# Requirements Related to Surprise Billing; Part I

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2021-14379

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** July 13, 2021
- **Citation:** 86 FR 36872

## Text

OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 890
RIN 3206-AO30
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD9951]
RIN 1545-BQ04
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AB99
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 144, 147, 149, and 156
[CMS-9909-IFC]
RIN 0938-AU63
Requirements Related to Surprise Billing; Part I

AGENCY:

Office of Personnel Management; Internal Revenue Service, Department of the Treasury; Employee Benefits Security Administration, Department of Labor; Centers for Medicare & Medicaid Services, Department of Health and Human Services.

ACTION:

Interim final rules with request for comments.

SUMMARY:

This document sets forth interim final rules implementing certain provisions of the No Surprises Act, which was enacted as part of the Consolidated Appropriations Act, 2021. These interim final rules amend and add provisions to existing rules under the Internal Revenue Code, the Employee Retirement Income Security Act, the Public Health Service Act, and the Federal Employees Health Benefits Act. These interim final rules implement provisions of the No Surprises Act that protect participants, beneficiaries, and enrollees in group health plans and group and individual health insurance coverage from surprise medical bills when they receive emergency services, non-emergency services from nonparticipating providers at participating facilities, and air ambulance services from nonparticipating providers of air ambulance services, under certain circumstances. In this rulemaking, the Department of Health and Human Services (HHS), the Department of Labor (DOL), and the Department of the Treasury (collectively, the Departments) are issuing interim final rules with largely parallel provisions that apply to group health plans and health insurance issuers offering group or individual health insurance coverage. HHS is also issuing in this rulemaking additional interim final rules that apply to emergency departments of hospitals and independent freestanding emergency departments, health care providers and facilities, and providers of air ambulance services related to the protections against surprise billing. The Office of Personnel Management (OPM) is issuing in this rulemaking interim final rules that specify how certain provisions of the No Surprises Act apply to health benefits plans offered by carriers under the Federal Employees Health Benefits Act (FEHBA).

DATES:

Effective date:
These regulations are effective on September 13, 2021.

Applicability date:
The regulations are generally applicable for plan years (in the individual market, policy years) beginning on or after January 1, 2022. The HHS-only regulations that apply to health care providers, facilities, and providers of air ambulance services are applicable beginning on January 1, 2022. The OPM-only regulations that apply to health benefits plans are applicable to contract years beginning on or after January 1, 2022.

Comment date:
To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on September 7, 2021.

ADDRESSES:

Written comments may be submitted to the addresses specified below. Any comment that is submitted will be shared among the Departments and OPM. Please do not submit duplicates.

Comments will be made available to the public. Warning: Do not include any personally identifiable information (such as name, address, or other contact information) or confidential business information that you do not want publicly disclosed. Comments are posted on the internet exactly as received and can be retrieved by most internet search engines. No deletions, modifications, or redactions will be made to the comments received, as they are public records. Comments may be submitted anonymously.

In commenting, refer to file code CMS-9909-IFC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

1.
Electronically.
You may submit electronic comments on this regulation at
https://www.regulations.gov
by entering the file code in the search window and then clicking on “Comment”.

2.
By regular mail.
You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9909-IFC, P.O. Box 8016, Baltimore, MD 21244-8016.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3.
By express or overnight mail.
You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9909-IFC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

For information on viewing public comments, see the beginning of the
SUPPLEMENTARY INFORMATION
section.

FOR FURTHER INFORMATION CONTACT:

Padma Babubhai Shah, Office of Personnel Management, at 202-606-4056; Kari DiCecco, Internal Revenue Service, Department of the Treasury, at 202-317-5500; Matt Litton or David Sydlik, Employee Benefits Security Administration, Department of Labor, at 202-693-8335; Lindsey Murtagh, Centers for Medicare & Medicaid Services, Department of Health and Human Services, at 301-492-4106.
Customer Service Information:
Information from OPM on health benefits plans offered under the Federal Employees Health Benefits (FEHB) Program can be found on the OPM website (
www.opm.gov/healthcare-insurance/healthcare/
). Individuals interested in obtaining information from the DOL concerning employment-based health coverage laws may call the Employee Benefits Security Administration (EBSA) Toll-Free Hotline at 1-866-444-EBSA (3272) or visit the DOL's website (
www.dol.gov/ebsa
). In addition, information from HHS on private health insurance coverage and coverage provided by non-federal governmental group health plans can be found on the Centers for Medicare & Medicaid Services (CMS) website (
www.cms.gov/cciio
), and information on health care reform can be found at
www.HealthCare.gov.

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments:
Comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post comments received before the close of the comment period on the following website as soon as possible after they have been received:
https://regulations.gov.
Follow the search instructions on that website to view public comments.

I. Background

A.
Patient Protections and Requirements Related to Emergency Services Under Section 2719A of the Public Health Service Act

The Patient Protection and Affordable Care Act (Pub. L. 111-148), was enacted on March 23, 2010 and the Health Care and Education Reconciliation Act of 2010, Public Law 111-152, was enacted on March 30, 2010 (these statutes are collectively known as the “Affordable Care Act” or “ACA”). The Affordable Care Act reorganizes, amends, and adds to the provisions of part A of title XXVII of the Public Health Service Act (PHS Act) relating to group health plans and health insurance issuers in the group and individual markets.
1

The Affordable Care Act adds section 715(a)(1) to the Employee Retirement Income Security Act (ERISA) and section 9815(a)(1) to the Internal Revenue Code (the Code) to incorporate the provisions of part A of title XXVII of the PHS Act into ERISA and the Code, and make them applicable to group health plans and health insurance issuers providing health insurance coverage in connection with group health plans. Sections 2701 through 2728 of the PHS Act are incorporated into ERISA and the Code.

1
The term “group health plan” includes both insured and self-insured group health plans.

Under section 2719A of the PHS Act, as added by the Affordable Care Act and incorporated into ERISA and the Code, if a non-grandfathered group health plan or health insurance issuer offering non-grandfathered group or individual health insurance coverage provides any benefits with respect to emergency services in an emergency department of a hospital, the plan or issuer must cover emergency services without the individual or the health care provider having to obtain prior authorization (including when the emergency services are provided out-of-network) and without regard to whether the health care provider furnishing the emergency services is an in-network provider with respect to the services. The emergency services must be provided without regard to any other term or condition of the plan or health insurance coverage other than the exclusion or coordination of benefits, an affiliation or waiting period permitted under the Code, ERISA, and the PHS Act, or applicable cost-sharing requirements. For a plan or health insurance coverage with a network of providers that provides benefits for emergency services, the plan or issuer may not impose any administrative requirement or limitation on benefits for out-of-network emergency services that is more restrictive than the requirements or limitations that apply to in-network emergency services. In addition, carriers offering FEHB plans must comply with requirements described in section 2719A of the PHS Act in the same manner as they apply to a plan or issuer.

For purposes of the requirements under section 2719A of the PHS Act, emergency services mean, with respect to an emergency medical condition, (1) a medical screening examination (as required under section 1867 of the Social Security Act) that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition, and (2) that is within the capabilities of the staff and facilities available at the hospital, such further medical examination and treatment as are required under section 1867 of the Social Security Act to stabilize the patient.

Regulations implementing section 2719A of the PHS Act include these consumer protections.
2

Section 2719A of the PHS Act did not prohibit balance billing. Balance billing refers to the practice of out-of-network providers billing patients for the difference between (1) the provider's billed charges, and (2) the amount collected from the plan or issuer plus the amount collected from the patient in the form of cost sharing (such as a copayment, coinsurance, or amounts paid toward a deductible). To avoid the circumvention of the protections of section 2719A of the PHS Act, in the implementing regulations, the Departments determined it was necessary that a reasonable amount be paid by a plan or issuer before a patient becomes responsible for a balance billing amount.
3

Therefore, under the Departments' final regulations published in the
Federal Register
on November 18, 2015 (Patient Protections Final Rule), a plan or issuer satisfies the out-of-network emergency care cost-sharing limitations in the statute if it provides benefits for out-of-network emergency services in an amount at least equal to the greatest of the following three amounts (adjusted for in-network cost sharing): (1) The median amount negotiated with in-network providers for the emergency service; (2) the amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services (such as the usual, customary, and reasonable (UCR) amount); or (3) the amount that would be paid under Medicare Part A or Part B for the emergency service (collectively, minimum payment standards).
4

The Departments' regulations clarify that the cost-sharing requirements create a minimum payment requirement for the plan or issuer.
5

The Departments also clarified that the cost-sharing requirements do not prohibit a group health plan or health insurance issuer from providing benefits with respect to an emergency service that are greater than the amounts specified in the regulations. However, those regulations address balance billing with respect to only emergency services and, even in that context, they serve only to minimize the amount of a balance bill by requiring that plans and issuers must pay a reasonable amount for emergency services before a patient becomes responsible for a balance billing amount. Prior to the enactment of the No Surprises Act, these minimum payment standards were the only federal consumer protections to reduce potential amounts of balance billing for individuals enrolled in group health plans and group and individual health insurance coverage.

2
26 CFR 54.9815-2719A(b); 29 CFR 2590.715-2719A(b); 45 CFR 147.138(b).

3
75 FR 37188, 37194 (June 28, 2010);
see also
80 FR 72192 (Nov. 18, 2015). Additional clarification of these rules was also provided in 2018.
See
83 FR 19431 (May 3, 2018).

4
26 CFR 54.9815-2719A(b)(3); 29 CFR 2590.715-2719A(b)(3); 45 CFR 147.138(b)(3).

5
If state law prohibits balance billing, or in cases in which a group health plan or health insurance issuer is contractually responsible for balance billing amounts, plans and issuers are not required to satisfy the minimum payment standards set forth in the regulations, but may not impose any copayment or coinsurance requirement for out-of-network emergency services that is higher than the copayment or coinsurance requirement that would apply if the services were provided in-network.
See
26 CFR 54.9815-2719A(b)(3)(iii); 29 CFR 2590.715-2719A(b)(3)(iii); 45 CFR 147.138(b)(3)(iii); FAQs about Affordable Care Act Implementation (Part I), Q15 (Sept. 20, 2010), available at
https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/aca-implementation-faqs; www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs.html.

The No Surprises Act added section 9816 of the Code, section 716 of ERISA, and section 2799A-1 of the PHS Act, which expand the patient protections related to emergency services under section 2719A of the PHS Act, in part, by providing additional consumer protections related to balance billing.
6

The No Surprises Act amended section 2719A of the PHS Act to include a sunset provision effective for plan years beginning on or after January 1, 2022, when the new protections under the No Surprises Act take effect.

6
These new protections apply regardless of whether the plan or coverage is a grandfathered health plan under section 1251 of the Affordable Care Act. The No Surprises Act also amended 5 U.S.C. 8902(p) to ensure that covered individuals enrolled in FEHB plans receive these protections.

