The Latest No Surprises Act Interim Rule and the Ignored Problem of Hospital Based Physicians

By Clive Riddle, September 30, 101`

A second interim final rule for the No Surprises Act: “Requirements Related to Surprise Billing; Part II,”  has just been issued, which CMS has summarized as including the following provisions:

• A process that takes consumers out of the middle of a payment dispute between providers and health plans;
• Requirements for health care cost estimates for uninsured (or self-pay, meaning you have coverage but choose not to have your care billed to your health plan) individuals;
• A payment dispute resolution process for uninsured (or self-pay) individuals; and
• Expanded rights to external review (what individuals with job-based or individual health plans can use to dispute when certain claims are denied payment, as described below).

Earlier this month, two other interim final rules were issued that take effect January 1st:  an interim final rule on consumer protections against surprise billing, and a proposed rule to help collect data on the air ambulance provider industry, which the DOL states “ban surprise billing for emergency services and ancillary care at in-network facilities, and limit high out-of-network cost sharing for emergency and non-emergency services, such that it cannot be higher than if such services were provided in-network.”

The DOL helps explain this latest interim final rule now “details how the total payment to an out-of-network provider or facility will be determined. In some cases – based on the law – state law or application of a state All-Payer Model Agreement will determine this amount. Where neither applies, the rule sets forth the federal process that will apply for determining the amount. When a payment dispute for items/services that fall under surprise billing protections occur, either a provider, facility, or air ambulance provider or plan/issuer may initiate a 30-day open negotiation period. If open negotiation fails, either party may initiate the federal independent dispute resolution process. This rule details how this process initiates, what is eligible for this process and how independent dispute resolution entities should consider factors when determining a payment amount.”

The DOL adds that the new rule “outlines key requirements related to uninsured (or self-pay) individuals (self-pay individuals are individuals who have coverage but do not choose to have their care billed to their health plan or issuer). When individuals schedule an item or service with certain providers and facilities, those providers and facilities will be required to inquire about the individual’s health coverage status, and if the individual wants their care billed to their health plan or issuer. The provider or facility must provide a good faith estimate of expected charges for the care they are scheduling for individuals deemed uninsured (or self-pay). An uninsured (or self-pay) individual may also request a good faith estimate, without scheduling an item or services. The rule also establishes a process for uninsured (or self-pay) individuals to initiate a payment dispute resolution process if they are ultimately billed substantially in excess of the good faith estimate they received.”

CMS provides a summary of the open negotiation and arbitration process and deadlines, and provisions for good faith estimates of charges for uninsured or self-pay individuals that are set in the rule.

The root problems of surprise medical billing are significant, and date back to the dawn of modern managed care, particularly with the advent of PPOs that weren’t as subject to coverage regulations as HMO policies. While the No Surprises Act and the subsequent final rules go a long ways in addressing the issue, they are silent to one of the root causes: the impact of state corporate practice of medicine laws on the services provided by hospital based physicians.

Surprise Medical Bills typically involve out-of-network providers, and the source of surprise can be two—fold: (1) the magnitude of the bill reflected in balance billing; and (2) if the service was determined to be out-of-network or non-covered, when the patient perceived it to be in-network or otherwise fully covered. The scenarios that comprise one or both of these surprises are various, although often involve emergency services when use of out-of-network providers is necessitated. But a common thread in many cases involves services rendered by hospital based physicians (emergency medicine, anesthesiologists, radiologists, pathologists, and hospitalists are the most common such specialties.)

While typical HMO policy coverage of a treatment would apply to all services rendered for that treatment, including hospital based physician (HBP) services, PPO policy coverage at the preferred benefit level for in-network hospital services often doesn’t extend to HBP servicews provided by non-participating providers. In such situations, the HBP services by non-participating physicians were subject to balance billing, the same as when services are determined to be totally non-covered. And of course, retail rates have historically applied to balance billing, as opposed to standard contracted or reference based pricing rates.

The average consumer is typically not aware that services rendered at hospitals by HBPs are subject to separate billing by HBPs, or that the HBP might not elect to contract with the same plans as the hospital (although numerous hospitals require such participation in their HBP arrangements.) Of course, hospitals in states not subject to corporate practice of medicine laws often contract and bill for HBP services, making this issue moot. But for the many states subject to corporate practice of medicine laws, the issue remains.

The No Surprises Act transfers some of the financial pain experienced by patients potentially to the provider. But in corporate practice of medicine states, this pain could be better avoided by a carve-out for allowing corporate practice for HBPs, at least regarding health plan contracting, so that such services would be subject to falling within the hospital bill. The consumer surprise is often that separate bills for HBPs exist. A carve out, with a requirement that hospitals assume billing and payment responsibility for HBP services in applicable states, could be a more fundamental step to addresses this issue in combination with the No Surprises Act.