CMS Issues Surprise Billing Interim Final Rule. Payers Praise! Hospitals Howl!

The rule lays out how payers and providers will resolve billing disputes under the No Surprises Act.

The Centers for Medicare & Medicaid Services on Thursday released its interim final rule on surprise medical billing, and payers and providers gave the long-awaited provisions decidedly different receptions.

In short: Hospitals Hate it. Payers are delighted.

The key point of contention in the final rule – which take effect on January 1, 2022 -- is the independent dispute resolution process for some out-of-network billing, which presumes that the payer's out-of-network reimbursement is the starting point for negotiations.

The disputing stakeholders will have a 30-day "open negotiation" to determine a payment. If they're still at loggerheads, they can open the dispute resolution process, which is conducted by a jointly select a "certified independent dispute resolution entity" that's been authorized by CMS.

CMS says the dispute resolution process – mandated by the No Surprises Act -- creates a process "that will take patients out of the middle of payment disputes, provides a transparent process to settle out-of-network rates between providers and payers, and outlines requirements for healthcare cost estimates for uninsured (or self-pay) individuals."

CMS Administrator Chiquita Brooks-LaSure said the final rule requires "healthcare providers and healthcare facilities to provide uninsured patients with clear, understandable estimates of the charges they can expect for their scheduled healthcare services."

Stacey Hughes, executive vice president of the American Hospital Association, called the rule "a windfall for insurers."

"The rule unfairly favors insurers to the detriment of hospitals and physicians who actually care for patients," Hughes said in prepared remarks. "These consumer protections need to be implemented in the right way, and this misses the mark." 

Federation of American Hospitals President and CEO Chip Kahn called the final rule "a total miscue" that goes against the intent of Congress when it passed the law.

"It inserts a government standard pricing scheme arbitrarily favoring insurers," Kahn said. "For two years, hospitals and other stakeholders stood shoulder to shoulder with lawmakers to develop legislation that would protect patients from surprise medical bills and last December, Congress passed a bill with a fair and balanced payment dispute resolution process. This regulation discards all of that hard work, misreads Congressional intent, and essentially puts a thumb on the scale benefiting insurers against providers and will over time reduce patient access."

Matt Eyles, president and CEO of America's Health Insurance Plans, said the final rule "signals a strong commitment to consumer affordability and lower healthcare spending through an independent dispute resolution process that should encourage more providers to join health plan networks."

"We are particularly encouraged to see the rules conform to the intent of the No Surprises Act and direct that arbitration awards must begin with a presumption that the appropriate out-of-network reimbursement is the qualified payment amount," Eyles said.

"This is the right approach to encourage hospitals, health care providers, and health insurance providers to work together and negotiate in good faith. It will also ensure that arbitration does not result in unnecessary premium increases for businesses and hardworking American families."

Justine Handelman, senior vice president of policy and representation for the Blue Cross Blue Shield Association, called the IFR "a win for patients and a step toward building a more affordable and equitable healthcare system.

"We commend the administration for protecting patients and using an independent resolution process that focuses on affordability. This was Congress’ intent, and we will continue to work with Congress and the administration to create a more transparent, affordable and equitable health system," Handelman said.

Docs hate it too

The IFR is also getting panned by the American Medical Association, which called it "a surprise gift to the insurance industry." 

Like the hospital associations, the AMA says the IFR "ignores congressional intent and flies in the face of the Biden Administration's stated concerns about consolidation in the health care marketplace."

"It disregards the insurance industry's role in creating the problem of surprise billing at the expense of independent physician practices whose ability to negotiate provider network contracts continues to erode,” said AMA President Gerald A. Harmon, M.D.

"Congress appreciated the negative consequences of national price setting for healthcare services and spent considerable time and effort developing a robust independent dispute resolution process to maintain market balance and preserve access to care, which the Administration apparently ignored,” Harmon said.

"It also is apparent that the Administration failed to appreciate the importance of creating an accessible and impartial dispute resolution processes as a backstop against even greater insurer abuses," he said.  

Thursday's final rule is the third in a series of implementations of the No Surprises Act put forward by the Departments of Health and Human Services, Labor, Treasury and the Office of Personnel Managment.  

In September, policy makers issued a rule to help collect data on the air ambulance provider industry, and in July issued a rule on consumer protections against surprise billing. All of the rules take effect on January 1, 2022.