CMS Rule Protects Patients from Surprise Billing

Rule will provide patients with financial peace of mind and safeguards from unknowingly incurring surprise expenses.

On July 1, the U.S. Department of Health and Human Services (HHS) announced the first in a series of rules aimed at protecting patients from, "increased financial hardships stemming from surprise medical bills."

The interim final rule bars surprise billing (or balance billing) for emergency services and high out-of-network cost-sharing for emergency and non-emergency services. It also prohibits out-of-network charges for ancillary services like those provided by anesthesiologists or pathologists, as well as other out-of-network charges, without advance notice. 

Currently, balance billing is prohibited by both Medicare and Medicaid. The proposed rule extends similar protections to people insured through employer-sponsored and individual commercial health plans.

"No patient should forgo care for fear of surprise billing," said HHS Secretary Xavier Becerra. "Health insurance should offer patients peace of mind that they won't be saddled with unexpected costs. The Biden-Harris Administration remains committed to ensuring transparency and affordable care, and with this rule, Americans will get the assurance of no surprises."

According to a CMS fact sheet, studies have shown that in the period from 2010-2016, more than 39% of emergency department visits to in-network hospitals resulted in an out-of-network bill, increasing to 42.8% in 2016. During the same period, the average amount of a surprise medical bill also increased from $220 to $628. And nine percent of individuals who got surprise bills paid more than $400 to providers, which may result in financial distress for consumers, given recent findings show 40% of Americans struggle to find $400 to pay for an unexpected bill.

Here's some things you need to know about the interim final rule:

1. Emergency services, regardless of where they are provided, must be billed on an in-network basis without prior authorization.
2. 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 co-insurance or deductible must be based on in-network provider rates. 
3. Patient consent is required to receive care on an out-of-network basis and healthcare providers and facilities must provide patients with a plain-language consumer notice explaining the need for consent before billing at the out-of-network rate. (Note: As specified in Section 2799B-2(b) of the Public Health Service Act, the notice and consent exception is not applicable with respect to non-emergency ancillary services, including most laboratory and pathology services, or to an out-of-network provider if there is no in-network provider available to furnish the item or service at the facility. In these cases, patients may not be billed beyond their in-network cost-sharing amounts, regardless if notice is given.)
4. Certain providers must also make publicly available a one-page notice that details the requirements and prohibitions on surprise medical billing and any state balance billing limitations or prohibitions.
5. Plans will have to calculate consumers' out-of-pocket expenses based on a state's all-payer model agreement or other applicable state law in most cases. 
6. Arbitration process. The first interim rule doesn't discuss the dispute resolution process.
7. Comments on the interim final rule are due 60 days after publication in the Federal Register.

Most provisions outlined in the proposed rule will not take effect until Jan. 1, 2022. You can read the entire 411-page interim final rule document on the CMS website. Fact sheets are also available here and here.