Additionally, the No Surprises Act recodified the patient protections regarding choice of health care professional from section 2719A(a), (c), and (d) of the PHS Act at new section 9822 of the Code, section 722 of ERISA, and section 2799A-7 of the PHS Act. If a plan or issuer requires or provides for designation by a participant, beneficiary, or enrollee of a participating primary care provider, these provisions permit individuals to designate any participating primary care providers available to accept them, including pediatricians, and prohibit the plan or issuer from requiring authorization or referral for obstetrical or gynecological care.

B.
Surprise Billing and the Need for Greater Consumer Protections

Most group health plans, and health insurance issuers offering group or individual health insurance coverage, have a network of providers and health care facilities (participating providers or preferred providers) who agree by contract to accept a specific amount for their services.
7

By contrast, providers and facilities that are not part of a plan or issuer's network (nonparticipating providers) usually charge higher amounts than the contracted rates that plans and issuers have negotiated with participating providers and facilities. When a participant, beneficiary, or enrollee receives care from a nonparticipating provider, the individual's plan or issuer may decline to pay for the service or may pay an amount that is lower than the provider's billed charges, and may subject the individual to greater cost-sharing requirements than would have been charged had the services been furnished by a participating provider. Prior to the No Surprises Act, the nonparticipating provider could generally balance bill the individual for the difference between the provider's billed charges and the sum of the amount paid by the plan or issuer and the cost sharing paid by the individual, unless otherwise prohibited by state law.

7
These interim final rules refer to providers both in terms of their participation (participating provider) and in terms of a network (in-network provider). In both situations, the intent is to refer to a provider that has a contractual relationship or other arrangement with a plan or issuer to provide health care items and services for participants, beneficiaries, and enrollees of the plan or issuer.

A balance bill may come as a surprise for the individual. A surprise medical bill is an unexpected bill from a health care provider or facility that occurs when a covered person receives medical services from a provider or facility that, usually unknown to the participant, beneficiary, or enrollee, is a nonparticipating provider or facility with respect to the individual's coverage. Surprise billing occurs both for emergency and non-emergency care. In an emergency, a person usually goes (or is taken by emergency transport) to a nearby emergency department. Even if they go to a participating hospital or facility for emergency care, they may receive care from nonparticipating providers working at that facility. For non-emergency care, a person may choose a participating facility (and possibly even a participating provider), but not know that at least one provider involved in their care (for example, an anesthesiologist or radiologist) is a nonparticipating provider. In either circumstance, the person might not be in a position to choose the provider, or to ensure that the provider is a participating provider. Therefore, in addition to a bill for their cost-sharing amount, which tends to be higher for out-of-network services, the person might receive a balance bill from the nonparticipating provider or facility. This scenario also plays out frequently for air ambulance services, where individuals generally do not have the ability to select a provider of air ambulance services, and, therefore, have little or no control over whether the provider is in-network with their plan or coverage.

When individuals are unable to avoid nonparticipating providers, it raises health care costs and exposes patients to financial risk.
8

The evidence suggests that the ability to balance bill is used as leverage by some providers to obtain higher in-network payments, which results in higher premiums, higher cost sharing for individuals, and increased health care expenditures overall.
9

Studies have shown that surprise bills can be large. For example, a recent study found that physicians collected, on average, 65 percent of the total charged amount for emergency department visits that likely included surprise bills, compared to 52 percent of the total charged amount for emergency department visits that likely did not include surprise bills. The study also found that nine percent of the individuals who likely received surprise bills paid physicians an amount more than $400, which may cause financial hardship to many individuals.
10

In addition, out-of-network cost sharing and payments for surprise bills usually do not count towards an individual's deductible and maximum out-of-pocket expenditure limits. Therefore, individuals with surprise bills may have difficulty reaching those limits, even after a significant health care event.

8
Cooper Z et al., Out-of-Network Billing and Negotiated Payments for Hospital-Based Physicians, Health Affairs 39, No. 1, 2020. doi: 10.1377/hlthaff.2019.00507.

9

See
Cooper, Z. et al., Surprise! Out-Of-Network Billing For Emergency Care in the United States, NBER Working Paper 23623, 20173623; Duffy, E. et al., Policies to Address Surprise Billing Can Affect Health Insurance Premiums. The American Journal of Managed Care 26.9 (2020): 401-404.; and Brown E.C.F., et al., The Unfinished Business of Air Ambulance Bills, Health Affairs Blog (March 26, 2021), DOI: 10.1377/hblog20210323.911379, available at
https://www.healthaffairs.org/do/10.1377/hblog20210323.911379/full/.

10
Biener, A. et al., Emergency Physicians Recover a Higher Share of Charges From Out-Of-Network Care Than From In-Network Care, Health Affairs 40, No, 4 (2021): 622-628.

Another study using claims data from a large commercial issuer for the period 2010-2016 found that over 39 percent of emergency department visits to in-network hospitals resulted in an out-of-network bill, and the incidence increased from 32.3 percent in 2010 to 42.8 percent in 2016. The average potential amount of surprise medical bills also increased from $220 in 2010 to $628 in 2016. During the same period, 37 percent of inpatient admissions to in-network hospitals resulted in at least one out-of-network bill, increasing from 26.3 percent in 2010 to 42 percent in 2016, and the average potential surprise medical bill increased from $804 to $2,040.
11

11
Sun EC, Mello MM, Moshfegh J, Baker LC, Assessment of Out-of-Network Billing for Privately Insured Patients Receiving Care in In-Network Hospitals. JAMA Intern Med. 2019; 179(11):1543-1550 (2019). doi:10.1001/jamainternmed.2019.3451.

Although some states have enacted laws to reduce or eliminate balance billing, these efforts have created a patchwork of consumer protections. Even within a state that has enacted such protections, those protections typically apply only to individuals enrolled in individual and group health insurance coverage, as ERISA generally

preempts state laws that regulate self-insured group health plans sponsored by private employers. In addition, states are limited in their ability to address surprise bills that involve an out-of-state provider.

Surprise medical bills can lead to medical debt for individuals who have difficulty paying their bills. The impact is most keenly felt by those communities experiencing poverty and other social risk factors, as surprise medical bills and medical debt can negatively affect individuals' abilities to eliminate debt and create wealth, and ultimately can affect a family for generations.
12

A recent survey reported that while 68 percent of respondents said that it was difficult to pay a surprise bill, the likelihood of such difficulty was higher for middle income respondents (77 percent) and African Americans (74 percent). In addition, while 11 percent of survey respondents were unable to pay the surprise bill, 21 percent of low income respondents, 19 percent of African Americans, and 17 percent of respondents in rural areas were unable to do so.
13

In addition, individuals are often confused by medical bills. A 2016 survey found that 61 percent of individuals are confused by medical bills, and for 49 percent of individuals surveyed, the amount owed was a surprise.
14

These challenges are exacerbated for underserved communities, which are more likely to experience poor communication, underlying mistrust of the medical system, and lower levels of patient engagement than other populations.
15

Effective, culturally, and linguistically tailored communication at appropriate literacy levels, coupled with policies that address the social risk factors and other barriers underserved communities face to accessing, trusting, and understanding health care costs and coverage, can reduce disparities and promote health equity.
16

12
Taylor, J. Racism, inequality, and health care for African Americans. The Century Foundation: Report (December 19, 2019).
https://tcf.org/content/report/racism-inequality-health-care-african-americans/;
Chavis, B. Op-Ed: Big insurance must help end surprise medical billing. blackpressUSA (February 24, 2020).

13
Families USA, Surprise Medical Bills, Results from a National Survey, November 2019.
https://familiesusa.org/wp-content/uploads/2019/11/Surprise-Billing-National-Poll-Report-FINAL.pdf.

14
Gooch, Kelly. 61% of patients confused by medical bills, survey finds. Becker's Hospital Review (July 14, 2016).
https://www.beckershospitalreview.com/finance/61-of-patients-confused-by-medical-bills-survey-finds.html.

15

See
Butler S, Sherriff N. How poor communication exacerbates health inequities and what to do about it. Brookings Institution: Report (February 22, 2021).
https://www.brookings.edu/research/how-poor-communication-exacerbates-health-inequities-and-what-to-do-about-it/;
Hamel, L., Lopes, L., Muñana, C., Artiga, S., Brodie, M. Race, Health, and COVID-19: The Views and Experiences of Black Americans. Kaiser Family Foundation (October 2020).
https://files.kff.org/attachment/Report-Race-Health-and-COVID-19-The-Views-and-Experiences-of-Black-Americans.pdf;
Shen M.J., Peterson E.B., Costas-Muñiz R.
et al.
The Effects of Race and Racial Concordance on Patient-Physician Communication: A Systematic Review of the Literature.
J. Racial and Ethnic Health Disparities
5, 117-140 (2018).
https://doi.org/10.1007/s40615-017-0350-4.

16
Pérez-Stable EJ, El-Toukhy S. Communicating with diverse patients: How patient and clinician factors affect disparities.
Patient Educ Couns.
2018;101(12):2186-2194. doi:10.1016/j.pec.2018.08.021; McNally, M. Confronting disparities in access to healthcare for underserved populations. MedCity News (February 22, 2021).
https://medcitynews.com/2021/02/confronting-disparities-in-access-to-healthcare-for-underserved-populations-in-2021/.

Communication among providers, plans, consumers, communities, and consumer advocates must be consistent with and reinforce all relevant consumer protections related to surprise bills. Such communication must be accessible, linguistically tailored, and at an appropriate literacy level. This includes compliance with requirements to provide effective communication for individuals with disabilities under the Americans with Disabilities Act of 1990,
17

section 504 of the Rehabilitation Act of 1973
18

and, where applicable, section 1557 of the Affordable Care Act,
19

as well as compliance with race, color, and national origin protections under title VI of the Civil Rights Act of 1964
20

and section 1557 of the Affordable Care Act. Section 1557 prohibits discrimination on the basis of race, color, national origin, sex (including sexual orientation and gender identity), age, or disability in covered health programs or activities, including requiring covered entities to take reasonable steps to ensure meaningful access for individuals with limited English proficiency.

17
42 U.S.C. 12101
et seq.

18
29 U.S.C. 794 and 794d.

19
42 U.S.C. 18116(a).

20
42 U.S.C. 2000d.

On January 20, 2021, President Biden issued Executive Order 13985, “On Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,”
21

directing that as a policy matter, the federal government should pursue a comprehensive approach to advancing equity for all, including people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality. Executive Order 13985 also directs HHS to assess whether, and to what extent, its programs and policies perpetuate systemic barriers to opportunities and benefits for people of color and other underserved groups. Consistent with Executive Order 13985, regulations issued pursuant to the No Surprises Act must ensure that communication from plans, issuers, providers, facilities, and providers of air ambulance services recognizes these inequities and upholds all relevant consumer protections. Regulations issued pursuant to the No Surprises Act should ensure that all individuals, particularly those from underserved and minority communities, trust and believe information they receive related to costs and network coverage. Regulations and policies should enable and encourage regulated entities to address barriers to accessing care, including mistrust of the health care system. They should also encourage entities to communicate with individuals in a language they can understand, in a respectful way that addresses cultural differences, and at an appropriate literacy level. To ensure all consumers, particularly those in minority and underserved communities, are able to understand and benefit from these consumer protections, deliberate attention must be paid to the unique barriers and challenges underserved communities face in understanding and accessing health care. The Departments seek comment from those who are members of, advocate for, and work with underserved communities regarding the impact of these interim final rules.

