Putting Surprise Billing Protections into Practice: Biden Administration Releases First Set of Regulations

On July 1, four federal agencies charged with implementing the No Surprises Act issued an interim final rule¹ that provides the first set of regulations for implementing the law, which was signed on December 27, 2020, and is effective January 1, 2022. It aims to ensure that consumers who inadvertently or unknowingly use out-of-network providers or facilities in specific situations will face no more than normal in-network cost sharing. Under the law, out-of-network providers and facilities are banned from sending consumers bills for amounts beyond in-network cost sharing.

Consumer Protections and Other Elements in the First Regulation

This regulation — the first of several regulations expected on the No Surprises Act — lays out key consumer protections in the law and details its scope. Provisions addressed include cost-sharing protections, rules for when providers can request that patients waive their protections, and rules for calculating the QPA.

Consumer Protections

The rule reiterates the core of the law. Consumers are protected from surprise bills in key scenarios: emergency services delivered in any emergency facility by an out-of-network provider, air ambulance services, and nonemergency services delivered by an out-of-network provider at an in-network facility. Under the rule, urgent care centers are classified as emergency facilities if they are licensed by a state to provide emergency services.

Notice and Consent

The law identifies limited circumstances (some nonemergency services and poststabilization services delivered after emergency care) where providers may ask patients to consent to waiving their rights under the law, which means they agree to pay higher out-of-network charges. Consent may be requested by the lead physician (e.g., surgeon or obstetrician) but not for ancillary services (e.g., anesthesia or radiology). Consent cannot be requested when care is for unforeseen, urgent medical needs (e.g., calling in a cardiologist during a surgery). The rule elaborates on the process for requesting consent, which includes a standard form that must be signed at least 72 hours before a scheduled appointment and at least three hours in advance when the appointment is made on the same day. These provisions are designed to ensure that consumers are fully aware of the consequences before consenting to waive their protections.

Cost Sharing

The rule spells out how consumers will be protected from higher cost sharing in surprise billing situations. Patient cost-sharing amounts will be based on either state law (if one applies) or the federal QPA, typically the insurer’s median in-network rate. Patient cost sharing for out-of-network care will count toward the in-network deductible and annual limit on out-of-pocket costs.

Qualifying Payment Amount

The QPA is a vital component of the law. It serves as the base for calculating patient cost sharing and as a key factor if payment disputes go to arbitration. The rule builds on the law’s definition of the QPA in terms of how providers calculate the median rate, provides guidance if there is insufficient data to calculate a median, and outlines the process for insurers to share relevant information with providers.

The rule also answers questions about how to define geographic regions when calculating the QPA. It uses metropolitan statistical areas (MSAs) in a state and an additional region to represent rural areas. For air ambulance services, the regions are larger; they combine all the state’s MSAs into one region. The intent was to limit distortions caused by high-cost outliers and include fewer regions with insufficient data.

Looking Forward

Publication of the interim rule represents a key step to readying the No Surprises Act for its 2022 implementation. The federal agencies have spelled out many details needed by plans and providers to prepare for next year.

In the coming months, the agencies will publish a second rule laying out the critical process to settle disputes that arise regarding how much the insurer must pay an out-of-network provider. The law calls for arbitrators — who make the final decision on the amount paid — to consider the QPA, along with a variety of other factors (e.g., provider experience, case complexity, and prior contracted rates) in making decisions. How these factors are balanced will be critical in arbitrators’ decisions; for instance, whether they choose amounts above in-network rates and whether these decisions have an inflationary impact. Guidance for arbitrators and the structure of the process will be critical to the success of the No Surprises Act.