Late last week, the U.S. Department of Health and Human Services
left enforcement of a federal law prohibiting emergency balance billing largely in the hands of states, thus leaving lingering questions around dispute resolution and price comparison tools unanswered.
In a highly-anticipated joint notice of proposed rulemaking, HHS, Labor, Treasury, and the Office of Personnel Management addressed the division of power between federal and state governments in overseeing the “No Surprises Act” (NSA), along with penalties for violations of the law.
The departments said HHS would enforce the law, which goes into effect January 1, the same way it does other requirements under the Public Health Service Act (PHS Act) of 1944. This means the Centers for Medicaid and Medicare Services (CMS) will have federal oversight of state enforcement actions, and only intervene where states are unable or unauthorized to act.
Enforcement falls to the states
HHS said it would generally leave states to determine whether healthcare providers and plans were abiding by their responsibility to accurately bill patients for emergency and related post-emergency services. The only exceptions are where the states affirmatively report they are unable to do so. or if they “fall asleep on the job,” said Sidley Partner Brenna Jenny.
“Eighteen of the states already have balance billing laws in place, and in these states, existing enforcement mechanisms against providers should already largely be in place,” she said, in a phone interview. “The pressure is on the other states to pass mirror regulations that clearly delegate the authority to enforce provider balance billing restrictions under No Surprises to the appropriate state agency.”
Four states (Missouri, Oklahoma, Texas, and Wyoming) have already notified CMS that they are not enforcing PHS Act requirements, which places the ball in CMS’ court unless they create state-level regulations.
Under title XXVII of the PHS Act, as amended by the Patient Protection and Affordable Care Act (ACA), when a state informs CMS that it does not have authority to enforce or will not enforce health insurance market reforms, CMS takes on responsibility for enforcing it.
Providers bear the brunt of audits but payers could pay big for miscalculating qualifying payment amounts (QPAs)
While this new rule gives permission for up to 25 insurer audits, Jenny noted that in its regulatory impact analysis, HHS estimated it would be conducting no more than nine such investigations. On the other hand, CMS expects to audit 200 providers per month, adding up to 2,400 per year.
“HHS’s implementation approach demonstrates a more hands-off strategy than the Department could have adopted,” she said. “CMS will only audit payers in states that substantially fail to enforce the No Surprises Act.”
In other words, CMS is mainly interested in making sure payers calculate qualifying payment amounts (QPAs) using the methodology HHS requires.
The QPA is a concept introduced in the NSA. The act defines it as a plan’s median contracted rate (the middle amount in a list of contracted rates) for a particular service in a particular geography for a particular market (e.g., individual, small group, or large group).
Having consistently calculated QPAs is important because they serve as the basis for patient cost-sharing and can affect out-of-network provider reimbursement.
If CMS finds a state is failing to hold its payers responsible for their obligations under the NSA, it can fine them up to $162 (updated periodically for inflation) per day for each responsible entity and each individual affected by the violation, according toHHS regulationscited by Jenny.
If a plan issuer miscalculates the QPA on a common service and fails to notice, fines could add up quickly, according to Jenny — especially if it fails to correct the mistake.
“CMS takes into account mitigating and aggravating circumstances,” she said, “so it’s in payers’ best interests to keep on top of their QPAs, and cooperate fully with any investigation or examination.”
Compared to insurers, providers bear a heavier load. The No Surprises Act not only allows HHS to hit them with a civil monetary penalty (CMP) of up to $10,000 per violation, but also specifically mandates that the agency can bring an action to prevent a provider from engaging in an activity that would make it subject to a penalty. Jenny believes this liability could hit private equity firms that invest in providers, as well.
However, “CMS will look kindly on a provider that affirmatively goes back and notifies patients they were overcharged,” Jenny said, “and if mistakes are made, CMS has promised that when it is calculating CMPs, it will also give credit to their efforts to establish robust compliance programs.”
This doesn’t leave providers off the hook, however, according to Joel White, president, Horizon Government Affairs.
“Payers and providers still need more clarity, otherwise we’re looking at the L-word: litigation,” White said in a phone interview.
A Still-Developing Picture
Signed in December, the No Surprises Act (NSA) seeks to protect patients from the crippling effects of unexpected medical debt from air ambulance trips, emergency room visits, and related tests. The departments released the first set of rules implementing the law in July.
“While the departments have done a great job of taking private-sector concerns into account, the guidance they’ve offered to this point has been marginally helpful,” White said. “It’s vague.”
In August, the departments delivered further guidance but punted the ball on implementing the NSA’s provisions on the independent dispute resolution (IDR) process for out-of-network reimbursement rates, the patient-provider dispute resolution process, and price comparison tools.
In its answers to Frequently Asked Questions (FAQ) issued August 20, HHS said that insurers will not be expected to issue price comparison tools to patients until January 1, 2023 for the 500 most common emergency items and services, and have until January 1, 2024, for all others.
While payers, providers, industry advocates, and attorneys had hoped to find clarity on these points in Friday’s release, they’ve been left to make a “good faith effort” to interpret the law on these issues — at least until HHS drops another set of rules, which are expected soon.
The departments have explicitly stated they will not be releasing additional guidance on a number of provisions in the law until after January 1, such as: ID card requirements, disclosure requirements, and continuity of care. They will not enforce these provisions, or those requiring good faith estimates and advanced explanation of benefits (EOB), until proper rulemaking is established.
“Instead of putting off [NSA] implementation, the Biden Administration should act quickly to issue clear regulations so that patients can stop being surprised by unexpected bills,” said White, who is also president of the Council for Affordable Health Coverage. “Failing to act quickly creates uncertainty — plans, providers and patients are all waiting.”
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