On January 1, 2022, a new federal law, “Requirements Related to Surprise Billing, Part I” (“The Rule”), goes into effect for health care providers and facilities and for providers of air ambulance services. The Rule will restrict excessive out-of-pocket costs to consumers which resulting from surprise billing and balance billing.

Group health plans and health insurers contract with a network of provider and health care facilities; these providers are considered as in-network providers. They agree to accept a specific payment for their services. Providers and facilities that are not contracted with a health plan or insurer are known as out-of-network providers (OON). They usually charge higher amounts than in-network providers. When OON providers do not receive full payment for their charge from the insurance payor, they charged the patient for the difference between the charge and the amount paid, a practice known as balance billing.

Balance billing came as a surprise to many patients because they did not realize that they had gotten services from an OON provider even though they may had selected an in-network facility. The Rule does not apply to people with coverage through Medicare, Medicaid, Indian Health Services, Veteran Affairs Health Care or TRICARE as these programs already contain protections against high medical bills.

The Rule

  • Bans balance billing for emergency services. Cost sharing for emergency services must be determined on an in-network basis.
  • Requires that patients’ cost sharing obligations such as co-payments, co-insurance, or deductibles for emergency services and certain non-emergency services, provided at an in-network facility, cannot be higher than if these services were provided by an in-network provider. The cost sharing provisions must be based on in-network provider rates even though services may be provided by an out-of-network provider.
  • Prohibits out-of-network (OON) charges for items or services provided by an OON provider at an in-network facility, unless certain notice and consent is given to the patient. Provider and facilities must give the patient plain-language consumer notice explaining that patient consent is required to receive care on an OON basis before the provider can bill the patient more than in-network cost-sharing rates.

The Rule established a federal independent dispute resolution process (“IDR”) that OON providers, facilities, providers of air ambulance services, health plans, insurers may use to determine the OON rate for items or services after an unsuccessful open negotiation. The federal independent dispute resolution process will apply only to those services for which balance billing is prohibited under the Rule.

The IDR entity will have 30 days to reach a decision and must consider:

  • Offers by both parties.
  • A qualifying payment amount for the same service in the same geographic region.
  • The acuity of the patient and complexity of the case
  • The teaching status, case mix and scope of services of the facility where service was delivered.
  • Good faith efforts by parties to contract including contracting-rate history from the last four years.

Some states have enacted balance billing protections; for example, in 2018 Florida passed “Coverage requirements for services provided by non-participating providers; payment collection limitations.” The statue prohibits OON providers from surprise billing for emergency services provided at in-network facilities and it also has a voluntary dispute resolution provision (Fla. Stat. Sec. 627.64194). OON providers should familiarize themselves with the numerous upcoming changes in patient balance billing protections now imposed on them and make adjustments and changes to their processes in compliance with these laws.