State Surprise Billing Laws and the Federal NSA

Does a state surprise billing law replace the federal No Surprises Act?

No. CMS states in its Questions and Answers on the No Surprises Act and State Laws that the federal law "supplements state surprise billing laws; it does not replace them." If a state law does not apply to a specific item or service, the federal protections apply to it if they otherwise would.

The billing question is narrower: which process sets the out-of-network payment for this claim, a state method or federal IDR? The federal steps are on their own pages: open negotiation, the federal IDR process and the qualifying payment amount.

What is a specified state law?

A specified state law is a state law that provides a method for determining the total amount payable for an out-of-network item or service. That is the definition in 45 CFR 149.30. It includes the case where a state lets a plan that is not otherwise subject to the state law opt in, subject to section 514 of the Employee Retirement Income Security Act (ERISA).

The definition adds conditions for plans. A group health plan that opts in must do so for all items and services the law covers, in the way the state authority decides. It must also state in its plan materials that it opted in, name the state, and describe the covered items and services.

An All-Payer Model Agreement is a different route. Under 45 CFR 149.30, where an All-Payer Model Agreement under section 1115A of the Social Security Act applies, the recognized amount is the amount the state approves under it. It applies only when the agreement covers the plan or issuer, the provider or facility, and the item or service.

Patients are affected too. CMS says that where a specified state law applies, both the out-of-network rate and the amount on which patient cost sharing is based follow the state method.

When does a state process apply instead of federal IDR?

A state process applies instead of federal IDR when a specified state law or All-Payer Model Agreement determines the amount for that item or service. CMS's tips page for disputing parties lists "submitting disputes that are subject to a specified state law or All-Payer Model Agreement" among common mistakes, because those disputes are not eligible for federal IDR. The rule carries the same carve-out: in 45 CFR 149.510(a)(2)(xi)(A), air ambulance services qualify for federal IDR only where the rate is not determined by reference to an All-Payer Model Agreement or a specified state law.

In the state letters, CMS applies a three part test. The state method controls only if it applies to all three of these:

• the nonparticipating provider or nonparticipating emergency facility;
• the plan, issuer or coverage, including where the state lets a plan opt in; and
• the item or service involved.

If any one of the three is missing, the claim goes the federal route. That is how one state can have both processes. CMS calls these states "bifurcated" in its applicability chart.

Payer deadlines can change too

Under 45 CFR 149.120(c)(3), the plan has 30 calendar days to send an initial payment or a denial notice. Where the recognized amount comes from a specified state law or All-Payer Model Agreement, it is "such other timeframe as specified under the State law." Paragraph (c)(4) gives the same carve-out for the total payment.

Do state laws apply to self-funded ERISA plans?

Usually not. CMS says federal IDR applies to self-insured plans sponsored by private employers or employee organizations in all states, except where the plan has opted into a specified state law in a state that permits it, or an All-Payer Model Agreement applies. A self-insured plan is one the employer funds directly, as opposed to buying insurance. See self-funded plans and fully insured plans.

CMS names six states that allow self-insured plans to opt in to a specified state law: Georgia, Maine, Nevada, New Jersey, Virginia and Washington. Because opting in is voluntary, any given plan in those states may or may not have done it. Plans that did not opt in are under federal IDR.

The CMS Q&A gives the enforcement side. For a self-insured group health plan, a state cannot enforce its surprise billing protections unless the plan has opted into the state law.

Other plan types follow their own rules. CMS's chart says non-federal governmental plans may be subject to a specified state law, either because the law applies to them broadly or because the plan opted in. It says Federal Employees Health Benefits plans use federal IDR unless the contract between the Office of Personnel Management and the carrier adopts the state process.

Where does CMS show which state law applies?

CMS publishes three resources that answer this: a federal IDR applicability chart, the CAA enforcement letters for each state, and a Q&A on the No Surprises Act and state laws.

The chart lists 21 states as bifurcated: California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Maine, Maryland, Michigan, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Texas, Virginia and Washington. It lists the other states, DC and the territories as federal IDR. That is the January 2023 picture. Confirm it in the state's letter and on the state's own Department of Insurance site.

