On July 1, 2021, the U.S. departments of Health and Human Services (HHS), Treasury, and Labor, along with the Office of Personnel Management, released an interim final rule related to surprise billing, which was outlawed by the “No Surprises Act,” signed into law as part of the Consolidated Appropriations Act on Dec. 27, 2020. The legislation bars surprise billing in most health care settings and establishes new transparency requirements that will take effect Jan. 1, 2022.

Surprise medical billing occurs when an insured patient unknowingly receives care from an out-of-network provider and then is presented with a bill for services and payment obligation beyond what the patient’s insurer will cover. Surprise medical bills arise out of emergencies when patients have no or limited ability to select the facility or provider rendering services or when patients receive planned care.

To learn more, you can read the CMS fact sheet, “Requirements Related to Surprise Billing; Part I Interim Final Rule with Comment Period.” Important aspects of the regulation include:

1) Methodology for calculating the qualifying payment amount (QPA)

When an insured patient receives emergency care and certain non-emergency services from an out-of-network provider, the patient’s cost-sharing obligation will be capped at amounts that would apply if the services had been furnished by an in-network provider. That amount will be an amount determined by an applicable All-Payer Model Agreement; an amount defined under state law, where applicable; or the QPA. The QPA is the annual median contracted rate recognized by the issuer for the same or similar item or service by a similar provider in the same insurance market, which will be increased annually based on the Consumer Price Index for All Urban Consumers (CPI-U).

  • Similar items and services, providers and facilities, and geographic regions that will be used to calculate a median rate, and the methodology for arranging contracted rates to determine a median rate, are further defined.
  • The QPA methodology will be based on contracted rates and will not consider actual paid claims amounts.
  • States are given wide-ranging discretion in implementing All-Payer Claims Databases, which will be considered unconditionally eligible to serve as a resource for calculating the QPA.
  • The QPA influences consumers’ cost sharing and payments to providers, and it will be considered in determining payment during arbitrable disputes.
  • HHS and the other departments seek to limit financial burden of payer-provider disputes on consumers’ cost sharing by tying cost sharing to a recognized amount.

2) Definitions of emergency services and emergency medical conditions

The act defines “emergency medical condition” to mean a medical condition revealing itself by acute symptoms or pain of enough severity that a prudent layperson could rationally assume the absence of urgent medical attention would result in placing an individual’s health in serious risk. This definition extends to mental health conditions and substance use disorders. Emergency services can also include items and services provided to patients after they are stabilized and as part of outpatient observation, or as part of an inpatient stay or outpatient visit.

  • It prevents payers from limiting coverage based on the final diagnosis code alone or general policy exclusions.
  • By expanding the definition of emergency services, HHS seeks to prevent activities that may circumvent coverage in emergency situations.

3) Payer Disclosures

The No Surprises Act requires that payers make publicly available, post on their public website, and include in their explanation of benefits a description of the prohibitions related to surprise billing and the circumstances in which they apply.

  • Payers are also required to disclose to non-participating providers the QPA for each item or service involved, and a statement that the QPA applies for purposes of the recognized amount.
  • Payer disclosures serve as early notice that will give providers greater clarity on how the payment amount was reached and whether they should pursue Independent Dispute Resolution.

4) Processes for receiving consumer complaints

The No Surprises Act requires plans, health care providers and facilities to make and post notices about the new requirements related to surprise billing. The act requires HHS and the other departments to establish a process to receive consumer complaints regarding violations of payers’ application of the QPA and directs HHS to establish a parallel complaints process for consumer complaints to provider violations of the balance billing requirements. The act also requires HHS and other departments to respond to consumers’ payer and provider complaints within 60 days of receipt.

  • The complaints processes for reporting payer and provider violations are still a work-in-progress, and while an outline has been developed, these processes may be expanded.

5) Notice and Consent Requirements

  • This regulation establishes the content, language and timing standards related to notice and consent forms and how these forms must be delivered. Notice and consent provisions are to ensure that patients can maintain provider choice and that they are not pressured into waiving balance billing protections.
  • Excluding certain ancillary services, the No Surprises Act provides exceptions to the balance billing protections for non-emergency services if the patient is given notice and consents to be financially liable for out-of-network financial obligations.
  • The act also requires consent in which patients acknowledge they were given written notice about payment information and its impact on cost-sharing.
  • The provider must retain consent for seven years and must notify the payer in a timely manner as to whether balance billing and in-network cost sharing protections apply to the item or service.

AASM staff also will review Parts 2 and 3 of the surprise billing interim final rules and share analyses with AASM members. Questions can be sent to coding@aasm.org.

View more coding and reimbursement resources from the AASM.