The No Surprises Act Interim Final Rule: Implications for States
JoAnn Volk, Jack Hoadley and Sabrina Corlette, The Georgetown University Center on Health Insurance Reforms
On July 1, the U.S. Departments of Health and Human Services (HHS), Treasury, and Labor (DOL) and the Office of Personnel Management (OPM) released the first of at least three rules implementing the No Surprises Act (NSA), the comprehensive federal law banning balance bills in emergency and certain non-emergency settings beginning January 1, 2022. The interim final rule (IFR) was released with model notice and disclosure forms, as well as other materials.
The IFR outlines the basic protections provided by the NSA. It also covers the NSA’s notice and consent provisions that apply to providers and facilities; the disclosure requirements that apply to insurers, health plans, providers and facilities; and the HHS-administered system for receiving complaints. It also details how to calculate the qualifying payment amount (QPA) and cost-sharing obligations for patients protected from balance billing. There is also extensive discussion of how the new federal standards defer to state law. Comments on the IFR are due 60 days after it has been posted in the Federal Register and will inform future rulemaking, since the IFR is effective once published for plan years beginning on or after January 1, 2022. Comments on the model notice and disclosure forms are due in 30 days.
A detailed summary of the IFR can be found here. This expert perspective summarizes provisions that have particular implications for state regulators.
Protecting Consumers from Surprise Bills
Notice and consent for out-of-network care: Under the NSA, patients receiving out-of-network services are protected from balance billing and only responsible for cost-sharing no greater than what they’d pay for in-network care for all emergency services and most non-emergency care received at an in-network facility. In certain circumstances, patients can waive their NSA protections and consent to receive out-of-network non-emergency care. The IFR details the circumstances under which notice must be provided and consent may be sought; the content of the standard notice and consent; the manner in which the notice and consent must be provided; and what constitutes voluntary consent. The IFR seeks comments on all aspects of the notice and comment requirements, including how to avoid circumstances that would amount to coercion for patients considering consent forms and how to ensure patients can be informed of and understand their rights in a form and language they prefer.
Consent may not be obtained when there is no in-network provider available; for urgent or unforeseen care; or for providers in designated specialties, including anesthesiology, pathology, radiology and neonatology, care delivered by hospitalists, intensivists, and assistant surgeons, and others that may be identified in federal regulations. The IFR seeks comment on any other ancillary services that should be included in this list.
In addition, post-stabilization services are considered services for which consent may not be sought or obtained unless certain conditions are met, including consideration of “unreasonable travel burdens.” The IFR includes an extensive discussion of what that may mean for those in underserved and geographically isolated communities and for those with social risk factors or facing other potential barriers. The Departments seek comments on how to determine “unreasonable travel burdens” and “unreasonable travel distance.”
Disclosure of balance billing rights: Insurers, plans, providers and facilities must make publicly available, post on a public website of the provider or facility, and provide directly to enrollees and plan participants a one-page notice of balance billing protections. The departments released a model disclosure notice that insurers, plans, providers and facilities may use to demonstrate good faith compliance with the disclosure requirements. The IFR also urges states to develop model language to convey state-specific requirements and notes that some states may have more consumer protective requirements, for example, by prohibiting providers from seeking consent to balance bill in more circumstances than are included in the NSA. States may wish to comment on how to ensure disclosures adequately and unambiguously reflect both state and federal protections that apply.
Complaints: The IFR establishes a single system for all complaints about NSA violations, whether they involve insurers, health plans, providers, facilities or air ambulance providers. The departments’ intent is to provide the public with a seamless way to file complaints, in recognition that complainants may not know which department has enforcement jurisdiction or whether to communicate with federal or state governments. HHS must respond to complaints within 60 days and, among other things, inform complainants if their complaint has been referred to another state or federal agency for resolution. States may wish to comment on how this process should operate where complaints fall under state enforcement authority.
State Law Interaction with Federal Law
Specified state laws: The NSA defers to “specified state laws” for determining how to resolve a payment dispute between a health plan or insurer and out-of-network providers. Under the law, a “specified state law” is defined as a state law that “provides for a method for determining the amount of payment” owed to an out-of-network provider or facility. The IFR confirms that this includes state laws that set a payment standard and those that use arbitration. The rule says 14 states meet this definition, though the departments do not identify which states are in that group; it may be that more than 14 states meet the definition. Policies around the role of specified state laws in the process for determining payment amounts will be further discussed in the later rule addressing independent dispute resolution processes.