CMS says that states have primary enforcement authority and that CMS directly enforces any provision a state fails to substantially enforce. The Q&A also gives the No Surprises Help Desk number, 1-800-985-3059, for help on which law applies. Our state pages go deeper on each state.

How do I know if my claim is under state or federal law?

Work through four checks, in this order.

1. Find the plan type on the ID card or the eligibility response: fully insured, self-funded, Medicare, Medicaid, TRICARE or another program. Per the CMS chart, federal IDR does not apply to items and services payable by Medicare, Medicaid, the Children's Health Insurance Program or TRICARE.
2. Find the state where the service was furnished, then look it up in the CMS chart. If it is in the "Federal IDR Process" column, you are on the federal track.
3. If it is bifurcated, read that state's CMS letter and the state's own law. Match the plan, the provider or facility, and the item or service against what the state method covers.
4. If the plan is self-funded and the state allows opt-in, confirm whether this plan opted in. A plan that did not opt in is under federal IDR.

When you cannot tell, the CMS chart advises consulting the plan and the proper state authorities. It adds that if services are received in a state other than where the member enrolled, the plan's language on geographic scope of coverage may matter.

What do Texas, New York and New Jersey show about state laws?

These three states are all bifurcated, and each splits the work differently. We verified each in its CMS letter, and New York and New Jersey on the state's own site.

Texas

CMS's Texas letter says Texas has no applicable All-Payer Model Agreement. It says Chapter 1467 is a specified state law for emergency care in a hospital emergency room or a licensed freestanding emergency room, for out-of-network facility-based providers at in-network facilities, and for certain out-of-network diagnostic imaging and laboratory services. It applies to individuals in a PPO, EPO or HMO fully insured commercial plan regulated by the Texas Department of Insurance, and to the Texas state employee and retiree plans for state agency employees and teachers.

Texas is not in CMS's list of six opt-in states, so a self-funded plan there is a federal IDR claim under the chart. Mediation and arbitration request steps are set by the Texas Department of Insurance, so read its current instructions before you file. See Texas TDI mediation.

New York

New York's Department of Financial Services describes its protections for people with fully insured coverage, including emergency services in hospitals and inpatient care after an emergency room visit. Its provider pages say out-of-network providers can dispute payment through the state independent dispute resolution process, starting with a case number from the DFS portal.

DFS says the entity must decide within 45 business days of receiving all the information it needs, including payment of its charge, and the review is binding. For employer or union self-funded coverage, DFS tells providers the federal No Surprises Act protections apply, with one exception it names: the New York State Empire Plan and the Student Employee Health Plan, where state protections apply.

New Jersey

The New Jersey Department of Banking and Insurance says the Out-of-network Consumer Protection, Transparency, Cost Containment, and Accountability Act, effective August 30, 2018, created an arbitration system for inadvertent and emergency or urgent out-of-network services. Self-funded plans may opt in to the same arbitration as insured carriers.

The Department's Bulletin 21-14 states the interaction rule: state arbitration continues for state-regulated plans and opted-in self-funded plans, while federal IDR applies to self-funded plans that did not opt in, to air ambulance, and to services rendered out of state. It also says a self-funded plan can opt out of the state process to use federal IDR, with notice to the Department at least two weeks before the opt-out takes effect.

How we handle state and federal out-of-network disputes

We verify benefits for every patient the client sends each day, so plan type and state decide the route. Self-funded (ERISA) plans go to federal IDR, and fully insured plans regulated by a state go to that state's process. Medicare and Medicaid claims are outside the dispute process.

In Texas, fully insured plans regulated by the Texas Department of Insurance, usually marked TDI or DOI on the card, plus state employee (ERS, including HealthSelect) and teacher (TRS) plans, use the Texas mediation or arbitration process. Self-funded employer plans use federal IDR. Each state process has its own windows, which we pull from the state's own source at the start of each case.

We go back on older claims as far as payer filing limits allow. If your hospital, emergency department or freestanding ER sends claims across several states, book a call and we will walk through how we sort them. Our out-of-network billing and IDR service covers the full scope, and emergency department billing is where state and federal rules meet most often.