Congress Finally Tackles “Surprise” Out-of-Network Medical Billing & Also Adds New Rx Benefit Reporting Requirements

The Consolidated Appropriations Act of 2021 (the “Appropriations Act”) that was recently signed into law on December 28, 2020 by President Trump is mostly famous for two things: (1) it extended unemployment benefits and rental assistance for those impacted by the COVID-19 pandemic and (2) it provides a second round of stimulus payments to most Americans, though less then the earlier payments issued under the CARES Act.

However, the Appropriations Act also included two provisions that impact health and welfare plans. First, it contained a revised version of the “No Surprises Act,” a rare piece of bipartisan and bicameral legislation that has long been in the works and was always expected to become law. Second, it imposes new prescription drug reporting rules on plans and insurance providers. The following is summary of these new rules:

  • Nonemergency Services Provided by Out-of-Network Provider at In-Network Facility

This situation was extremely frustrating (not to mention unfair) to participants. They would elect to be treated at an in-network facility, presumably to reduce their out-of-pocket costs, only to be hit with a huge out-of-network balance bill from a provider they did not choose. The new law prohibits this practice, which commonly occurs with radiologists, anesthesiologists, and other specialty providers that the patient usually does not select. Now, unless the patient consents to use an out-of-network provider, he or she can only be billed for the cost sharing that would have been charged by an in-network professional.

  • Emergency Services Provided by Out-of-Network Providers and Facilities

The rule here is the same but covers emergency services that were provided by an out-of-network provider or facility. Under the Act, patients cannot be assessed cost-sharing that is higher than the in-network amount he or she would have paid for the same emergency services that were received.

  • Air Ambulance Services

If the air ambulance services are furnished by a non-participating provider, the services must be covered as if the patient had been treated by an in-network air ambulance service. Additionally, the cost sharing for the air ambulance services must count towards the in-network deductible and maximum out-of-pocket limit in the same manner as in-network services do. Importantly, these rules do not apply to ground ambulance services.

  • Dispute Resolution

These provisions all lead to one question: If the plan or insurer can only assess the in-network cost sharing to the participant, how does it determine the covered amount with the provider? Generally, insurers and self-insured plans favored the use of a national benchmark payment standard. This would essentially remove all payment disputes. Instead, the Act sided with providers and adopted a binding arbitration standard.

The process contains two provisions designed to encourage negotiation and prevent overuse: (1) the losing party pays the administrative fee; and (2) the arbitrator does not have the flexibility to act like King Solomon and split the difference between the parties; instead, the arbitrator must select the amount proposed by one of the parties (i.e., winner takes all).

  • New Prescription Drug Reporting Requirements

Finally, the Act added a new annual reporting requirement that requires group health plans and insurance providers to submit certain information on pharmacy benefits and drug costs provided under the plan to the Secretary of Health and Human Services (“HHS”). The information required under the Act must be submitted within one (1) year following the Act’s effective date. The new rules were a part of a joint effort undertaken by HHS, the Department of Labor, and the Secretary of the Treasury. Church plans are exempt from this new reporting requirement. It is expected that HHS will issue additional regulations or guidance in the near future.

Final Takeaway

Plans and health insurance providers must adapt their billing practices, and potentially update any administrative service agreements, to accommodate the changes ushered in by the No Surprises Act. This may also require an amendment to the plan document or summary plan description. Further, the prescription drug reporting rules require that plans and pharmacy benefit managers coordinate and create a process that ensures that the appropriate data is collected and reported on a timely basis. It also may require a review of the underlying administrative services agreement.