The Biden administration released Thursday the latest final rule to implement a ban on surprise medical bills, detailing how disputes over out-of-network charges will be handled.
The interim final rule, released by the departments of Health and Human Services (HHS), Treasury and Labor, is the third in a series of rules that implement the No Surprises Act, which bans surprise medical bills. The latest rule details the independent dispute resolution process to determine an out-of-network rate for items and services after talks between payers and providers break down.
The rule also requires providers and facilities to give uninsured patients a clear estimate of the charges they can expect to receive for their services.
“Price transparency is a reality in almost every aspect of our lives except healthcare,” said Centers for Medicare & Medicaid Services Administrator Chiquita Brooks-LaSure in a statement. “The Biden-Harris administration is committed to changing this.”
The rule—which goes into effect Jan. 1—builds on an interim final rule issued back in July that bans balance billing for emergency services and prohibits out-of-network charges for items and services provided by out-of-network providers at an in-network facility, except if the patient grants consent.
A payer and provider can initiate a 30-day open negotiation period to determine an out-of-network rate. If the parties can’t reach an agreement after that period, either party can initiate the independent dispute resolution process.
“The parties then may jointly select a certified independent dispute resolution entity to resolve the disputes,” according to a fact sheet on the rule.
After an arbiter is selected, both the payer and provider will submit the amount they believe the service should cost. The arbiter will then select one of the amounts as the out-of-network charge.
The arbiter must begin with the presumption that the qualified payment amount, which is the insurance plan's median contracted rate for the same or similar service in an area, is the appropriate out-of-network charge.
The new rule outlines how independent arbiters are certified. Any entity that wants to become an arbiter must submit its application by Nov. 1 to be ready by Jan. 1, when the rule goes into effect.
But some parts of the rule are sure to upset the hospital industry that had asked for more leeway on certain time frames.
For example, the Federation of American Hospitals (FAH) wrote to the Biden administration back in August seeking greater flexibility on the timelines for triggering the independent resolution process.
The No Surprises Act states that providers and payers have three days to choose a resolution entity and four days to trigger the dispute resolution process.
FAH believes that HHS has the ability to change those timelines to make them more flexible.
A senior HHS official told reporters on a press call Thursday that the interim final rule can still be changed and that it will review any comments on the issues.
“We tried to stick as closely to the statute as possible,” the official said. “We will continue to refine this as we go.”
But hospital groups slammed the rule's decision to have the arbiter rely on the qualifying payment amount, charging that it tilts the balance of arbitration toward payers.
"It inserts a government standard pricing scheme arbitrarily favoring insurers," said Chip Kahn, president and CEO of FAH, in a statement.
The American Hospital Association also said the rule "moved away from congressional intent and brought new life to harmful proposals that Congress deliberately objected," said Executive Vice President Stacey Hughes in a statement. "Today’s rule is a windfall for insurers."
But the insurance group America's Health Insurance Plans cheered the rule's decision to tie the out-of-network reimbursement to the qualified payment amount.
"This is the right approach to encourage hospitals, healthcare providers and health insurance providers to work together to negotiate in good faith," the group said in a statement.
Making good faith estimates
The rule also requires providers and hospitals to give a good faith estimate to an uninsured patient for any healthcare items or services.
The estimate must include any “expected charges for the items or services that are reasonably expected to be provided together with the primary item or service,” a summary of the rule said.
If an uninsured patient gets an estimate for surgery, that estimate not only has to include the cost for the procedure but also any labs, tests and anesthesia that could be used during the operation.
“If an item or service is something that isn’t scheduled separately from the surgery itself, it will generally be included in the good faith estimate,” the summary said.
But other services like physical therapy or a pre-surgery appointment do not have to be included in the estimate.
HHS does give some leeway to providers for including the required information from others.
For 2022, HHS will not penalize providers that offer good faith estimates that don’t “include expected charges from other providers and facilities that are involved in the individual’s care.”
Comments for the final rule are due 60 days after it is published in the Federal Register.