Biden admin releases first rule banning surprise medical bills

The Biden administration has released an interim final rule that bans surprise billing and certain out-of-network charges, implementing a law passed by Congress late last year.

The 411-page interim final rule released Thursday by the departments of Health and Human Services (HHS), Labor and Treasury will go into effect on Jan. 1, 2022, for providers and for insurance plans that begin on or after Jan. 1, 2022. The regulation is the first part to address surprise billing and affects people enrolled in employer-sponsored or individual market plans.

“Health insurance should offer patients peace of mind that they won’t be saddled with unexpected costs,” said HHS Secretary Xavier Becerra in a statement Thursday.

The interim final rule will ban any surprise billing for emergency services regardless of where they are provided, including if they are air medical services. Such services must be treated via an in-network basis.

Other provisions of the rule include banning out-of-network charges without advance notice, out-of-network charges for ancillary care and any out-of-network charge for cost-sharing for emergency and nonemergency services.

“Patient cost-sharing, such as co-insurance or a deductible, cannot be higher than if such services were provided by an in-network doctor, and any coinsurance or deductible must be based on in-network provider rates,” according to a release from HHS.

The regulation also outlines several requirements for insurance plans that provide any benefits for emergency services. It says that any emergency service must be covered without any prior authorization, regardless of whether the provider is in-network or if there is any "other term and condition of the plan or coverage other than the exclusion or coordination of benefits, or a permitted affiliation or waiting period," a fact sheet on the rule said. 

Consumer cost-sharing for emergency services provided out of network must be less than either the billed charge or the qualifying payment amount, which is generally a plan's median contracted rate. 

Cost-sharing for air ambulance services, a common source of surprise medical bills, "provided by out-of-network providers must be calculated using the lesser of the billed charge or the plan's or issuer's qualifying payment amount," the fact sheet said. 

Certain providers must also make available or post on a website and give to individuals a one-page notice that details the requirements and prohibitions on surprise medical billing and any state balance billing limitations or prohibitions, HHS added.

Arbitration regulations on the way

Congress passed a law to end balance billing in December 2020 after a hard-fought lobbying war between providers and payers.

The law prohibits certain out-of-network providers from balance billing patients unless the patient is notified of their network status. The law requires an independent dispute resolution between payers and providers over any out-of-network charges. Both parties will submit amounts, and the arbiter will choose one.

Becerra said on a call with reporters Thursday that later regulations will address the arbitration process to settle disputes among providers and payers over out-of-network charges. 

How the arbitration will be handled is a major point of contention among stakeholders.

A collection of more than 20 patient advocacy groups including the American Heart Association wrote to administration leaders last month (PDF) listing their priorities for the regulation. The groups wanted to ensure the arbitration process didn’t lead to higher patient costs.

“Regulations should be drafted to at least meet, if not exceed, the savings projected by the Congressional Budget Office, which estimated premiums could be reduced by one percent,” the letter said.

The interim final rule is open for public comment for 60 days after it is published in the Federal Register.