No More Surprises

By Timothy Powell, CPA, CHCP

One of the consulting engagements I once turned down was for a group of “mini” hospitals that provided emergency care in rural areas. What drove reimbursement was the fact that they refused to contract with essentially all payors, and they demanded full charges from non-contracting third-party payers and patients. They also had a very lucrative reimbursement sharing model with local ambulance drivers.

In response to these kinds of abuses, on July 1, the U.S. Department of Health and Human Services (HHS) released an interim final rule with comment period, titled “Requirements Related to Surprise Billing; Part I.”

The rule implements many of the law’s requirements for group health plans, health insurance issuers, carriers under the Federal Employees Health Benefits (FEHB) Program, healthcare providers and facilities, and air ambulance service providers.

The rule protects individuals from surprise medical bills for emergency services, air ambulance services provided by out-of-network providers, and non-emergency services provided by out-of-network providers at in-network facilities, in certain circumstances.

If a plan or coverage provides or covers any benefits for emergency services, the rule requires emergency services to be covered:

• Without any prior authorization (i.e., approval beforehand);
• Regardless of whether the provider is an in-network provider or an in-network emergency facility; and
• Regardless of any other term or condition of the plan or coverage, other than the exclusion or coordination of benefits, or a permitted affiliation or waiting period.

Emergency services include certain services provided in an emergency department of a hospital or an independent freestanding emergency department, as well as post-stabilization services, in certain instances.

The rule also limits cost-sharing for out-of-network services subject to these protections to being no higher than in-network levels, requires such cost-sharing to count toward any in-network deductibles and out-of-pocket maximums, and prohibits balance billing.

The rule specifies that consumer cost-sharing amounts for emergency services provided by out-of-network emergency facilities and out-of-network providers, and certain non-emergency services furnished by out-of-network providers at certain in-network facilities, must be calculated based on one of the certain given amounts:

The cost-sharing amounts for air ambulance services 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, and the cost-sharing requirement must be the same as if the services were provided by an in-network air ambulance provider.

Under the rule, surprise billing for items and services generally is not allowed.

Hospitals and other providers are scrambling to comply with these rules. The patient modeling systems used by providers simply can’t catch up with payment terms that they do not have and expanding the number of contracting rates they have to model. Providers, patients, and third-party payers are all in for a rough ride in implementing this.