Surprise Billing Regulations: Out-of-Network Providers at In-Network Facilities

On 1 July 2021, the Department of the Treasury, the Department of Labor, and the Department of Health and Human Services (the Departments) issued an interim final rule (IFR)¹ implementing certain provisions of the No Surprises Act (the Act).² Congress enacted the Act in 2020 to protect patients from “surprise medical bills” and to limit so called “out-of-network” cost sharing bills for patients receiving care from providers who are not “in-network” participating providers in the patient’s health plan. The Act is applicable to emergency services, non-emergency services furnished by out-of-network providers at certain in-network health care facilities, and air ambulance services furnished by out-of-network providers. The IFR provides additional guidance to health care providers and facilities, including hospital and freestanding emergency departments, for complying with the Act. Comments on the IFR are due on 7 September 2021. Assuming no further changes from the Departments following the comment period, the requirements for providers as outlined in the IFR will be effective as of 1 January 2022.

For in-network providers and facilities, the Act and the IFR will require advance planning with respect to certain public and patient-specific disclosures. In-network providers and facilities will also need to prepare patient notice and consent forms in order to comply with updated surprise billing protections. Further, such providers will need to be actively coordinating with plans and insurers prior to seeking payment in order to determine whether notice and consent and/or balance billing prohibitions are triggered.

Key takeaways include:

• The IFR extends surprise billing protections to non-emergency services furnished by an out-of-network provider at in-network health care facilities.
• Out-of-network providers may not bill patients for an amount that exceeds in-network cost sharing, as determined in accordance with the balance billing provisions, when furnishing services at an in-network health care facility.
• Such balance billing prohibitions will not apply if the patient has been provided with adequate notice as has agreed to waive such requirements pursuant to a valid consent, with certain enumerated exceptions.
• Providers and facilities will further be required to make certain additional disclosures regarding protections against balance billing, including written disclosures to patients and prominent public displays on-site and online.

Background

The Act provides protections from surprise medical bills for certain emergency and non-emergency services. The Act protects patients from surprise medical bills for emergency services from the point of evaluation and treatment until the patient can be stabilized and can consent to transfer to an in-network facility. Such protections apply to three emergency categories (1) emergency services received at an out-of-network facility, (2) emergency services rendered by an out-of-network individual provider, such as an emergency physician, regardless of whether the facility is in- or out-of-network, and (3) emergency services provided by out-of-network air ambulances. Additionally, patients will be protected from surprise medical bills for non-emergency services (1) provided by an out-of-network provider at an in-network facility and (2) out-of-network air ambulance services.³ For services subject to these protections, the Act limits cost sharing for out-of-network services to in-network levels and requires such cost sharing to count toward any in-network deductibles and out-of-pocket maximums.⁴

The Act effectively repeals the “Greatest of Three Rule” framework. Prior to the Act, the Affordable Care Act (ACA) enacted provisions requiring that insurance companies hold out-of-network patients harmless as if they were in-network. The ACA’s implementing regulations required insurers or private health plans to reimburse providers at the greatest of three enumerated amounts (the Greatest of Three Rule): (1) the rate generally reimbursed by the plan of insurance for out-of-network providers (i.e., the usual, customary, and reasonable amount); (2) the median in-network rate; or (3) the Medicare rate. The Act will effectively repeal the Greatest of Three Rule framework and replace it with a new reimbursement regime for emergency and certain non-emergency out-of-network services. The Act directs the Departments to establish through rulemaking the methodology that a group health plan or health insurance issuer offering group or individual health insurance coverage must use to determine the “qualifying payment amount” used to determine a patient’s coinsurance. For provider reimbursement where there is no governing state law or agreement between the payor and the provider, the Act establishes a baseball style arbitration that takes into account the qualifying payment amount. To learn more about how the No Surprises Act and IFR address reimbursement, please see our prior alerts here and here.

Impact for Out-of-Network Providers at In-Network Facilities

In the IFR, the Departments contend that surprise billing is a significant issue across all types of coverage and throughout the country, particularly certain specialties that are not “actively shoppable by consumers,” such as anesthesiology or laboratory providers, which often bill as out-of-network at in-network facilities.⁵ While the IFR focuses in part on emergency services, it also focuses on non-emergency services in certain circumstances, specifically extending surprise billing protections to non-emergency services furnished by an out-of-network provider at an in-network health care facility.⁶ Specifically, if a health plan provides benefits for certain non-emergency items and services at a facility, the plan must cover items and services furnished to a plan enrollee by an out-of-network provider with respect to a visit at an in-network health care facility, including meeting requirements regarding cost-sharing, payment amounts, and processes for resolving billing disputes. For providers, the IFR clarifies the Act’s requirement that out-of-network providers or facilities may not bill patients for an amount that exceeds in-network cost sharing. This cost-sharing is determined in accordance with the balance billing provisions. The balance billing prohibition is applicable when an out-of-network provider furnishes services at an in-network health care facility. The prohibition specifically includes those off-site out-of-network providers, such as laboratories, who furnish items or services that a patient receives as part of a visit to the in-network facility.⁷ The prohibitions on balance billing do not apply if certain notice is provided to the patient and the patient waives the balance billing protections with respect to the particular out-of-network provider.⁸

Notice and Consent Requirements

The IFR details the following specific standards around the notice and consent requirements for out-of-network providers providing items or services at in-network facilities. 