21
86 FR 7009 (Jan. 25, 2021).

C.
Preventing Surprise Medical Bills Under the Consolidated Appropriations Act, 2021

On December 27, 2020, the Consolidated Appropriations Act, 2021 (CAA), which included the No Surprises Act, was signed into law. The No Surprises Act provides federal protections against surprise billing and limits out-of-network cost sharing under many of the circumstances in which surprise bills arise most frequently.
22

22
Public Law 116-260.

The CAA added provisions that apply to group health plans and health insurance issuers in the group and individual market in a new Part D of title XXVII of the PHS Act, and also added new provisions to part 7 of ERISA, and subchapter B of chapter 100 of the Code. Section 102 of the No Surprises Act added section 9816 of the Code, section 716 of ERISA, and section 2799A-1 of the PHS Act, which contain limitations on cost sharing, and requirements for initial payments for emergency services and for non-emergency services provided by

nonparticipating providers at certain participating health care facilities. Section 103 of the No Surprises Act amended section 9816 of the Code, section 716 of ERISA, and section 2799A-1 of the PHS Act to establish an independent dispute resolution (IDR) process that allows plans and issuers and nonparticipating providers and nonparticipating emergency facilities to resolve disputes over out-of-network rates. Section 105 of the No Surprises Act added section 9817 of the Code, section 717 of ERISA, and section 2799A-2 of the PHS Act, which contain limitations on cost sharing and requirements for initial payments to nonparticipating providers of air ambulance services, and allow plans and issuers and such providers of air ambulance services to access the IDR process. The CAA also amended the FEHBA, as discussed in more detail in section I.D. of this preamble.

The CAA provisions that apply to health care providers and facilities and providers of air ambulance services, such as cost-sharing requirements, prohibitions on balance billing for certain items and services, and requirements related to disclosures about balance billing protections, were added to title XXVII of the PHS Act in a new part E.

The Departments are issuing regulations in several phases implementing provisions of title I (No Surprises Act) and title II (Transparency) of Division BB of the CAA. Later this year, the Departments intend to issue regulations regarding the federal IDR process (sections 103 and 105 of Division BB), patient protections through transparency and the patient-provider dispute resolution process (section 112), and price comparison tools (section 114). The Departments also intend to undertake rulemaking this year to propose the form and manner in which plans, issuers, and providers of air ambulance services would report information regarding air ambulance services (section 106). In addition, HHS intends to undertake rulemaking to implement requirements on health insurance issuers offering individual health insurance coverage or short-term, limited-duration insurance to disclose and report information regarding direct or indirect compensation provided to agents and brokers (section 202(c)), as well as provisions related to HHS enforcement of requirements on issuers, non-federal governmental group health plans, providers, facilities, and providers of air ambulance services.

The CAA also includes provisions regarding transparency in plan and insurance identification cards (section 107), continuity of care (section 113), accuracy of provider network directories (section 116), and prohibition on gag clauses (section 201) that are applicable for plan years beginning on or after January 1, 2022; and pharmacy benefit and drug cost reporting (section 204) that is required by December 27, 2021. The Departments intend to undertake rulemaking to fully implement these provisions, but rulemaking regarding some of these provisions might not occur until after January 1, 2022. The Departments note that any such rulemaking to fully implement these provisions will include a prospective applicability date that provides plans, issuers, providers, and facilities, as applicable, a reasonable amount of time to comply with new or clarified requirements. Until rulemaking to fully implement these provisions is finalized and effective, plans and issuers are expected to implement the requirements using a good faith, reasonable interpretation of the statute. The Departments intend to issue guidance in the near future regarding their expectations related to good faith compliance with these provisions.

D.
Preventing Surprise Medical Bills for Federal Employees Health Benefits Plans

The No Surprises Act also amended the FEHBA, 5 U.S.C. 8901
et seq.,
by adding a new subsection (p) to 5 U.S.C. 8902. Under this new provision, each FEHB Program contract must require a carrier to comply with provisions of sections 9816, 9817, and 9822 of the Code; sections 716, 717, and 722 of ERISA; and sections 2799A-1, 2799A-2, and 2799A-7 of the PHS Act (as applicable) in the same manner as they apply with respect to a group health plan or health insurance issuer offering group or individual health insurance coverage. Likewise, the provisions of sections 2799B-1, 2799B-2, 2799B-3, and 2799B-5 of the PHS Act apply to health care providers, facilities, and providers of air ambulance services with respect to covered individuals in FEHB plans in the same manner as they apply to participants, beneficiaries, or enrollees in group health plans or coverage offered by health insurance issuers.

OPM is charged with administering the FEHB Program and maintains oversight and enforcement authority with respect to FEHB health benefits plans, which are federal governmental plans. Generally, under 5 U.S.C. 8902(p), each FEHB contract must require a carrier to comply with certain PHS Act, ERISA, and Code requirements in the same manner as they apply to a group health plan or health insurance issuer.

II. Executive Summary

These interim final rules implement provisions of the No Surprises Act that: (1) Apply to group health plans, health insurance issuers offering group or individual health insurance coverage, and carriers in the FEHB Program to provide protections against balance billing and out-of-network cost sharing with respect to emergency services, non-emergency services furnished by nonparticipating providers at certain participating health care facilities, and air ambulance services furnished by nonparticipating providers of air ambulance services; (2) prohibit nonparticipating providers, health care facilities, and providers of air ambulance services from balance billing participants, beneficiaries, and enrollees in certain situations, and permit these providers and facilities to balance bill individuals if certain notice and consent requirements in the No Surprises Act are satisfied; (3) require certain health care facilities and providers to provide disclosures of federal and state patient protections against balance billing; (4) recodify certain patient protections that initially appeared in the ACA and that the No Surprises Act applies to grandfathered plans; and (5) set forth complaints processes with respect to violations of the protections against balance billing and out-of-network cost sharing under the No Surprises Act.

These interim final rules protect individuals from surprise medical bills for emergency services, air ambulance services furnished by nonparticipating providers, and non-emergency services furnished by nonparticipating providers at participating facilities in certain circumstances. Among other requirements, these interim final rules require emergency services to be covered without any prior authorization, without regard to whether the health care provider furnishing the emergency services is a participating provider or a participating emergency facility with respect to the services, and without regard to 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. Additionally, emergency services include certain services in an emergency department of a hospital or an independent freestanding emergency department, as well as post-stabilization services in certain instances.

With respect to emergency services, air ambulance services furnished by nonparticipating providers, and non-

emergency services furnished by nonparticipating providers at participating facilities, these interim final rules limit cost sharing for out-of-network services to in-network levels, require such cost sharing to count toward any in-network deductibles and out-of-pocket maximums, and prohibit balance billing, as required by the No Surprises Act.

These interim final rules specify that cost-sharing amounts for such services furnished by nonparticipating emergency facilities and nonparticipating providers at participating facilities must be calculated based on one of the following amounts: (1) An amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act; (2) if there is no such applicable All-Payer Model Agreement, an amount determined by a specified state law; or (3) if there is no such applicable All-Payer Model Agreement or specified state law, the lesser of the billed charge or the plan's or issuer's median contracted rate, referred to as the qualifying payment amount (QPA). Cost-sharing amounts for air ambulance services provided by nonparticipating providers must be calculated using the lesser of the billed charge or the QPA, and the cost-sharing requirement that would apply if such services were provided by a participating provider.

Under these interim final rules, balance billing for services covered by the rules generally is prohibited, and the total amount to be paid to the provider or facility, including any cost sharing, is based on: (1) An amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act; (2) if there is no such applicable All-Payer Model Agreement, an amount determined by a specified state law; (3) if there is no such applicable All-Payer Model Agreement or specified state law, an amount agreed upon by the plan or issuer and the provider or facility; or (4) if none of those three conditions apply, an amount determined by an IDR entity.

In general, under the No Surprises Act and these interim final rules, the protections that limit cost sharing and prohibit balance billing do not apply to certain post-stabilization services, or to certain non-emergency services performed by nonparticipating providers at participating health care facilities, if the provider or facility provides notice to the participant, beneficiary, or enrollee, and obtains the individual's consent to waive the balance billing protections. However, providers and facilities may not provide such notice or seek consent from individuals in certain circumstances where surprise bills are likely to occur, such as for ancillary services provided by nonparticipating providers in connection with non-emergency care in a participating facility. In such circumstances, balance billing is prohibited, and the other protections of the No Surprises Act, such as in-network cost-sharing requirements, continue to apply.

Neither the No Surprises Act, nor these interim final rules, universally protect individuals from every high or unexpected medical bill. For example, an individual may be enrolled in a group health plan or health insurance coverage that provides little or no coverage for their particular health care condition or the items and services necessary to treat that condition. In addition, balance billing continues to be permitted, unless prohibited by state law or contract, in circumstances where these interim final rules do not apply, such as for non-emergency items or services provided at facilities that are not included within the definition of health care facility in these interim final rules. Nonetheless, the No Surprises Act and these interim final rules provide relief from some of the more common scenarios where a participant, beneficiary, or enrollee might otherwise be faced with high and unexpected medical costs.

These interim final rules establish a complaints process for receiving and resolving complaints related to these new balance billing protections.

These interim final rules also implement the requirement of the No Surprises Act that certain health care providers and facilities make publicly available, post on a public website, and provide a one-page notice to individuals regarding: (1) The requirements and prohibitions applicable to the provider or facility under sections 2799B-1 and 2799B-2 of the PHS Act and their implementing regulations; (2) any applicable state balance billing requirements; and (3) how to contact appropriate state and federal agencies if the individual believes the provider or facility has violated the requirements described in the notice.

Section 116 of the No Surprises Act also added section 9820(c) of the Code, section 720(c) of ERISA, and section 2799A-5(c) of the PHS Act, which include similar disclosure requirements applicable to plans and issuers. In general, under these provisions, plans and issuers must make publicly available, post on a public website of the plan or issuer, and include on each explanation of benefits for an item or service with respect to which the requirements under section 9816 of the Code, section 716 of ERISA, and section 2799A-1 of the PHS Act apply, information on the requirements applied under these aforementioned sections, as applicable; on the requirements and prohibitions applied under sections 2799B-1 and 2799B-2 of the PHS Act; on other applicable state laws on out-of-network balance billing; and on contacting appropriate state and federal agencies in the case that an individual believes that such a provider or facility has violated the prohibition against balance billing. These disclosure requirements are applicable for plan years beginning on or after January 1, 2022. To reduce burden and facilitate compliance with these disclosure requirements, the Departments are concurrently issuing a model disclosure notice that health care providers, facilities, group health plans, and health insurance issuers may, but are not required to, use to satisfy the disclosure requirements regarding the balance billing protections. The Departments will consider use of the model notice in accordance with the accompanying instructions to be good faith compliance with the disclosure requirements of section 9820(c) of the Code, section 720(c) of ERISA, and section 2799A-5(c) of the PHS Act, if all other applicable requirements are met. In addition, HHS will consider use of the model notice in accordance with the accompanying instructions to be good faith compliance with the disclosure requirements of section 2799B-3 of the PHS Act and 45 CFR 149.430, if all other applicable PHS Act requirements are met. The Departments may address the requirements under section 9820(c) of the Code, section 720(c) of ERISA, and section 2799A-5(c) of the PHS Act, as added by the No Surprises Act, in more detail in future guidance or rulemaking. Until further guidance is issued, plans and issuers are expected to implement the requirements of section 9820(c) of the Code, section 720(c) of ERISA, and section 2799A-5(c) of the PHS Act using a good faith, reasonable interpretation of the law. The Departments will take into account the statutory applicability date and the timeframe for implementation when determining good faith compliance with the law.

