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Surprise Medical Billing Under Federal and Ohio Law
Not long after Eastman & Smith’s article, Surprise Medical Billing by Non-Network Providers in Michigan was released detailing a new Michigan law, both the federal government and State of Ohio finalized similar laws of their own. Application of these laws will begin in January of 2022 in an effort to prevent “surprise billing,” which occurs when a patient receives care from a provider or facility that is not part of their health insurer’s network, often unknowingly, leaving them with large and unexpected medical bills.
Federal No Surprises Act
The federal No Surprises Act (the Act), passed in December of 2020 as part of the Consolidated Appropriations Act (HR 133), prohibits health care providers from billing patients more than what the provider would be paid for in-network services, even if the provider is out-of-network, in certain scenarios. The Act applies to a broad range of providers including physicians, non-physician practitioners, hospitals, ambulatory surgery centers and air ambulance transports. Key provisions of the Act include the following.
- Emergency Services: The Act requires that insurers cover emergency services without any prior authorization and regardless of whether the provider is in or out of the patient’s health plan network. When emergency services are provided by an out-of-network provider, the insurer must cover such emergency services as if they were in-network (i.e. no more than the in-network cost sharing amount). After receiving a claim for reimbursement, the insurer has 30 days to either pay the out-of-network rate directly to the provider or deny the claim. Any patient cost sharing must count toward the patient’s in-network deductible and cost sharing limits.
- Balance Billing, Emergency and Elective Nonemergency: The Act bars out-of-network providers from balance billing patients in certain circumstances. “Balance bills” primarily occur in two circumstances: 1) when an enrollee receives emergency care either at an out-of-network facility or from an out-of-network provider, or 2) when an enrollee receives elective nonemergency care at an in-network facility but is inadvertently treated by an out-of-network health care provider. Since the insurer does not have a contract with the out-of-network facility or provider, it may decide not to pay the entirety of the bill. In that case, the out-of-network facility or provider may then bill the enrollee for the balance of the bill. Prior to the Act, out-of-network providers generally could bill the patient for the difference between the provider’s billed charges and the amount paid by the insurer, unless otherwise prohibited by state law or by contract.
- Balance Billing, Ancillary Services: The Act bars out-of-network providers at an in-network facility from balance billing patients for certain ancillary services including those services related to emergency medicine, anesthesiology, pathology, radiology, neonatology and laboratory services. An out-of-network provider at an in-network facility may balance bill patients if the provider is not rendering ancillary services and if the provider gives the patient advance notice that the item or service is out-of-network along with its estimated cost. The patient must acknowledge receipt of such notice.
The Act further prohibits out-of-network providers from:
- Emergency Services: Billing for the difference between in- and out-of-network rates for emergency services; and
- Nonemergency Services: Billing for the difference between in- and out-of-network rates for nonemergency services provided at an in-network facility, unless certain notice and consent requirements have been met.
Even if the aforementioned notice and consent requirements have been met, however, out-of-network providers may not bill for the difference in nonemergency service rates if the provider is based at the in-network facility and is the only provider available to deliver the services. Furthermore, insured individuals are protected from surprise billing resulting from inaccurate information provided by their health plan, and the Act calls for a dispute resolution process between providers and health plans (or providers and uninsured patients) to address payment disagreements. The Act extends to hospitals, facilities, individual practitioners and air ambulance services. Most provisions of the Act will go into effect on January 1, 2022.
Interim Final Rules - Surprise Billing
Relatedly, on July 1, 2021, the Department of Health and Human Services, Department of Labor, Department of the Treasury and Office of Personnel Management released an interim final rule with comment period (IFC), entitled “Requirements Related to Surprise Billing; Part I.” This is the first regulation to provide details for implementing the Act. Among its requirements, are the following.
- Emergency Services: Requires that emergency services be covered without any prior authorization, without regard to whether the health care provider furnishing the emergency services is a participating provider or a participating emergency facility with respect to the services, and without regard to any other term or condition of the plan or coverage other than the exclusion or coordination of benefits or a permitted affiliation or waiting period;
- Cost Sharing Limits: Limits cost sharing for out-of-network services to in-network levels, and requires that such cost sharing count toward any in-network deductibles and out-of-pocket maximums;
- Balance Billing: Prohibits balance billing, with some exceptions, establishes a complaints process for receiving and resolving complaints related to these new balance billing protections, and implements balance billing disclosure requirements applicable to health care providers, facilities, group health plans and health insurance issuers; and
- Cost Sharing Amounts: Specifies that consumer cost sharing amounts for emergency services furnished by out-of-network emergency facilities and out-of-network providers, as well as certain nonemergency services provided by out-of-network providers at in-network facilities, must be calculated based on one of the following amounts:
- An amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act;
- If there is no such applicable All-Payer Model Agreement, an amount determined by a specified state law; or
- If there is no such applicable All-Payer Model Agreement or specified state law, the lesser of the billed charge or the plan’s or issuer’s median contracted rate, referred to as the qualifying payment amount (QPA).
The IFC was published in the Federal Register on July 13, 2021, to be effective September 13, 2021. Comments to the IFC will be accepted through September 7, 2021.
Ohio House Bill
At the state level, Ohio House Bill 388 (HB 388) was signed into law on January 7, 2021. HB 388 largely mirrors the No Surprises Act, but two differences should be noted:
- Ground Ambulances: The provisions of HB 388 extend to surprise billing by ground ambulances, where the Act’s protections do not; and
- Applicable to Fully-Insured: HB 388 applies only to fully-insured health plans, whereas, the Act covers both fully-insured and self-insured patients.
H.B. 388 also establishes the default reimbursement rate as the greatest of the in-network rate, the out-of-network rate or the Medicare rate and sets forth procedures by which payees (i.e., providers, facilities, emergency facilities and ambulances) may seek to negotiate reimbursement in lieu of the default rate. The Ohio Department of Insurance has issued a draft rule implementing these provisions. Comments to this draft were accepted through May 28, 2021, and an updated draft with additional opportunity to comment is expected before HB 388’s effective date of January 12, 2022.
For questions related to the No Surprises Act or Ohio House Bill 388, please contact one of our health care attorneys.
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Disclaimer: This alert has been prepared by Eastman & Smith Ltd. for informational purposes only and should not be considered legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney/client relationship.