“Surprise Billing” Rules: What Plan Sponsors Need to Know

Insight By
Michael LoVasco
Employee Benefits

The Departments of Health and Human Services, Labor, and Treasury recently issued the first of two Interim Final Regulations (IFR) to implement the new “surprise billing” rules that will take effect for plan years beginning on or after January 1, 2022. The “No Surprises Act,” which will affect group health plans and participants, as well as health insurers and health care providers, was passed as part of the Consolidated Appropriations Act (CAA), 2021.

Briefly, the new restrictions on “surprise billing” will apply to certain emergency services provided by out-of-network providers and/or at out-of-network facilities, certain non-emergency services provided by out-of-network providers at participating facilities, and out-of-network air ambulance services. However, participants can waive the surprise billing protections in certain limited circumstances in which they otherwise would apply.

IFR Part 1 highlights include:  

  • The surprise billing rules will apply when a participant receives emergency services at an out-of-network facility, and/or from an out-of-network provider. The term “emergency services” does not include only services provided in a hospital emergency room. It can include services provided in other hospital departments, and even in urgent care centers that are not attached to or affiliated with a hospital.
  • The surprise billing rules do not just apply to emergency services. In the case of non-emergency services that a participant gets at a network facility from an out-of-network provider, the surprise billing rules also will apply.  However, the participant may voluntarily waive the surprise billing protections if the provider satisfies certain notice requirements. The plan can rely on the provider’s representation that it properly obtained a waiver. Otherwise, the plan must follow the surprise billing rules.  
  • The surprise billing rules also applies if participant uses a nonparticipating provider of air ambulance services. This is true even if the plan does not have any air ambulance service providers in its network.
  • The new rules do not require group health plans or health insurance issuers to provide coverage for emergency services, air ambulance services, or any other services. Instead, they apply only to the extent that plans or issuers do cover these services.   
  • The rules include specific definitions of “emergency services” and other key terms that will determine when and how the rules apply even if the plan or issuer would otherwise define them differently.
  • When the rules do apply, the IFR provides specific requirements for determining the participant’s cost-sharing obligation. Plans and issuers will need to prepare and maintain Qualifying Payment Amounts (QPAs) for relevant covered items and services in order to apply the cost-sharing requirements in many circumstances. The cost-sharing amount participants pay will have to count against the plan’s in-network deductible and out-of-pocket maximum.
  • When the rules apply, they also specify requirements for determining the amount plans and issuers ultimately pay providers for covered items and services. The amount the plan or issuer pays the provider might be different than the amount the participant’s cost-sharing requirement is based on.  In some cases, this will mean the plan has to make a payment to the provider even though the participant’s deductible has not yet been satisfied.
  • The surprise billing rules do apply to grandfathered health plans.  They do not apply to HRAs, plans providing only excepted benefits (e.g., standalone dental- and vision-only plans), or “retiree-only” plans.

To read a comprehensive summary of “Surprise Billing” IFR Part 1, please download the accompanying PDF file, prepared by the law offices of Davis & Harman LLP.

Insight By
Michael LoVasco
Executive Vice President
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Employee Benefits
Published on

August 16, 2021

updated on

August 3, 2021


This article is for educational purposes only. The tax and legal references attached herein are designed to provide accurate and authoritative information with regard to the subject matter covered and are provided with the understanding that LoVasco Consulting Group is not engaged in rendering tax or legal services. If tax or legal advice is required, you should consult your accountant or attorney. LoVasco Consulting Group does not replace those advisors.

Securities and Investment Advisory Services offered through M Holdings Securities, Inc., a registered broker dealer and Investment Advisor, member FINRA / SIPC. LoVasco Consulting Group is independently owned and operated.

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