These interim final rules generally apply to group health plans and health insurance issuers offering group or individual health insurance coverage (including grandfathered health plans) with respect to plan years (in the individual market, policy years) beginning on or after January 1, 2022, as

well as to health care providers and facilities, and providers of air ambulance services beginning on January 1, 2022.

In the OPM interim final rules included in this rulemaking, OPM adopts all provisions of the Departments' interim final rules that address the sections of the Code, ERISA, and the PHS Act that are referenced in 5 U.S.C. 8902(p). In the OPM interim final rules, OPM defines terms unique to the FEHB Program, adapts some of the Departments' rules as necessary to properly integrate with the existing FEHB Program regulatory and contractual structure, sets forth the circumstances in which OPM will enforce these rules against FEHB carriers, and sets forth the types of court actions involving the FEHB Program that may be brought against OPM with respect to the No Surprises Act.

In effectuating compliance with 5 U.S.C. 8902(p), FEHB contract terms that relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) supersede and preempt state law or local law, or any regulation issued thereunder, which relates to health insurance or plans.
23

OPM contracts with FEHB carriers may include terms that adopt state law as governing for a particular purpose.

23
5 U.S.C. 8902(m)(1);
see Coventry Health Care of Missouri, Inc.
v.
Nevils,
137 S. Ct. 1190 (2017).

III. Overview of the Interim Final Rules—Departments of HHS, Labor, and the Treasury

A.
Definitions

The provisions of the Code, ERISA, and the PHS Act added by the No Surprises Act, as well as these interim final rules, include defined terms that are specific to the requirements and implementation of the law. Definitions of these key terms are described throughout this preamble. These terms help define the scope of the balance billing protections and how cost-sharing amounts and payment levels are determined.

The Departments note that these interim final rules define the term “physician or health care provider” to mean a physician or other health care provider who is acting within the scope of practice of that provider's license or certification under applicable state law, but the definition specifically excludes providers of air ambulance services. The Departments recognize that, although the No Surprises Act does not define “provider,” it uses the term in a manner that includes providers of air ambulance services in some provisions. For example, the No Surprises Act added section 2799B-4 of the PHS Act, which specifically includes providers of air ambulance services when referencing providers. However, certain other provisions in the No Surprises Act apply only to providers of air ambulance services, or apply to health care providers generally, but by their terms are inapplicable to providers of air ambulance services. As an example of the latter, the No Surprises Act added section 2799B-2 of the PHS Act, which generally prohibits balance billing by nonparticipating health care providers furnishing non-emergency services at participating health care facilities. Although this provision does not explicitly exclude providers of air ambulance services, providers of air ambulance services would not furnish non-emergency services at participating health care facilities. Therefore, the provision does not apply to providers of air ambulance services (such providers are, however, prohibited from balance billing under section 2799B-5 of the PHS Act). Similarly, section 2799B-3 of the PHS Act, which requires a health care provider to inform individuals of the requirements and prohibitions on such health care provider in sections 2799B-1 and 2799B-2 of the PHS Act (neither of which apply to providers of air ambulance services), does not by its terms apply to providers of air ambulance services. Therefore, these interim final rules define “physician or health care provider” to exclude providers of air ambulance services, in order to help clarify which provisions of the No Surprises Act and interim final rules apply to providers of air ambulance services. In instances where provisions under the No Surprises Act, as implemented in these interim final rules, apply to providers of air ambulance services, the provisions explicitly reference air ambulance providers. Conversely, where providers of air ambulance services are not explicitly mentioned, the provisions do not apply.

The Departments seek comment on the terms defined in these interim final rules, including the appropriateness and usability of the definitions, and whether additional terms should be defined in future rulemaking.

B.
Preventing Surprise Medical Bills

1. Scope of the New Surprise Billing Protections

i. Emergency Services

Under section 9816(a) of the Code, section 716(a) of ERISA, and section 2799A-1(a) of the PHS Act, and these interim final rules, if a group health plan, or a health insurance issuer offering group or individual health insurance coverage, provides or covers any benefits with respect to services in an emergency department of a hospital or with respect to emergency services in an independent freestanding emergency department, the plan or issuer must cover emergency services as defined in these interim final rules and such coverage must be provided in accordance with these interim final rules.

A plan or issuer providing coverage of emergency services must do so without the individual or the health care provider having to obtain prior authorization (including when the emergency services are provided out-of-network) and without regard to whether the health care provider furnishing the emergency services is a participating provider or a participating emergency facility with respect to the services. The emergency services must be provided without regard to any other term or condition of the plan or coverage other than the exclusion or coordination of benefits (to the extent not inconsistent with benefits for an emergency medical condition as defined in these interim final rules), an affiliation or waiting period as permitted under the Code, ERISA, or the PHS Act, or applicable cost-sharing requirements. For a plan or health insurance coverage with a network of providers that provides benefits for emergency services, the plan or issuer may not impose any administrative requirement or limitation on coverage for emergency services received from nonparticipating providers or nonparticipating emergency facilities that is more restrictive than the requirements or limitations that apply to emergency services received from participating providers or participating emergency facilities. In addition, such plan or health insurance coverage must comply with the requirements regarding cost sharing, payment amounts, and processes for resolving billing disputes described elsewhere in this preamble.

The terms “emergency medical condition,” “emergency services,” and “to stabilize” generally have the meaning given to them under the Emergency Medical Treatment and Labor Act (EMTALA), section 1867 of the Social Security Act.
24

Emergency services include: (1) An appropriate medical screening examination that is within the capability of the emergency department of a hospital or of an independent freestanding emergency department, including ancillary services

routinely available to the emergency department, to evaluate whether an emergency medical condition exists; and (2) such further medical examination and treatment as may be required to stabilize the individual (regardless of the department of the hospital in which the further medical examination and treatment is furnished) within the capabilities of the staff and facilities available at the hospital or the independent freestanding emergency department.

24
42 U.S.C. 1395dd.

Under section 2719A of the PHS Act, emergency services were defined to include: (1) A medical screening examination (as required under section 1867 of the Social Security Act) that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition; and (2) such further medical examination and treatment as are required under section 1867 of the Social Security Act to stabilize the patient within the capabilities of the staff and facilities available at the hospital. HHS has previously interpreted the obligations on hospitals under EMTALA to provide medical examination and stabilization services to end when a patient is formally admitted in good faith.
25

Section 9816(a) of the Code, section 716(a) of ERISA, and section 2799A-1(a) of the PHS Act expand the definition of emergency services (as compared to section 2719A of the PHS Act) to include stabilization services “regardless of the department of the hospital in which the further medical examination and treatment is furnished.” Therefore, the definition of emergency services in these interim final rules includes pre-stabilization services that are provided after the patient is moved out of the emergency department and admitted to a hospital, and these services will be subject to the protections of the No Surprises Act.

25
42 CFR 489.24(a)(1)(ii); 68 FR 53221-53264 (Sept. 9, 2003); 73 FR 48654-48668 (Aug. 19, 2008).

Section 102 of the No Surprises Act further broadens the definition of emergency services to include emergency services provided at an independent freestanding emergency department. An independent freestanding emergency department is a health care facility (not limited to those described in the definition of health care facility at section 9816(b)(2)(A)(ii) of the Code, section 716(b)(2)(A)(ii) of ERISA, and section 2799A-1(b)(2)(A)(ii) of the PHS Act, as applicable) that provides emergency services, and is geographically separate and distinct from a hospital, and separately licensed as such by a state. The definition of “independent freestanding emergency department” is intended to include any health care facility that is geographically separate and distinct from a hospital, and that is licensed by a state to provide emergency services, even if the facility is not licensed under the term “independent freestanding emergency department.”

Regulation of health care facilities varies by state. In particular, state regulation of urgent care centers varies significantly, and is evolving as these types of centers become more common.
26

If under state licensure laws, urgent care centers are permitted to provide emergency services, then urgent care centers in that state that are geographically separate and distinct from a hospital would fall within the definition of independent freestanding emergency department for purposes of these interim final rules. In contrast, if state licensure of urgent care centers does not permit such facilities to provide emergency services as defined in these interim final rules, then urgent care centers in that state would not be treated as independent freestanding emergency departments for purposes of these interim final rules. Finally, the definition of emergency services also includes additional post-stabilization services, as discussed in section III.B.1.ii of this preamble.

26
Association of State and Territorial Health Officials. As Urgent Care Centers Increase, Licensing Authority Falling Under State Health Agencies, (Oct. 11, 2018) available at
https://www.astho.org/StatePublicHealth/As-Urgent-Care-Centers-Increase-Licensing-Authority-Falling-Under-State-Health-Agencies/10-11-18/.

The term “emergency medical condition” means a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in a condition described in EMTALA, including (1) placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, (2) serious impairment to bodily functions, or (3) serious dysfunction of any bodily organ or part.
27

This definition includes mental health conditions and substance use disorders.

27

See
42 U.S.C. 1395dd(e)(1)(A).

The Departments are aware that some plans and issuers currently deny coverage of certain services provided in the emergency department of a hospital by determining whether an episode of care involves an emergency medical condition based solely on final diagnosis codes, such as International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) codes . In addition, some plans and issuers might automatically deny coverage based on a list of final diagnosis codes initially, without regard to the individual's presenting symptoms or any additional review. Following an initial denial, plans and issuers might then provide for complete consideration of the claim, and apply the prudent layperson standard, only as part of an appeals process if the participant, beneficiary, or enrollee appeals. These practices are inconsistent with the emergency services requirements of the No Surprises Act and the ACA.
28

This is true even if the process for complete consideration of the claim following an initial denial is not designated as a formal appeal. Instead, the determination of whether the prudent layperson standard is met must be made on a case-by-case basis before an initial denial of an emergency services claim.

28

See also Am. Coll. of Emergency Physicians
v.
Blue Cross & Blue Shield of Georgia, No. 20-11511, 2020 WL 6165852
(11th Cir. Oct. 22, 2020) (per curiam) (reversing dismissal of plaintiffs' ACA and ERISA claims alleging defendants violated prudent layperson standard where review process was based upon physician review of medical records and diagnostic codes; prudent layperson standard ignores a patient's final diagnosis and instead asks whether a person with average medical knowledge would reasonably think they need emergency services to address their symptoms).