• The notice must be tailored to the individual patient in each circumstance, including identification of the provider or facility and a good faith estimate of the amount to be billed.⁹
• A facility may provide a single notice for multiple out-of-network providers, provided that (1) each provider’s name is specifically listed, (2) each provider includes an individual estimate of the items and services they are individually furnishing, and (3) the patient has the option to consent to waive balance billing protections with respect to each individual provider separately.¹⁰
• The notice and consent forms must be provided together and cannot be attached to or incorporated into any other documents.¹¹
• The notice be provided within an appropriate timeframe for the patient to make an informed decision. For example, for appointments scheduled in advance, notice should be made at least 72 hours before the date of the appointment, or if an appointment is made on the day of, notice should be given at least three hours prior to furnishing the items or services.¹²
• The notice must make clear that the good faith estimate and patient consent do not constitute a contract or a binding commitment to the estimated charge.¹³
• The notice must include information regarding whether prior authorization or other care management limitations may be required prior to the provision of services.¹⁴
• The notice must clearly state that the patient is not required to consent to receive such items and services, and that the patient may instead seek care from an available in-network provider or facility and that in such cases, in-network cost-sharing amounts will apply.¹⁵
• For post-stabilization services furnished by an out-of-network provider at an in-network emergency facility, the notice must include a list of in-network providers at the facility who are able to furnish the same items or services and state that the patient may be referred at their option to such provider(s).¹⁶
• The Departments also clarified that an in-network facility may provide the notice on behalf of an out-of-network provider.¹⁷
• Notice must be available in any of the 15 most common languages in the geographic region in which the facility is located. If an individual cannot understand any of the provided languages, the provider or facility must obtain a qualified interpreter.¹⁸
• A patient may demonstrate consent by signature of the consent form, and may revoke consent by notifying the provider or facility in writing prior to the furnishing of items or services.¹⁹
• Obtained consent must be maintained for a minimum of seven years.²⁰

Exceptions to Notice and Consent Requirements

In limited circumstances under the Act and as outlined in the IFR, notice and consent requirements do not apply for certain types of non-emergency items or services. In these situations, the prohibition on balance billing and in-network cost-sharing requirements will continue to apply. Specifically, notice and consent requirements do not apply to (1) ancillary services, including items and services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology; (2) items and services provided by assistant surgeons, hospitalists, and intensivists; (3) diagnostic services, including radiology and laboratory services; and (4) items and services provided by an out-of-network provider where there is no in-network provider who can furnish such item or service and the applicable facility.²¹ Further, notice and consent requirements do not apply for items or services furnished as a result of unforeseen, urgent medical needs arising when post-stabilization services are furnished and the out-of-network provider or facility has already satisfied the notice and comment criteria.²²

Disclosure Requirements

In addition to notice and consent requirements, the Act also requires providers and facilities to provide general public disclosures regarding patient protections against balance billing, including written disclosures to patients and postings both physically displayed in a prominent location at the location of the provider or facility and on a public website. These requirements will apply for plan years beginning on or after 1 January 2022. The disclosure provided to patients must include clear and understandable information about applicable state requirements and how to contact appropriate federal and state authorities if the patient believes the provider or facility has violated any applicable requirements for balance billing.²³ This disclosure may be on a one-page form and should be provided no later than at the time the provider requests payment from the patient (or if no payment is requested from the patient, at the time a claim for payment is submitted). The Departments suggest that this disclosure may be provided earlier, such as at the time when an individual schedules an appointment or when other standard notice disclosures, such as the Notice of Privacy Practices, are provided.²⁴ The IFR states that the Departments will separately issue a model disclosure notice for providers and facilities. Notably, providers that do not furnish items or services at a health care facility or in connection with visits at a health care facility are not required to make such disclosures, and disclosures are only required for patients who are participants, beneficiaries, or enrollees of group health plans or insurance coverage offered by an insurer.²⁵ Further, in order to streamline the documents provided to patients, the IFR clarifies that a provider may satisfy the above disclosure requirements if it has a written agreement with the facility that requires the facility to provide a single disclosure including information about balance billing requirements that are applicable to both the facility and the provider.²⁶

Enforcement and Compliance

The Act authorizes states to enforce certain requirements of the Act and requires the Department of Health and Human Services (HHS) to enforce if a state fails to substantially enforce the requirements.²⁷ Failure to meet the requirements of the Act may result in civil monetary penalties in states where HHS directly enforces balance billing requirements. Accordingly, out-of-network providers and facilities should take necessary precautions to ensure that their billing practices are in alignment with the Act and IFR guidance. For example, the Departments recommend that out-of-network providers that furnish non-emergency services confirm whether the facility at which they are providing such services is in-network or not to determine whether balance billing protections will apply. Additionally, out-of-network providers should be in communication with applicable plans and insurers when limitations on cost-sharing do not apply, including when proper notice and consent have been obtained. The Departments further emphasize that out-of-network providers providing non-emergency services may need to alter current billing practices to ensure they are not running afoul of the Act’s requirements. In particular, out-of-network providers may need to bill a health plan or insurer before billing an individual directly, in order to determine whether the plan covers the applicable non-emergency services at issue and thus triggers the applicable requirements.²⁸

Conclusion

Out-of-network providers who furnish services at in-network facilities, as well as in-network facilities that allow out-of-network providers to furnish services at their facilities, should be prepared to operationalize notice, consent, and disclosure requirements for out-of-network providers providing services in their facilities. Before providing services at a given location, out-of-network providers that furnish non-emergency services should confirm whether the facility at which they are providing such services is in- or out-of-network to determine whether balance billing protections will apply. Additionally, providers may need to alter current billing practices to meet the requirements of the Act. In particular, providers will need to proactively communicate with plans and insurers when limitations on cost-sharing do not apply, including when proper notice and consent have been obtained.

Our health care practice routinely assists health systems, hospitals, and other providers and suppliers with legal advice and strategic considerations, including providing advice on reimbursement matters and preparing clients’ public comments on proposed and final rulemakings. Contact the authors of this article or another K&L Gates lawyer for assistance with the IFR or to receive updates on Medicare reimbursement or other regulatory requirements.