On July 1, 2021, the Departments of Health and Human Services (“HHS”), Labor and Treasury and the Office of Personnel Management (collectively, the “Departments”) published a much anticipated interim final rule (“IFR”) implementing certain provisions of the No Surprises Act (the “Act”). While the IFR addresses some key aspects of the Act, it does not address the independent dispute resolution process, price transparency and comparison tools, reporting requirements for health plans and providers and enforcement mechanisms. The Departments indicated that such provisions would be addressed in future rulemakings, yet to come in 2021. The Act will go into effect for health insurance plan years beginning on January 1, 2022. Comments on the IFR are due by 5:00 P.M. EST on September 7, 2021. Comments on the model notice and disclosure forms are due on August 12, 2021.


Surprise billing generally occurs when a patient receives care at an out-of-network facility or from an out‑of-network provider at an in-network facility (e.g., when a hospital-based provider does not participate in the same health plans as the hospital). The patient then receives a “surprise” bill that is higher than expected, because of the provider’s out-of-network status. Over the years, the call to end surprise billing at the federal level increased, and eventually Congress responded by passing the Act on December 22, 2020. Please refer to our prior article for an overview of the Act.

Scope of Surprise Billing Prohibition

The IFR specifically prohibits surprise billing in three distinct circumstances.

First, the IFR prohibits surprise billing for emergency services provided by an out-of-network provider. Regardless of the provider’s status, each health plan must treat all emergency services as in‑network, without requiring prior authorization. Importantly, the IFR’s definition of emergency services is broader than the definition under the Emergency Medical Treatment and Labor Act and includes all post-stabilization services provided to a patient, unless certain conditions are met.

Second, the IFR requires all non-emergency services furnished by out-of-network providers at in‑network facilities to be treated as in-network services, except in those situations where the out-of-network provider gives notice and receives consent from the insured individual (as discussed in further detail below). This requirement also applies to 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 present at the facility.

As defined under the Act, “facilities” currently include hospitals, hospital outpatient departments, critical access hospitals and ambulatory surgery centers. However, the Act allows HHS to extend the surprise billing requirements to additional types of facilities in the future. Notably, due to state law variation, urgent care centers are not currently subject to the IFR in the context of non-emergency services (though, depending on licensure, they could be considered independent freestanding emergency departments as to emergency services).

Third, the IFR prohibits surprise billing for the provision of air ambulance services, though these details are beyond the scope of this alert. Note that the IFR does not apply to ground ambulance services.

Cost-Sharing Limitation

The IFR applies certain limits on patient cost-sharing amounts (i.e., copayment, coinsurance or deductible) when a patient receives out-of-network emergency services or a non-emergency service provided by an out-of-network provider at an in-network facility. Specifically, health plans may not impose higher cost‑sharing requirements than the amount that would have applied if an in-network provider had furnished the service. Additionally, all cost-sharing and out-of-pocket expenses paid by the patient must apply to the patient’s deductible and out-of-pocket maximum limit, as provided by the patient’s specific benefit plan.

In determining the cost-sharing amount for these services, the IFR requires the health plan to calculate a “recognized amount,” set by:

  1. An agreement between CMS and a state to test a system of all-payer payment reform under section 1115A of the Social Security Act (commonly referred to as an “All-Payer Model Agreement”), e.g., the agreement between CMS and Maryland;
  2. State law; or
  3. The lesser of the amount billed by the out-of-network provider, or the Qualified Payment Amount (discussed below).

Specified State Law

Prior to the Act, many states had already passed laws protecting patients against surprise medical bills. Consequently, the IFR requires that state law be utilized to determine the recognized amount and the out‑of‑network rate if the state law provides a method for doing so. Importantly, state laws that permit plans and providers to determine a rate through an independent dispute resolution (“IDR”) process constitute a “method” for rate setting. However, if the specified state law is to apply, it must apply to: (1) the health plan, (2) the nonparticipating provider, and (3) the item or service in question. If the above criteria are not met, the recognized amount and out‑of‑network rate will be determined using the procedures under the Act.

Qualified Payment Amount

Where an All-Payer Model Agreement or a specified state law does not apply, cost-sharing requirements are to be based on the lesser of the billed charge or the Qualified Payment Amount (“QPA”). In general, the initial QPA for a given item or service is determined by finding the median of the contracted rates recognized by the health plan on January 31, 2019, for: (a) the same or similar item or service, (b) furnished by a provider in the same or similar specialty, and (c) in the same geographic region, increased annually for inflation. Providers should recognize that:

  1. In determining the median contracted rate, each in-network provider contract rate is valued equally, regardless of the size of the provider.
  2. For contracted rates that are determined on a non-fee-for-service basis, e.g., a capitated rate, the health plan must use the underlying fee schedule rates for the relevant items and services.
  3. Except for air ambulance services, the geographic region is the metropolitan statistical area where the services are provided, or if the services are provided outside of a metropolitan statistical area, all other portions of the state.

If a health plan has insufficient information to establish a median contracted rate for an item or service, either because it is a new health plan, it has insufficient contracted rates for the item or service in the geographic region, or the item or service is new, the IFR establishes alternative methods to establish the QPA. However, these alternative methods should only be used in limited circumstances, and only until such time as the plan has enough information based on its own contracts to establish the QPA for the item or service in question.