These interim final rules make clear that if a group health plan, or a health insurance issuer offering group or individual health insurance coverage, provides or covers any benefits with respect to services in an emergency department of a hospital or with respect to emergency services in an independent freestanding emergency department, the plan or issuer must cover emergency services without limiting what constitutes an emergency medical condition (as defined in these interim final rules) solely on the basis of diagnosis codes. When a plan or issuer denies coverage, in whole or in part, for a claim for payment of a service rendered in the emergency department of a hospital or independent freestanding emergency department, including services rendered during observation or surgical services, the determination of whether the prudent layperson standard has been met must be based on all pertinent documentation and be focused on the presenting symptoms (and not solely on the final diagnosis). This determination must take into account that the legal standard

regarding the decision to seek emergency services is based on whether a prudent layperson (rather than a medical professional) would reasonably consider the situation to be an emergency.
29

In covering emergency services, plans and issuers must also ensure that they do not restrict the coverage of emergency services by imposing a time limit between the onset of symptoms and the presentation of the participant, beneficiary, or enrollee at the emergency department. Similarly, plans and issuers also may not restrict the coverage of emergency services because the patient did not experience a sudden onset of the condition.

29
However, nothing in the statute or these interim final rules prevents a plan or issuer from approving coverage for emergency services solely on the basis of diagnosis codes, or from taking diagnostic codes into account when deciding payment for a claim for emergency services, provided a denial of coverage is not based solely on diagnosis codes.

The Departments are also aware that some plans and issuers that generally provide coverage for emergency services have nonetheless denied benefits for such services based on other general plan exclusions. For example, the Departments are aware of some plans and issuers denying claims for emergency services provided to dependent women who are pregnant, based on a general plan exclusion for dependent maternity care. As explained previously, both the coverage of emergency services rules issued under section 2719A of the PHS Act and the new emergency services requirements included in these interim final rules provide, in part, that if a plan or issuer provides or covers any benefits with respect to services in an emergency department of a hospital (or under these interim final rules, in an independent freestanding emergency department), emergency services must be provided “without regard to any other term or condition of the plan or coverage (other than the exclusion or coordination of benefits . . . ).” The Departments clarify that this provision does not permit plans and issuers to exclude benefits for items and services that would otherwise constitute benefits for an emergency medical condition as defined under these interim final rules. This provision does not permit plans and issuers that cover emergency services to deny benefits for a participant, beneficiary, or enrollee with an emergency medical condition that receives emergency services, based on a general plan exclusion that would apply to items and services other than emergency services.

ii. Post-Stabilization Services

Under section 9816(a)(3)(C)(ii) of the Code, section 716(a)(3)(C)(ii) of ERISA, and section 2799A-1(a)(3)(C)(ii) of the PHS Act, emergency services include any additional items and services that are covered under a plan or coverage and furnished by a nonparticipating provider or nonparticipating emergency facility (regardless of the department of the hospital in which such items and services are furnished) after a participant, beneficiary, or enrollee is stabilized and as part of outpatient observation or an inpatient or outpatient stay with respect to the visit in which the other emergency services are furnished. Such additional items and services (referred to in this preamble as post-stabilization services) are considered emergency services subject to surprise billing protections unless the conditions enumerated in section 9816(a)(3)(C)(ii)(II)(aa)-(cc) of the Code, section 716(a)(3)(C)(ii)(II)(aa)-(cc) of ERISA, or section 2799A-1(a)(3)(C)(ii)(II)(aa)-(cc) of the PHS Act, as applicable, are met, as well as such other conditions as specified by the Departments under paragraph (dd) of the respective sections. Therefore, these interim final rules provide that post-stabilization services are emergency services unless all of the following conditions are met.

First, the attending emergency physician or treating provider must determine that the participant, beneficiary, or enrollee is able to travel using nonmedical transportation or nonemergency medical transportation to an available participating provider or facility located within a reasonable travel distance, taking into consideration the individual's medical condition. The HHS interim final rules codify this requirement at 45 CFR 149.410(b)(1). For this purpose, a treating provider is a physician or health care provider who has evaluated the individual. It is generally expected that a treating provider with medical training and experience related to the individual's specific medical condition will determine if the individual is able to travel using nonmedical transportation or nonemergency medical transportation to an available participating provider or facility located within a reasonable travel distance. This determination is based on all the relevant facts and circumstances and the individual should be involved in the decision-making process, if possible. The determination by the attending emergency physician or treating provider is binding on the facility for purposes of this requirement. This requirement is based on the Departments' understanding that such provider is in the best position to make this determination.

For individuals receiving care in or near their plan's or issuer's covered service area, as well as individuals with coverage that uses a national network of providers and facilities, the statutory criterion would generally be sufficient to ensure that an individual can freely choose, based on their medical condition, to receive post-stabilization services at a participating facility or participating provider. The additional requirement in these interim final rules that the individual be able to travel to an available participating provider or facility located within a reasonable travel distance, taking into consideration the individual's medical condition, is necessary and appropriate to carry out the provision of the No Surprises Act, as the requirement is intended to address the common situations in which an individual has received emergency services in a geographic region far from where any participating providers or facilities are located. In cases where the individual cannot travel using nonmedical transportation or nonemergency medical transportation, or cases where there are no participating facilities or participating providers located within a reasonable travel distance, taking into account the individual's medical condition, the Departments are of the view that individuals are unable to provide consent freely and, therefore, balance billing protections continue to apply.

In addition, the Departments recognize that an individual's transportation options may vary based on the individual's location, social risk, and other risk factors. In cases of underserved and geographically isolated communities and those with social risk factors related to income and transportation options, individuals may face additional barriers to obtaining post-stabilization services without a disruption in care. For example, individuals may not have the ability to pay for a taxi, may not have access to a car, may not be able to safely take public transit due to their medical condition, or may not have public transit options available. In these cases, the net effect would be the same: The individual would face unreasonable travel burdens that could prevent them from being able to consent freely to a waiver of the otherwise applicable balance billing protections. The Departments expect the attending emergency physician or treating provider to consider such factors when

assessing the individual's ability to travel to a participating provider or facility. The Departments seek comment on the definition of “reasonable travel distance” and whether specific standards or examples should be provided regarding what constitutes an unreasonable travel burden. For example, should reasonable travel distance take into account only mileage, or also other factors, such as traffic or other route conditions that might make traveling difficult, time consuming, or hazardous?

In contrast to situations where a participant, beneficiary, or enrollee is able to travel using nonmedical transportation or nonemergency medical transportation following stabilization, in the event that the individual requires medical transportation to travel, including transportation by either ground or air ambulance vehicle, the individual is not in a condition to receive notice or provide consent. Therefore, the surprise billing protections continue to apply to post-stabilization services provided in connection with the visit for which the individual received emergency services.

Second, the provider or facility furnishing post-stabilization services must satisfy the notice and consent criteria of section 2799B-2(d) of the PHS Act with respect to such items and services (which are implemented in HHS-only interim final rules at 45 CFR 149.410(b)(2), and incorporate by reference the criteria for notice and consent in 45 CFR 149.420(c) through (g)).

Third, the individual (or the individual's authorized representative) must be in a condition to receive the information in the notice described in section 2799B-2 of the PHS Act (which is also implemented in 45 CFR 149.410(b)(3)) and to provide informed consent under such section, in accordance with applicable state law. Whether an individual is in a condition to receive the information in the notice is determined by the attending physician or treating provider using appropriate medical judgment. It is generally expected that an attending physician or treating provider with medical training and experience related to the individual's specific medical condition will make this determination based on all the relevant facts and circumstances. In addition to applying any requirements under state law, such medical professionals should apply the same principles as they would when determining if a patient is able to provide informed consent for treatment.
30

They should assess whether an individual is capable of understanding the information provided in the notice and the implications of consenting. Consideration must be given to the individual's state of mind after receiving the emergency services and the individual's emotional state at the time of consent. For example, consideration must be given to the effect of any alcohol or drug use by the individual, including the use or administration of prescribed medications, as well as to any pain the individual is experiencing, and the impact of those factors on the patient's state of mind. If the individual is experiencing a mental or behavioral health episode or displaying symptoms of a mental or behavioral health disorder, or is impaired by a substance abuse disorder, consideration should also be given as to whether the individual's condition impairs their ability to receive the information in the notice and provide informed consent. In addition, consideration must be given to cultural and contextual factors that may affect the informed decision-making and consent process for members of underserved communities, including lack of trust arising from historical inequities, misinformation about the informed consent process, or barriers to comprehension of the information given through the informed consent process and after the informed consent document is signed.
31

These barriers may include accessibility, language, and literacy barriers. In addition, the informed consent must be obtained in a way that adheres to all civil rights protections cited within this rulemaking, ensuring that all individuals including those from underserved, underrepresented communities, with limited English proficiency, and with disabilities, are able to understand and freely make informed decisions.

30
Ethics guidance for physicians, published by the American Medical Association, states that physicians should “[a]ssess the patient's ability to understand relevant medical information and the implications of treatment alternatives and to make an independent, voluntary decision” as part of the process of seeking informed consent. American Medical Association, Code of Medical Ethics Opinion 2.1.1, available at
https://www.ama-assn.org/system/files/2019-06/code-of-medical-ethics-chapter-2.pdf
(last visited April 5, 2021).
See also
Gostin, LO. Public Health Law, 217-218 (2000) (discussing the four elements of the doctrine of informed consent: Information, competency, voluntariness, and specificity).

31
For a discussion of strategies to improve informed consent processes for minority communities,
see
Quinn, S.C., et al. Improving Informed Consent with Minority Participants: Results from Researcher and Community Surveys, Journal of Empirical Research on Human Research Ethics, 7(5): 44-55 (Dec. 2012).

Consent must be made voluntarily, meaning the individual must be able to consent freely, without undue influence, fraud, or duress. If post-stabilization services must be provided quickly after the emergency services are provided, it may be challenging for the individual or their authorized representative to have adequate time to make a clear-minded decision regarding consent. Consent obtained through a threat of restraint or immediacy of the need for treatment is not voluntary. In addition, the emergency physician or treating provider should consider whether the individual has reasonable options regarding post-stabilization services, transport, or service provider or facility. The Departments are of the view that the post-stabilization notice and consent procedures should generally be applied in limited circumstances, where the individual knowingly and purposefully seeks care from a nonparticipating provider or facility (such as deciding to go under the care of a specific provider or facility that the individual is familiar or comfortable with), and that the process should not be permitted to circumvent the consumer protections in the No Surprises Act.

Fourth, the provider or facility must satisfy any additional requirements or prohibitions as may be imposed under applicable state law. These interim final rules include this criterion recognizing that some state laws do not permit exceptions to state balance billing protections, such as allowing individuals to consent to waive protections. Thus, states may impose stricter standards by which post-stabilization services will be exempted from the surprise billing protections under these interim final rules, or states might not permit exceptions at all. This requirement is codified in the HHS interim final rules at 45 CFR 149.410(b)(5).

