided by another healthcare practitioner or facility in conjunction with the scheduled service. This information must be provided at least 3 business days before the service is furnished and not later than 1 business day after scheduling, unless scheduled more than 10 business days in advance, in which case the provider then has 3 business days to provide the estimate.
Transparency: Advanced Explanation of Benefits
Also effective for plan years beginning on or after January 1, 2022, payers are required, no later than 1 business day (or 3 business days if the services are scheduled at least 10 business days in advance) after the date on which the plan receives the notification or request, to provide the patient (through mail or electronic means, as requested) notification of the following:
- Whether or not the provider or facility participates with the plan for the intended service.
- The contracted rate for the services to be provided (based on the billing and diagnostic codes provided by the provider or facility) if the provider or facility is in-network.
- In the case of a non-participating practitioner or facility, language that explains how the patient can obtain information on practitioners and facilities that are in-network.
- A good faith estimate of the amount the plan is responsible for paying for the services included in the estimate.
- A good faith estimate of the amount of any patient cost-sharing for the scheduled services (as of the date of the notification).
- A good faith estimate of the amount that the patient has incurred toward meeting his/her financial responsibility for deductibles and out-of-pocket maximums under the plan.
- Any medical management requirements for the expected service, including concurrent review, prior authorization, and step-therapy or fail-first protocols, for plan coverage of the intended service.
- A disclaimer that the information provided in the notification is only an estimate based on the items and services expected to be furnished and is subject to change.
Transparency: Removing Gag Clauses on Price and Quality Information
Under the law, neither a group health plan (or an issuer of health insurance coverage offered in connection with such a plan) nor a health insurance issuer offering individual health insurance coverage may enter into an agreement with a healthcare provider, network or association of providers, third-party administrator, or other service organizations offering access to a network of providers that would restrict the entities from disclosing the terms of the agreement. These so-called gag clauses were often used to restrict sharing of the contract terms, but are eliminated under the new law.
If you would like additional information about surprise billing provisions under the CAA, or for assistance with any matter related to reimbursement, strategy and integration, compliance, or valuation, contact a PYA executive below at (800) 270-9629.