Notably, the IFR states that HHS maintains the authority to audit health plans to ensure compliance with this methodology for calculating the QPA.

Determination of Out-of-Network Rate to be Paid to Provider

The IFR also establishes the amount an out-of-network provider will receive from a health plan for the provision of services. Under the law, the health plan must make a total payment to the out-of-network provider equal to the following (less the patient’s applicable cost-sharing responsibility):

  1. An amount determined by an All-Payer Model Agreement;
  2. If there is no applicable All-Payer Model Agreement, an amount specified by state law;
  3. If no state law or All-Payer Model Agreement applies, an amount mutually agreed upon by the provider and health plan; or
  4. If the parties cannot reach an agreement, an amount as determined through an IDR process.

Acknowledging that the QPA may have a significant impact on how an out-of-network rate is ultimately established, the IFR requires that health plans make the following disclosures to out-of-network providers upon sending their initial payment or denial of payment:

  1. The QPA for each item or service involved;
  2. A certification that the QPA was determined in compliance with the IFR;
  3. Notice that the provider may initiate a thirty (30) day open negotiation period for purposes of determining the out-of-network rate; and
  4. A statement that if the negotiation period does not result in a determination, the provider may initiate the IDR process within four (4) days after the end of the open negotiation period.

The Departments expressed hope that this transparency in the QPA process will provide out-of-network providers with the information required to properly guide their negotiations with health plans regarding the appropriate out-of-network rate.

Waiver of Surprise Billing & Cost-Sharing Protections

Recognizing there may be instances where patients may wish to receive services from an out-of-network provider despite potential increased costs, the Act established an exception where patients may, under certain limited circumstances, knowingly and voluntarily waive the surprise billing and cost-sharing protections.

HHS has developed a model notice and consent form which a provider must use if it wants a patient to waive these protections. The form cannot be modified except to add information identifying the provider or facility (as applicable), the patient and the contemplated items and services, or as needed to address state law. The notice must also contain a good faith estimate amount the nonparticipating provider or facility may charge the patient for the items and services involved (including any item or service the provider reasonably expects to provide in conjunction with such items and services). Additionally, the notice must be physically separate from, and not attached to or incorporated into, any other documents. A flawed consent document will be treated as a lack of consent, and balance billing protections will still apply to the patient.

The notice and consent form must be presented to the patient at least seventy-two (72) hours prior to the patient’s scheduled appointment for out-of-network services. If there are fewer than seventy-two (72) hours between the scheduling of the service and the service itself, consent must be obtained on the day the services are scheduled, but at least three (3) hours prior to services being rendered.

An in-network facility may provide notice on behalf of an out-of-network provider. The notice and consent form must be available in the fifteen (15) most common languages in the provider’s geographic region. Providers must give the patient a copy of the signed form; retain the form for at least seven (7) years; and notify the health plan about the form when billing for services.

Regardless of the foregoing, in no event may a patient waive the surprise billing and cost-sharing protections established by the IFR for any of the following:

  1. Emergency services;
  2. Air ambulance services;
  3. Items and services provided by a nonparticipating provider when there is no participating provider available to furnish such items or services at the participating health care facility;
  4. Items and services for unforeseen, urgent medical needs, whether for non-emergency care or post‑stabilization services; or
  5. Ancillary services that a patient does not typically select, including but not limited to diagnostic services such as radiology and laboratory services; items and services related to emergency medicine, anesthesiology, pathology and neonatology; and items and services provided by assistant surgeons, hospitalists and intensivists.

Website Disclosure

The IFR also requires providers to disclose these surprise billing protections on their public websites. The disclosure must include, in relevant part, a statement that explains the requirements and prohibitions under the Act, additional state law requirements related to permitted charges if applicable, and contact information for state and federal agencies in the event an individual believes a violation of the Act has occurred. The Departments have published a model disclosure notice entities may use, available here. These disclosure requirements do not apply to air ambulance services.

Complaint Process

The Departments will establish a single system to intake complaints related to alleged violations of the Act. There is not a time limit as to when a complaint may be filed, but the Departments are seeking comment on an appropriate period. The applicable Department must respond no later than sixty (60) business days after a complaint is received. Such response may be oral or written and will inform the complainant about their rights, obligations and next steps.

Practical Takeaways

  • Stakeholders should mobilize quickly to submit comments on the IFR by September 7, 2021.
  • Comments on the model notice and disclosure forms are due on August 12, 2021.
  • Providers should be on the lookout for additional regulations to be issued later this year, which will likely discuss the IDR process, the patient‑provider dispute resolution process and enforcement mechanisms.
  • Facilities should assess the participation status of their contracted physician groups with respect to each payer with whom the facility is in-network.
  • Providers should begin preparing model notice and consent forms.
  • Providers should ensure that their websites contain the required surprise billing disclosures prior to January 1, 2022.
  • Providers should watch for proposed amendments to their payer contracts, as payers may take this opportunity to initiate new changes to their current agreements, and to potentially renegotiate payment rates.
  • Finally, providers should consider the impact of this new law on the decision of whether to be in‑network or out-of-network with a particular payer.