The No Surprises Act authorizes the Departments to specify other conditions that must be satisfied for post-stabilization services to be excepted from the definition of emergency services for purposes of the No Surprises Act. The Departments solicit comments on the conditions described earlier in this section. The Departments also seek comment on whether there are any additional conditions that would be appropriate to designate under the definition of emergency services, such as conditions relating to coordinating care transitions to participating providers and facilities. The Departments also solicit comments on

what guidelines, beyond state laws regarding informed consent, may be needed to determine when an individual is in a condition to receive the written notice and provide consent. For example, are standards needed to account for individuals who are experiencing severe pain, intoxication, incapacitation, or dementia after being stabilized following an emergency medical condition?

iii. Non-Emergency Services Performed by Nonparticipating Providers at Participating Health Care Facilities

Section 9816(b) of the Code, section 716(b) of ERISA, section 2799A-1(b) of the PHS Act, and these interim final rules, apply surprise billing protections in the case of non-emergency services furnished by nonparticipating providers during a visit by a participant, beneficiary, or enrollee at a participating health care facility, unless the notice and consent requirements, as specified in these interim final rules, have been met.

Specifically, if a group health plan, or a health insurance issuer offering group or individual health insurance coverage, provides or covers benefits with respect to items and services (other than emergency services to which section 9816(a) of the Code, section 716(a) of ERISA, or section 2799A-1(a) of the PHS Act applies), the plan or issuer must cover such items and services furnished to a participant, beneficiary, or enrollee of the plan or coverage by a nonparticipating provider with respect to a visit at a participating health care facility in accordance with these interim final rules, including the requirements regarding cost sharing, payment amounts, and processes for resolving billing disputes described elsewhere in this preamble.

iv. Health Care Facilities

These interim final rules, consistent with section 9816(b)(2)(A) of the Code, section 716(b)(2)(A) of ERISA, and section 2799A-1(b)(2)(A) of the PHS Act, define a participating health care facility, in the context of non-emergency services, as a health care facility that has a contractual relationship directly or indirectly with a group health plan or health insurance issuer offering group or individual health insurance coverage setting forth the terms and conditions on which a relevant item or service is provided to a participant, beneficiary, or enrollee under the plan or coverage, respectively. These interim final rules also specify that a single case agreement between a health care facility and a plan or issuer, used to address unique situations in which a participant, beneficiary, or enrollee requires services that typically occur out-of-network constitutes a contractual relationship for purposes of this definition, and is limited to the parties to the agreement with respect to the particular individual involved. Thus, when non-emergency services are furnished by a nonparticipating provider at a health care facility that has a single case agreement in place with respect to the individual being treated, as opposed to an agreement or contract that would apply to all the plan's or issuer's participants, beneficiaries, or enrollees, those non-emergency services would be subject to the protections described in 26 CFR 54.9816-5T, 29 CFR 2590.716-5, and 45 CFR 149.120, as applicable, and the corresponding requirements on providers at 45 CFR 149.420. The Departments are of the view that it is reasonable that an individual would expect items and services delivered at a health care facility that has a single case agreement in place with respect to the individual's care to be delivered on an in-network basis. Thus, these interim final rules apply the same protections in this circumstance as would apply at health care facilities that participate in the plan or issuer's network.
32

The facility is considered a participating facility only with respect to items and services furnished to the individual whose care is covered by the single case agreement. Similarly, these interim final rules define a participating emergency facility to include a facility that has a single case agreement in place with a plan or issuer with respect to a specific individual's care. The Departments seek comment on this approach.

32
In contrast, as discussed in section III.B.2.vi of this preamble, these interim final rules do not include negotiated rates under single-case agreements in the methodology for calculating the qualifying payment amount.

For this purpose, a health care facility described in the statute is each of the following, in the context of non-emergency services: (1) A hospital (as defined in 1861(e) of the Social Security Act); (2) a hospital outpatient department; (3) a critical access hospital (as defined in section 1861(mm)(1) of the Social Security Act); or (4) an ambulatory surgical center described in section 1833(i)(1)(A) of the Social Security Act.

In addition, section 9816(b)(2)(A)(ii)(V) of the Code, section 716(b)(2)(A)(ii)(V) of ERISA, and section 2799A-1(b)(2)(A)(ii)(V) of the PHS Act authorize the Departments to designate additional facilities as health care facilities. The Departments solicit comments on other facilities that would be appropriate to designate as health care facilities. The Departments are interested in comments identifying types of facilities in which surprise bills frequently arise, and are particularly interested in comments regarding whether urgent care centers or retail clinics should be designated as health care facilities for purposes of these interim final rules.

The Departments recognize that state regulation of urgent care centers varies significantly, as does the type of services they are permitted to provide under state law. Under these interim final rules, emergency services provided at urgent care centers that are licensed in a manner that brings them within the definition of independent freestanding emergency department would be subject to cost-sharing and balance billing protections, among others. However, given significant variation in state law definitions, urgent care centers are not included within the definition of health care facilities, in the context of non-emergency services. Thus, in cases where non-emergency services are furnished at participating urgent care centers by nonparticipating providers, those services would not receive the protections under these interim final rules. However, the Departments are of the view that it is possible that individuals may be using urgent care centers (regardless of how they are licensed) in a similar way to how they use independent freestanding emergency departments, in which case it may be appropriate to designate urgent care centers as health care facilities. The Departments seek comment on the degree to which individuals may be using urgent care centers in a similar way to how they use independent freestanding emergency departments. The Departments seek data on how frequently surprise bills arise in the context of urgent care centers. The Departments also seek comment on whether plans and issuers generally contract separately with urgent care centers and the providers who work at the centers, and how frequently contracting practices result in nonparticipating providers furnishing services at participating urgent care centers. The Departments also seek comment on potential definitions of the term urgent care center.

v. Items and Services Within the Scope of a Visit

In addition to items and services furnished by a provider at the facility, a “visit” to a participating health care facility includes the furnishing of equipment and devices, telemedicine services, imaging services, laboratory services, and preoperative and

postoperative services, regardless of whether the provider furnishing such items or services is at the facility. These services are not limited based on whether the provider furnishing the services is physically located at the facility. For example, if a sample is collected during an individual's hospital visit and sent to an off-site laboratory, the laboratory services would be considered to be part of the individual's visit to a participating health care facility, if laboratory services are covered by the plan or coverage. Similarly, if an individual receives a consultation with a specialist via telemedicine during a visit to a participating hospital, those telemedicine services would be considered part of the individual's visit to a participating health care facility. The statutory definition of “visit” also provides authority for the Departments to specify other items and services. The Departments solicit comments regarding other items and services that would be appropriate to include within the scope of a visit for purposes of these interim final rules.

The No Surprises Act and these interim final rules provide for exceptions to the balance billing prohibitions and cost-sharing requirements if the participant, beneficiary, or enrollee is provided a compliant written notice and consents to receive such services from a nonparticipating provider at a participating health care facility. However, these exceptions do not apply with respect to certain ancillary services (in the context of non-emergency services) and other services under certain conditions, as discussed later in this preamble.

vi. Air Ambulance Services

Section 105 of the No Surprises Act added section 9817 of the Code, section 717 of ERISA, and section 2799A-2 of the PHS Act to address surprise air ambulance bills. These provisions apply in the case of a participant, beneficiary, or enrollee who receives services from a nonparticipating provider of air ambulance services, meaning medical transport by a rotary-wing air ambulance, as defined in 42 CFR 414.605, or fixed-wing air ambulance, as defined in 42 CFR 414.605. These interim final rules apply these provisions where a plan or coverage generally has a network of participating providers and provides or covers any benefits for air ambulance services, even if the plan or coverage does not have in its network any providers of air ambulance services. With respect to air ambulance services furnished by nonparticipating providers (including inter-facility transports), plans and issuers must comply with the requirements regarding cost sharing, payment amounts, and processes for resolving billing disputes described elsewhere in this preamble, if such services would be covered if provided by a participating provider with respect to such plan or coverage.

2. Determination of the Cost-Sharing Amount and Payment Amount to Providers and Facilities

i. In General

Under section 9816(a) of the Code, section 716(a) of ERISA, section 2799A-1(a) of the PHS Act, and these interim final rules, if a plan or issuer provides or covers any benefits with respect to services in an emergency department of a hospital or with respect to emergency services in an independent freestanding emergency department, the cost-sharing requirement for such services performed by a nonparticipating provider or nonparticipating emergency facility must not be greater than the requirement that would apply if such services were provided by a participating provider or a participating emergency facility. Additionally, if a plan or issuer provides or covers any benefits for non-emergency items and services furnished by a nonparticipating provider with respect to a visit at a participating health care facility, unless the provider has satisfied certain notice and consent criteria with respect to such items and services, the plan or issuer may not impose a cost-sharing requirement for such items and services that is greater than the cost-sharing requirement that would apply had such items or services been furnished by a participating provider. Similarly, if a plan or issuer provides or covers benefits for air ambulance services, the plan or issuer must cover such services from a nonparticipating provider in such a manner that the cost-sharing requirement with respect to such services must be the same requirement that would apply if such services were provided by a participating provider. For example, if a plan or issuer imposes a 20 percent coinsurance rate for emergency services from participating providers or participating emergency facilities, the plan or issuer may not impose a coinsurance rate on emergency services from nonparticipating providers or facilities that exceeds 20 percent. Stakeholders have reported that network participation rates are low among providers of air ambulance services. In instances where a plan or issuer does not have an established cost-sharing requirement that applies specifically to participating providers, the plan or issuer must calculate the cost-sharing amount using the generally applicable cost-sharing requirement for the relevant item or service under the plan or coverage.

Under sections 9816(a) and (b) and 9817(a) of the Code, sections 716(a) and (b) and 717(a) of ERISA, sections 2799A-1(a) and (b) and 2799A-2(a) of the PHS Act, and these interim final rules, any cost-sharing payments for emergency services, non-emergency services furnished by a nonparticipating provider in a participating health care facility, and air ambulance services furnished by a nonparticipating provider must be counted toward any in-network deductible or out-of-pocket maximums applied under the plan or coverage (including the annual limitation on cost sharing under section 2707(b) of the PHS Act) (as applicable), respectively (and these in-network deductibles and out-of-pocket maximums must be applied) in the same manner as if such cost-sharing payments were made with respect to services furnished by a participating provider or facility.

ii. Cost-Sharing Amount

Section 9816(a)(1)(C)(iii) of the Code, section 716(a)(1)(C)(iii) of ERISA, section 2799A-1(a)(1)(C)(iii) of the PHS Act, and these interim final rules also specify that for emergency services furnished by a nonparticipating emergency facility, and for non-emergency services furnished by nonparticipating providers in a participating health care facility, cost sharing is generally calculated as if the total amount that would have been charged for the services by a participating emergency facility or participating provider were equal to the recognized amount for such services, as defined by the statute and in these interim final rules.

