Health Care Clients Face Complicated, New Regulations — And Legal Exposure

Issue May/June 2022 June 2022 By Anna Gurevich and Michelle R. Peirce
Health Law Section Review
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From left: Anna Gurevich and Michelle R. Peirce

Health care providers are facing new rules — and legal exposure — due to new state requirements for patient billing that impact consumers, providers and payors alike. 

These new requirements around patient billing were passed as part of the 2020 health care omnibus bill, “An Act Promoting a Resilient Health Care System that Puts Patients First,” that was signed into law on Jan. 1, 2021, by Governor Charlie Baker (the “Patients First Law”). The Patients First Law requires health care providers to tell patients how much patients will pay for planned hospital stays, medical procedures, health care services, and referrals — based on the patient’s specific health insurance plan. 

The most recent guidance published by the Department of Public Health (DPH) clarifies that the requirements for providers are effective as of July 31, 2022. DPH had earlier said the law was effective as of the start of 2022. 

For the health care community trying to piece together the complex requirements under both the Massachusetts Patients First Law and the federal No Surprises Act, also effective Jan. 1, 2022 (not discussed in this article), the delay in effectiveness and enforcement is welcome while the requirements of these laws are clarified and understood. However, your health care clients should be immediately attentive to these new laws and their requirements, or soon face the consequences. 

What's the issue?

So-called “surprise billing” has been a national issue for years, and refers to the situation where a patient receives an unexpectedly high bill from an out-of-network health care provider or facility because the patient received medical care that was not covered or paid by the patient’s health plan, usually because the health care provider did not participate in the health plan participating provider network. For example, a patient might schedule an operation at a hospital and, though the hospital and surgeons’ fees are covered and paid by the patient’s health plan because the providers are participating providers in the health plan’s network, the anesthesiologists’ fees are not fully paid by the health plan because the anesthesiologist is not a participating provider — resulting in the separate bill directly from the anesthesiologist. The Patients First Law aims to remove this element of surprise.

What are the implications?  

In short, Massachusetts health care providers — other than those involved in emergency services — have new notice and disclosure requirements to patients under the new law. 

If an out-of-network provider does not provide the required notices to a patient, the out-of-network provider may not bill the patient for additional amounts that are not reimbursed by the patient’s health plan or for which the patient would be responsible with an in-network provider. Without providing the required notices to patients upfront, providers sending such balance bills to patients, sending bills to collection or suing for payment will be in violation of the law and may be subject to DPH fines and penalties of up to $2,500 per violation. As of this writing (mid-March 2022), newly published DPH guidance says that DPH will begin investigating complaints on July 31, 2022, but that the “initial penalty amount will be $0, to give providers time to come into compliance.”  

Providers may also be subject to disciplinary action. In recently issued guidance, DPH encourages patients to report noncompliant providers to the appropriate licensing board, creating a real risk of disciplinary proceedings for failing to comply with many requirements of this new law.
On top of regulatory penalties and disciplinary proceedings, there may also be a risk of civil litigation against providers who do not comply, especially due to the complexity of intersecting rules and obligations under the state and federal laws and confusion about the requirements. 

Who Does the Massachusetts Law apply to?

The Massachusetts law is significant because it applies to individual licensed providers— large and small — as well as facilities like hospitals. Specifically, providers subject to the new requirements include any doctor of medicine, osteopathy, or dental science; any nurse, pharmacist, social worker, chiropractor or psychologist; or an intern, resident, fellow, or medical officer. In addition, the requirements apply to hospitals, clinics or nursing homes and their agents and employees. Thus, even physician practices are subject to these requirements. 

What are the new requirements?

Providers — other than those involved in emergency services — have new notice and disclosure requirements to patients under the new law. As is evident from the list, these requirements are fairly complicated and may greatly impact your clients’ current processes and operations: 

  1. Before scheduling any care, providers must inform patients whether the provider is in-network or out-of-network with the patient’s health plan. 

  2. If a provider is in-network for the patient, the provider must inform the patient that the patient can request information about the provider’s fees. 

  3. If a provider is out-of-network for the patient, the provider must actually provide the patient with information regarding the provider’s fees, inform the patient that the patient will be responsible for amounts not covered by the patient’s health plan, and inform the patient that they may be able to find lower-cost care from a provider who is in-network. 

  4. When a provider refers a patient to another provider, the provider must inform the patient whether the referred-to provider is part of the same provider organization, that it is possible the referred-to provider is not in-network with the patient’s health plan, and that, if so, that out-of-network rates will apply. The provider must also inform the patient that they have the opportunity to verify if the provider is in- or out-of-network before making an appointment. The patient must also be provided with sufficient information about the provider to be able to find out whether the provider is in-network for them. 

  5. When a provider directly schedules, orders or arranges for services for the patient with another provider, the provider must, before scheduling, verify whether the referred-to provider is in-network for the patient, and notify the patient if the referred-to provider is out-of-network for the patient, or if it could not be verified whether the provider is in- or out-of-network. 

When do patient notices have to be provided?

The timing and format of notices to patients will differ based on the lead time to the scheduled service, but notice will generally be required at least seven days (if scheduled further in advance), two days (if less than seven days available), or as soon as is practicable (if less than two days available) in advance of the scheduled admission, procedure or service. 

What happens now?

Lawyers, advisors and their health care clients will need to make their best efforts to understand and (for providers) to implement the requirements under the Patients First Law immediately, and be aware of similar requirements under the federal No Surprises Act. It is clear that more guidance is needed from federal and state regulators on how the federal and state laws will work together, and this guidance is likely to be coming in the next few months. Regardless of the deferment of enforcement under the Patients First Law until July 31, 2022, that window will close soon, and providers — and facilities — will face regulatory action for failing to comply. Providers are encouraged to implement applicable procedures to meet the new notice and billing requirements as soon as possible in order to minimize the prospect of regulatory scrutiny.

Anna Gurevich is a health care and business attorney at Hinckley Allen. Her practice focuses on counseling health care providers in business arrangements and regulatory issues.

Michelle R. Peirce is the co-chair of Hinckley Allen’s Government Enforcement and White Collar practice group and has a significant focus on health care matters.