In order for a state law to determine the “recognized amount” (which determines patient cost-sharing) or the out-of-network rate, the state law must apply to (1) the plan, insurer, or self-funded plan (if it has opted-into state law); (2) the nonparticipating provider or facility involved; and (3) the item or service involved. The rule provides multiple examples of how this would be applied, for example, where a state law applies to an insurer licensed in the state and to the services, but not to the provider that is licensed and located in another state. In this example, federal law would apply for determining patient cost-sharing and the out-of-network rate. Another example is where state law applies to some but not all types of services or providers. Thus, if state law applies to anesthesia services, but not neonatology services, then recognized amounts would be handled separately under state and federal law. The IFR also notes air ambulance services would fail to meet all three criteria for application of a state specified law, since states are barred under the Airline Deregulation Act from setting payment rates for air ambulances. Air ambulances are therefore subject to federal law for determining the recognized amount.
The departments seek comment on whether an insurer, health care provider, or facility should be allowed to opt into a state law that would not otherwise apply because of failure to meet the three criteria noted above. This would occur, for example, when state law applies to the insurer and item or service, but not the provider. The departments note their concern that allowing providers and facilities to selectively opt into state laws may increase health care prices if they only do so for state processes that favor providers.
State law interaction with the Employee Retirement Income Security Act of 1974 (ERISA): The IFR also includes extensive discussion of state law interaction with ERISA and the legal basis for recognition of and deference to state laws so long as they do not prevent the application of federal law. It is this discussion that supports the IFR’s conclusion that ERISA does not preempt state laws that allow self-funded plans to opt into a state’s process for determining payment of out-of-network claims. However, the IFR sets requirements for self-funded plans that choose to opt into state payment standards, including that a self-funded employer that opts in must do so for all items and services to which state law applies, and the employer must provide prominent notice that they are opting into the specified state law for out-of-network providers.
Qualifying Payment Amount
The IFR has a detailed discussion of the methodology for determining the QPA, which is generally the median contracted in-network rate for an item or service in a geographic region. The QPA determines patient cost-sharing where there is no specified state law and informs the Independent Dispute Resolution (IDR) process when insurers and plans fail to reach agreement with a provider or facility on a payment amount. In answering multiple questions about factors that can influence the QPA, the rule generally minimizes the influence of potential outlier prices that could skew the QPA higher. For example, the methodology excludes single use contracts from the median rate calculation (although single use contracts are included in the definition of participating facility). It also seeks to minimize the need to rely on an alternative method for calculating QPA where an insurer or health plan has insufficient information.
With those same goals in mind, the departments considered but did not adopt the approach recommended by the National Association of Insurance Commissioners (NAIC) for determining the geographic regions for QPA calculations. Rather than base the QPA on the geographic regions used in the ACA individual and small group markets, as the NAIC recommended, the QPA will be based on larger geographic regions defined by metropolitan statistical areas (MSAs) in a state or the non-MSA areas in the state.
Emergency Services: The IFR also revisits the Affordable Care Act’s (ACA) requirements regarding coverage of emergency services (Section 2719A of the Public Health Service Act) and extends them to grandfathered plans beginning in 2022. The IFR clarifies that emergency services must be covered without conditions such as denials based on final diagnosis codes or denying claims for dependents who are pregnant based on a general plan exclusion for dependent maternity care.
Similarly, the IFR recodifies the ACA’s choice of health care professional requirement to apply to all group health plans and group and individual health insurance, including grandfathered plans beginning in 2022.
Definition of Emergency Services: Under the NSA, patients can never be balance billed for emergency services. The IFR includes in the definition of emergency services those provided by urgent care centers licensed in their state to provide emergency services. Regulators seek comment on whether the definition of health care facilities should include urgent care centers or retail clinics. Under the IFR, urgent care centers are not classified as facilities, so that out-of-network providers practicing at in-network urgent care centers will be allowed to balance bill patients.
The departments note their intent to undertake rulemaking in the future to implement rules requiring individual market insurers and short-term limited-duration plans to disclose broker compensation; for requirements regarding provider directory accuracy and continuity of care provisions; and for HHS enforcement of requirements on insurers, non-federal governmental group health plans, providers, facilities and providers of air ambulance services.