The “recognized amount” is: (1) An amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act; (2) if there is no applicable All-Payer Model Agreement, an amount determined by a specified state law; or (3) if there is no applicable All-Payer Model Agreement or specified state law, the lesser of the amount billed by the provider or facility or the QPA, which under these interim final rules generally is the median of the contracted rates of the plan or issuer for the item or service in the geographic region.

By requiring plans and issuers to calculate the cost-sharing amount using the recognized amount, rather than the

amount the plan or issuer ultimately pays the nonparticipating provider or nonparticipating emergency facility for the furnished items or services, the No Surprises Act and these interim final rules limit the effect of provider-payer disputes about payment amounts on participant, beneficiary, or enrollee cost sharing. Under the statute and these interim final rules, the provider or facility and plan or issuer separately determine the total payment amount for the furnished items or services, but that amount generally does not affect the cost-sharing amount the individual must pay.

The Departments are aware that there may be some instances where a nonparticipating health care provider or facility might bill a plan or issuer for an item or service that is subject to these surprise billing protections in an amount less than the QPA. For example, this might be a relatively common occurrence for items whose patent expires after 2019, in instances where the QPA is based off the median of the contracted rates from 2019. In these instances, assuming the plan or issuer would not pay more than the billed charge, calculating cost sharing based on the QPA would require a participant, beneficiary, or enrollee to pay a higher percentage in cost sharing than if the items or services had been furnished by a participating provider. However, section 9816(a)(1)(C)(ii) of the Code, section 716(a)(1)(C)(ii) of ERISA, and section 2799A-1(a)(1)(C)(ii) of the PHS Act expressly prohibit plans and issuers from applying a cost-sharing requirement that is greater than the requirement that would apply if such services were provided by a participating provider or a participating emergency facility. Therefore, under these interim final rules, in circumstances where a specified state law or All-Payer Model Agreement does not apply to determine the cost-sharing amount, cost sharing must be based on the lesser of the QPA or the amount billed by the provider for the item or service. The different methods for determining the recognized amount are discussed in separate sections of this section III.B.2 of this preamble.

With respect to air ambulance services furnished by nonparticipating providers, the recognized amount is not used for purposes of determining cost sharing. Rather, the statute specifies that the cost-sharing requirement with respect to such services must be the same requirement that would apply if such services were provided by a participating provider, and any coinsurance or deductible must be based on rates that would apply for such services if they were furnished by a participating provider. These interim final rules require that plans and issuers base any coinsurance and deductible for air ambulance services provided by a nonparticipating provider on the lesser of the QPA or the billed amount. The Departments have concluded that this policy is consistent with the statute's general intent to protect participants, beneficiaries, and enrollees from excessive bills, and to remove the individuals as much as possible from disputes between plans and issuers and providers of air ambulance services. In addition, using the QPA is one method of ensuring that any coinsurance or deductible is based on rates that would apply for the services if they were furnished by a participating provider, given that the QPA is generally based on median contracted rates, as opposed to rates charged by nonparticipating providers, and is one basis used for determining the cost-sharing amount in the context of emergency services and items and services furnished by nonparticipating providers at participating health care facilities.

As discussed in this preamble, the Airline Deregulation Act of 1978 (ADA) broadly preempts state laws that relate to air ambulance providers, and the Departments are unaware of any instances in which an All-Payer Model Agreement or a specified state law might apply. In addition, since an All-Payer Model Agreement or a specified state law would not need to follow an approach based on rates that would apply for such services if they were furnished by a participating provider (for example, Medicare rates could be used instead), it is the Departments' view that Congress did not intend to apply the concept of the recognized amount to nonparticipating providers of air ambulance services. The Departments seek comment on any potential alternate approaches for calculating the cost-sharing amount for air ambulance services furnished by nonparticipating providers of air ambulance services.

iii. Out-of-Network Rate

In addition to establishing requirements related to cost sharing, the No Surprises Act and these interim final rules also establish requirements related to the total amount paid by a plan or issuer for items and services subject to these provisions, referred to as the out-of-network rate. The plan or issuer must make a total payment equal to one of the following amounts, less any cost sharing from the participant, beneficiary, or enrollee: (1) An amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act; (2) if there is no such applicable All-Payer Model Agreement, an amount determined by a specified state law; (3) in the absence of an applicable All-Payer Model Agreement or specified state law, if the plan or issuer and the provider or facility have agreed on a payment amount, the agreed on amount; or (4) if none of those three conditions apply, and the parties enter into the IDR process and do not agree on a payment amount before the date when the IDR entity makes a determination of the amount, the amount determined by the IDR entity. These four approaches for determining the out-of-network rate are discussed more fully later in this preamble.

The requirements related to cost sharing and to the out-of-network rate apply when a group health plan or coverage provides or covers benefits for services subject to these provisions. The Departments interpret this to mean that the requirements apply when a plan or issuer provides coverage for such items and services, pursuant to the terms of the plan or coverage, even in cases where an individual has not satisfied their deductible.
33

Because the cost-sharing amount is calculated using the recognized amount (or for air ambulance services the lesser of the QPA or the billed amount) that is calculated separately from the determination of the out-of-network rate, these requirements may result in circumstances where a plan or issuer must make payment prior to an individual meeting their deductible. Specifically, where the surprise billing protections apply, and the out-of-network rate exceeds the amount upon which cost sharing is based, a plan or issuer must pay the provider or facility the difference between the out-of-network rate and the cost-sharing amount (the latter of which in this case would equal the recognized amount, or the lesser of the QPA or the billed amount), even in cases where an individual has not satisfied their deductible, as illustrated in the following example.

33
Absent the balance billing protections under the No Surprises Act and these interim final rules, the plan or issuer would not generally be expected to make a payment to the provider or facility prior to an individual satisfying the deductible.

Example.
An individual is enrolled in a high deductible health plan with a $1,500 deductible and has not yet accumulated any costs towards the deductible at the time the individual receives emergency services at an out-of-network facility. The plan determines that the recognized amount for the services is $1,000. Because the

individual has not satisfied the deductible, the individual's cost-sharing amount is $1,000, which accumulates towards the deductible. The out-of-network rate is subsequently determined to be $1,500. Under the requirements of the statute and these interim final rules, the plan is required to pay the difference between the out-of-network rate and the cost-sharing amount. Therefore, the plan pays $500 for the emergency services, even though the individual has not satisfied the deductible. The individual's out-of-pocket costs are limited to the amount of cost-sharing originally calculated using the recognized amount (that is, $1,000).

Although such a payment would generally cause a high deductible health plan to lose its status as a high deductible health plan, the No Surprises Act added section 223(c)(2)(F) to the Code to specify that a plan shall not fail to be treated as a high deductible health plan by reason of providing benefits for medical care in accordance with section 9816 or 9817 of the Code, section 716 or 717 of ERISA, or section 2799A-1 or 2799A-2 of the PHS Act (the provisions added by the No Surprises Act related to surprise medical and air ambulance bills), or any state law providing similar protections to individuals, prior to the satisfaction of the deductible.
34

34
See section IV.A.5 of this preamble for a discussion of HHS-only interim final rules addressing catastrophic plans' compliance with these requirements.

iv. Specified State Law

Under section 9816(a)(3)(I) of the Code, section 716(a)(3)(I) of ERISA, section 2799A-1(a)(3)(I) of the PHS Act, and these interim final rules, a specified state law is a state law that provides a method for determining the total amount payable under a group health plan or group or individual health insurance coverage to the extent the state law applies. This includes instances where the Departments have interpreted this term to include state laws where the state law applies because the state has allowed a plan that is not otherwise subject to applicable state law an opportunity to opt in to a program established under state law, subject to section 514 of ERISA, for an item or service furnished by a nonparticipating provider or nonparticipating emergency facility. In cases where a specified state law applies, the recognized amount (the amount upon which cost sharing is based) and out-of-network rate for emergency and non-emergency services subject to the surprise billing protections is calculated based on such specified state law.

In order for a state law to determine the recognized amount or out-of-network rate, any such law must apply to: (1) The plan, issuer, or coverage involved, including where a state law applies because the state has allowed a plan that is not otherwise subject to applicable state law an opportunity to opt in, subject to section 514 of ERISA; (2) the nonparticipating provider or nonparticipating emergency facility involved (and in the case of state out-of-network rate laws, the nonparticipating provider of air ambulance services involved); and (3) the item or service involved. In instances where a state law does not satisfy all of these criteria, the state law does not apply to determine the recognized amount or out-of-network rate. For example, where a particular state surprise billing law that governs the recognized amount and out-of-network rate applies to a particular plan or coverage but does not apply to nonparticipating neonatologists, who provide a specified ancillary service under section 2799B-2(b)(2) of the PHS Act, the consumer protections under federal law would determine the recognized amount and out-of-network rate with respect to neonatology services while the state law would apply with respect to other provider specialties covered under that state law. Similarly, where a state's surprise billing laws apply only to health maintenance organizations (HMOs), federal protections against surprise billing would govern with respect to other types of coverage while the state protections would apply to HMOs for purposes of determining the recognized amount and out-of-network rate.

The same definition of “out-of-network rate”—including the reference to specified state laws—applies to air ambulance services as to other services. The Departments note, however, that the ADA states in relevant part: “. . . a State, political subdivision of a State, or political authority of at least 2 States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.”
35

Assuming that a provider of air ambulance services is an “air carrier” covered by this provision, as is typical,
36

the provision preempts state laws that would limit the amount of payment that the provider of air ambulance services would otherwise be entitled to receive.
37

Given the applicability of the ADA, the Departments are not aware of any state laws that would meet the criteria to set the out-of-network rate for nonparticipating providers of air ambulance services when providing services subject to the protections in the No Surprises Act.

35
49 U.S.C. 41713(b).

36
An air ambulance provider is a covered “air carrier” if it has economic authority from the Department of Transportation to provide interstate air transportation. Most air ambulance providers have such authority under the provisions of 14 CFR part 298.
See, e.g., Scarlett
v.
Air Methods Corp.,
922 F.3d 1053 (10th Cir. 2019);
Air Evac EMS
v.
Cheatham,
910 F.3d 751 (4th Cir. 2018).

37

See, e.g., Guardian Flight LLC
v.
Godfread,
991 F.3d 916, 921 (8th Cir. 2021) (holding that ADA preempted state law prohibiting out-of-network air ambulance providers from balance billing and requiring them to accept amounts paid by insurers);
Bailey
v.
Rocky Mountain Holdings, LLC,
889 F.3d 1259, 1269-72 (11th Cir. 2018) (holding that ADA preempted state law that prohibited air ambulance providers from collecting more than amount specified in fee schedule).

