The Biden administration on Thursday unveiled the first in a series of rules aimed at banning surprise billing.
The interim final rule bars surprise billing for emergency services and high out-of-network cost-sharing for emergency and non-emergency services. It also prohibits out-of-network charges for ancillary services like those provided by anesthesiologists or assistant surgeons, as well as other out-of-network charges without advance notice.
"No patient should forgo care for fear of surprise billing," HHS Secretary Xavier Becerra said in a statement. "Health insurance should offer patients peace of mind that they won't be saddled with unexpected costs. The Biden-Harris Administration remains committed to ensuring transparency and affordable care, and with this rule, Americans will get the assurance of no surprises."
While public health insurance programs like Medicare and Medicaid already prohibit balance billing, people with job-based coverage or individual health plans frequently and unknowingly accept care from an out-of-network provider before they are slapped with a surprise medical bill. The new rule aims to put a stop to that.
According to CMS, two-thirds of all bankruptcies in the U.S. are tied to medical expenses, and researchers estimate that 1 in 6 emergency department visits result in an unexpected bill.
"No one should ever be threatened with financial ruin simply for seeking needed medical care," U.S. Secretary of Labor Marty Walsh said in a statement.
This first round of regulation applies to providers, air ambulance providers, group health plans, health insurance issuers and Federal Employees Health Benefits Program carriers. The rule takes effect in 60 days, but most provisions don't apply until January 1. Providers and insurers have until September 1 to submit comments.
Under the new rule, health plans that cover emergency services cannot use prior authorization for those services and must pay for them regardless of whether the clinician is an in-network provider or emergency facility. Likewise, insurers can't charge their enrollees higher out-of-pocket costs for emergency services delivered by an out-of-network provider. They also have to count beneficiaries' cost-sharing for those emergency services toward their in-network deductible and out-of-pocket maximums.
Plans will have to calculate consumers' out-of-pocket expenses based on a state's all-payer model agreement or other applicable state law in most cases.
"If neither of the above apply, the lesser amount of either the billed charge or the qualifying payment amount, which is generally the plan's or issuer's median contracted rate," according to a CMS fact sheet. Similar rules apply to air ambulance services.
Likewise, if state laws don't specify that an insurer must pay a specific price for a given service, providers and insurers will have to agree to an amount or go through an independent dispute resolution process.
The Biden administration is still working out the details about how the dispute resolution process will work. But Congress laid out the broad-brush strokes in December's No Surprises Act, which passed as part of its end-of-year spending package. Providers and insurers will have 30 days to agree to a price for the medical services delivered. And if they don't settle, they're supposed to enter arbitration, during which each side will present a final offer and make their case for why their recommendation is best. The arbitrator must then pick one of the two offers. But they can't split the difference.
Congress' decision to go with baseball-style arbitration to settle payment disputes between providers and insurers was a victory for providers since insurers' preferred benchmarking approach would have led to lower payments for doctors and hospitals.