In recent years, Congress has undertaken efforts to protect American health care consumers from “surprise billing.” This problem occurs when those covered by health insurance suddenly find themselves hit with unexpected medical bills — often of several thousand dollars or more — because of hard-to-detect coverage gaps.
The Consolidated Appropriations Act, passed in December 2020, included coverage and disclosure requirements intended to protect consumers from surprise medical bills issued by nonparticipating providers and facilities. Building on patient protections for emergency services originally included in the Affordable Care Act (ACA), the comprehensively revised and expanded requirements now apply to emergency and certain nonemergency services for plan years beginning on or after January 1, 2022.
A familiar look
Although the rules differ for emergency and nonemergency services, in each case, group health plans (including grandfathered plans) and insurers are limited in the patient cost sharing they can impose. In addition, providers and facilities are generally prohibited from “balance billing” — that is, seeking to collect from the patient more than the applicable cost-sharing amount.
Some of the revised protections for emergency services will look familiar. For example, as with the ACA protections, emergency services must be covered without the need for prior authorization and regardless of whether the provider is a participating provider.
If the services are provided by a nonparticipating provider or facility, the plan may not impose any limitation on coverage that’s more restrictive than the requirements or limitations that apply to emergency services received from participating providers. And, as with the existing protections, cost sharing for items and services provided by nonparticipating providers and facilities may not be greater than the cost sharing amount that would apply if the items and services were provided by a participating provider.
Other protections expand the ACA provisions. For instance, the revised protections apply to coverage of services both in:
- An emergency department of a hospital, defined to include a hospital outpatient department that provides emergency services, and
- An independent freestanding emergency department.
Cost sharing must be calculated as if the total amount charged for such services is equal to the “recognized amount,” which generally means the median in-network rate recognized by the plan for such services, unless applicable state law requires otherwise. The recognized amount supplants the ACA’s requirement for plans to base benefits on the greatest of three separate calculations.
Perhaps the most notable changes involve the process for plan payments to nonparticipating providers — and the amount that must be paid. For example, an initial payment or notice of denial must be sent within 30 days after the provider transmits a bill for services.
Ultimately, the plan must pay directly to the provider a total payment equal to the amount by which the “out-of-network rate” for such services exceeds the cost-sharing amount. The out-of-network rate generally means the amount:
- Agreed on by the plan and the provider, or
- Established through an independent dispute resolution process that considers specified factors, including the plan’s median in-network rate.
As noted above, nonparticipating providers are prohibited from balance billing patients for emergency services.
If your organization provides group health plan coverage to its employees, be sure your HR staff and/or third-party provider is aware of the new requirements now that they’re in effect. And please contact us for assistance in managing the costs and financial risks of offering health care benefits.
We highly recommend you confer with your Miller Kaplan advisor to understand your specific situation and how this may impact you.