The Departments also seek comment on whether health insurance issuers, health care providers, or health care facilities, in instances where they are not otherwise subject to a specified state law that provides for a method for determining the total amount payable under a group health plan or group or individual health insurance coverage, should have an opportunity, for purposes of these interim final rules, to opt in to a program established under state law, with respect to an item or service furnished by a nonparticipating provider or nonparticipating emergency facility. The Departments seek comment on whether this approach would allow for more flexibility for state laws to apply when, for example, by their terms, they apply to the health insurance issuer and item and service in question, but not to the provider; whether an issuer, provider, or facility would still be subject to any specified state laws in their “home” state if they opt in to a program established under another state's law; and whether an issuer, provider, or facility should be permitted to opt in on an episodic basis. The Departments are concerned that allowing providers and facilities to opt in to a program established under state law could increase health care prices if providers and facilities selectively opt in to state programs that favor providers and facilities in the determination of the out-of-network rate. The Departments seek comment on the potential impact of expanding the ability to opt in to a state program to providers and facilities. The Departments specifically seek comment from health insurance issuers, health care providers, or health care facilities located within or serving

underserved and rural communities, and other communities facing a shortage of providers on the impact of these provisions on services, coverage, and payment for and within medically underserved, rural, and urban communities.

a. State Law Interaction With ERISA

Under the general preemption clause of section 514(a) of ERISA, state laws are preempted to the extent that they “relate” to employee benefit plans subject to title I of ERISA. There are, however, a number of exceptions to this broad preemption provision. Section 514(b)(2)(A), referred to as the “savings clause,” provides in pertinent part that “nothing in this title (title I of ERISA) shall be construed to exempt or relieve any person from any law of any State which regulates insurance. . . .” Additionally, the preemption provisions of section 731 of ERISA (implemented in 29 CFR 2590.731(a)) apply so that the requirements of part 7 of ERISA are not to be “construed to supersede any provision of state law which establishes, implements, or continues in effect any standard or requirement solely relating to issuers in connection with group health insurance coverage except to the extent that such standard or requirement prevents the application of a `requirement' of a federal standard.” The conference report accompanying the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which applied this preemption standard to state laws with respect to its title I health insurance reform provisions, indicates that this preemption is intended to be the “narrowest” preemption of states' laws.
38

States may therefore continue to apply state law requirements to issuers except to the extent they prevent the application of ERISA requirements. Additionally, states have significant latitude to impose requirements on issuers that are more restrictive than the federal law. State laws that impose comparable or additional requirements on health insurance issuers would generally constitute a “specified state law” notwithstanding section 514 of ERISA and would continue to apply.

38

See
House Conf. Rep. No. 104-736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News 2018.

While section 514(b)(2)(A) saves from ERISA preemption state laws regulating insurance, section 514(b)(2)(B) of ERISA, referred to as the “deemer clause,” provides that a state law “purporting to regulate insurance” generally cannot deem an employee benefit plan to be an insurance company (or in the business of insurance) for the purpose of regulating such a plan as an insurance company (section 514(b)(6)(A) creates a partial exception to the deemer clause for employee welfare benefit plans that are also multiple employer welfare arrangements (MEWAs)). Thus, to the extent that a state law has a “reference to” or an impermissible connection with ERISA plans (such as laws that govern the payment of benefits), these laws are preempted, to the extent they apply to self-insured plans sponsored by private employers.
39

However, section 514 of ERISA does not prevent states from expanding access to a state program and allowing self-insured, ERISA-covered plans to choose to voluntarily comply with it. For example, the Departments allowed such plans to comply with their obligations for external review under section 2719 of the PHS Act by voluntarily opting in to the state external review process.
40

Similarly, these interim final rules allow self-insured plans (including non-federal governmental plans) to voluntarily opt in to state law that provides for a method for determining the cost-sharing amount or total amount payable under such a plan, where a state has chosen to expand access to such plans, to satisfy their obligations under section 9816(a)-(d) of the Code, section 716(a)-(d) of ERISA, and section 2799A-1(a)-(d) of the PHS Act. A group health plan that opts in to such a state law must do so for all items and services to which the state law applies. Under these interim final rules, a self-insured plan that has chosen to opt in to a state law must prominently display in its plan materials describing the coverage of out-of-network services a statement that the plan has opted in to a specified state law, identify the relevant state (or states), and include a general description of the items and services provided by nonparticipating facilities and providers that are covered by the specified state law.

39

See Gobeille
v.
Liberty Mutual Ins. Co.
577 U.S. 312 (2015);
Egelhoff
v.
Egelhoff,
532 U.S. 141 (2001).

40

See, e.g.,
Technical Release 2010-01; 76 FR 37208, 37211 fn. 13 (June 24, 2011).

b. Examples Involving Specified State Laws

The following examples illustrate how state laws may or may not apply. In each example, assume there is no applicable All-Payer Model Agreement that would determine the recognized amount or out-of-network rate.

Example 1.
(i) Facts. A health insurance issuer licensed in State A covers a specific non-emergency service that is provided to an enrollee by a nonparticipating provider in a participating health care facility, both of which are also licensed in State A. State A has a law that prohibits balance billing for non-emergency services provided to individuals by nonparticipating providers in a participating health care facility, and provides for a method for determining the cost-sharing amount and total amount payable. The state law applies to health insurance issuers and providers licensed in State A. The state law also applies to the type of service provided.

(ii) Conclusion. In this Example 1, State A's law would apply to determine the recognized amount and the out-of-network rate.

Example 2.
(i) Facts. Same facts as Example 1, except that the nonparticipating provider and participating health care facility are located and licensed in State B. State A's law does not apply to the provider, because the provider is licensed and located in State B.

(ii) Conclusion. In this Example 2, State A's law would not apply to determine the recognized amount and out-of-network rate. Instead, the lesser of the billed amount or QPA would apply to determine the recognized amount, and either an amount determined through agreement between the provider and issuer or an amount determined by an IDR entity would apply to determine the out-of-network rate.

Example 3.
(i) Facts. An individual receives emergency services at a nonparticipating hospital located in State A. The emergency services furnished include post-stabilization services, as described in 26 CFR 54.9816-4T(c)(2)(ii), 29 CFR 2590.716-4(c)(2)(ii), and 45 CFR 149.110(c)(2)(ii). The individual's coverage is through a health insurance issuer licensed in State A, and the coverage includes benefits with respect to services in an emergency department of a hospital. State A has a law that prohibits balance billing for emergency services provided to an individual at a nonparticipating hospital located in State A and provides a method for determining the cost-sharing amount and total amount payable in such cases. The law applies to issuers licensed in State A. However, State A's law has a definition of emergency services that does not include post-stabilization services.

(ii) Conclusion. In this Example 3, State A's law would apply to determine the cost-sharing amount and out-of-network rate for the emergency services, as defined under State A's law. State A's

law would not apply for purposes of determining the cost-sharing amount and out-of-network rate for the post-stabilization services. Instead, the lesser of the QPA or billed amount would apply to determine the recognized amount, and either an amount determined through agreement between the hospital and issuer or an amount determined by an IDR entity would apply to determine the out-of-network rate, with respect to post-stabilization services.

Example 4.
(i) Facts. A self-insured plan, subject to ERISA, covers a specific non-emergency service that is provided to a participant by a nonparticipating provider in a participating health care facility, both of which are licensed in State A. State A has a law that prohibits balance billing for non-emergency services provided to individuals by nonparticipating providers in a participating health care facility, and provides for a method for determining the cost-sharing amount and total amount payable. The law applies to health insurance issuers and providers licensed in State A, and provides that plans that are not otherwise subject to the law may opt in. The law also applies to the type of service provided. The self-insured plan has opted in.

(ii) Conclusion. In this Example 4, State A's law would apply to determine the recognized amount and the out-of-network rate.

The Departments are of the view that it would be uncommon for laws of more than one state to each apply to the same health insurance issuer, and to the same provider for a particular item or service. Therefore, the Departments do not foresee many instances where there might be a question as to which state's law applies to determine the recognized amount or out-of-network rate. However, in such uncommon scenarios, one approach might be for the states involved to make that decision. Another approach might be that the law enacted by the state in which the service is provided would apply. Yet another approach would be for the QPA to apply to determine the recognized amount, and either a negotiated amount or an amount determined by an IDR entity to apply to determine the out-of-network rate. The Departments seek comment on these and any other approaches for resolving this choice-of-law question. The Departments also seek comment on how states have handled such questions prior to the enactment of the No Surprises Act, should these types of conflicts exist.

The Departments are of the view that Congress intended that where state law provides a method for determining the total amount payable under a plan or coverage, the state law regarding balance billing would govern, rather than the alternative method for determining the out-of-network rate under the No Surprises Act. The Departments interpret the statutory phrase “a State law that provides for a method for determining the total amount payable under such a plan, coverage, or issuer, respectively” broadly as referring not only to state laws that set a mathematical formula for determining the out-of-network rate, or that set a predetermined amount for an out-of-network item or service. Rather, the Departments interpret that language to also include, for example, state laws that require or permit a plan or issuer and a provider or facility to negotiate, and then to engage in a state arbitration process to determine the out-of-network rate. Such state laws provide a process for determining the total amount payable, and in such instances, the timeframes and processes under such a state law related to negotiations and arbitration would apply, as opposed to the timeframes and IDR process under the No Surprises Act.

In addition, the Departments are of the view that Congress did not intend for the No Surprises Act to preempt provisions in state balance billing laws that address issues beyond how to calculate the cost-sharing amount and out-of-network rate. To the extent state laws do not prevent the application of a federal requirement or prohibition on balance billing, the Departments are of the view that such state laws are consistent with the statutory framework of the No Surprises Act and would not be preempted.
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This view extends to any state law that provides balance billing protections beyond what these interim final rules provide. In fact, Congress specifically indicated that such state balance billing laws may continue in effect along with the balance billing protections set forth in the statute, by requiring in new section 2799B-3 of the PHS Act that providers must disclose to participants, beneficiaries, and enrollees information about federal balance billing protections, plus any other protections that apply under state law. A more detailed discussion of the disclosure requirements appears in section IV.A.3 of this preamble, which discusses the provisions codified in 45 CFR 149.430.

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Section 731(a) of ERISA and section 2724(a) of the PHS Act. As noted above, the HIPAA conference report indicates that this preemption standard is intended to be the “narrowest” preemption of states' laws.
See
House Conf. Rep. No. 104-736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News 2018.

v. All-Payer Model Agreements

As described earlier, in instances where an All-Payer Model Agreement is applicable, the recognized amount (the amount upon which cost sharing is based with respect to items and services furnished by nonparticipating emergency facilities, and nonparticipating providers of nonemergency items and services in participating facilities) and the out-of-network rate are determined using the amount that the state approves under the All-Payer Model Agreement for such items or services.

An All-Payer Model Agreement is an agreement between the Centers for Medicare & Medicaid Services (CMS) and a state to test and operate systems of all-payer payment reform for the medical care of residents of the state, under the authority granted under section 1115A the Social Security Act. Under the terms of section 1115A of the Social Security Act, such Agreements may waive specific provisions of titles XI and XVIII and of sections 1902(a)(1), 1902(a)(13), 1903(m)(2)(A)(iii), and 1934 (other than subsections (b)(1)(A) and (c)(5) of such section) as may be necessary solely for the purposes of testing the Model. All-Payer Model Agreements can vary significantly by state, including in using different approaches for approving payment amounts for items or services covered by the Agreements. Th

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2021-14379. Public record. Not legal advice.