During the 2019 Legislative Session, the State of New Mexico fundamentally changed the way that health insurance companies, hospitals, physicians, and patients address payments for health care services provided by nonparticipating providers to covered persons. This article will examine New Mexico’s new “Surprise Billing Protection Act” (the “Act”)[1] and the Act’s new requirements for “surprise bills” beginning January 1, 2020.[2] The intent of the new law is to protect patients by “taking them out of the middle” of reimbursement disputes between health insurers and providers by creating a new article of the New Mexico Insurance Code.
Surprise Billing Protection Act
In 2019, the New Mexico Legislature passed, and the Governor signed into law, the new Surprise Billing Protection Act. This new law provides for a defined way for health insurance companies, hospitals, physicians, and patients to address payments and reimbursements for health care services provided by nonparticipating providers to a covered person. The provisions of the Act have a very broad reach and apply to coverage for both emergency care and non-emergency care delivered or issued by the State; by individual health insurance policies, health benefits plans, and certificates of insurance; by multiple-employer welfare arrangements; by small group and blanket health insurance policies, health benefits plans, and certificates of insurance; by individual and group health maintenance organization contracts governed by the provisions of the Health Maintenance Organization Law; and by individual and group nonprofit health benefits plans governed by the provisions of the Nonprofit Health Care Plan Law.[3]
Surprise Bill Defined
The new law defines a “surprise bill” as a bill that a nonparticipating provider issues to a covered person for health care services rendered in an amount that exceeds the covered person’s cost-sharing obligation that would apply for the same health care services if these services had been provided by a participating provider. Surprise bills may result from: (1) emergency care provided by the nonparticipating provider; or (2) health care services, that are not emergency care, rendered by a nonparticipating provider at a participating facility where a participating provider is unavailable, a nonparticipating provider renders unforeseen services, or a nonparticipating provider renders services for which the covered person has not given specific consent for that nonparticipating provider to render those particular services.[4] A surprise bill is defined to not include a bill for health care services received by a covered person when a participating provider was available to render the health care services and the covered person knowingly elected to obtain the services from a nonparticipating provider without prior authorization. The definition also excludes a bill received for health care services rendered by a nonparticipating provider to a covered person whose coverage is provided pursuant to a preferred provider plan, except for health care services not provided as emergency care.[5]
Prohibition on Surprise Bills
The new law strictly prohibits nonparticipating providers from knowingly submitting a surprise bill to a covered person.[6] The new law provides that a provider shall not knowingly submit to a covered person a surprise bill for health care services that demands payment for any amount in excess of the cost-sharing amounts that would have been imposed by the covered person’s health benefits plan if the health care service from which the surprise bill arises had been rendered by a participating provider.[7] It also provides that it shall be an unfair practice for a health care provider to knowingly submit a surprise bill to a collection agency.[8] Unfair practices are actionable under New Mexico law and subject to treble damages.[9]
The new law attempts to ensure that patients are aware of the protections provided by the new law. The new law requires that any written communication, other than a receipt of payment, from a provider or health insurer pertaining to a surprise bill, shall clearly state that the covered person is responsible only for payment of applicable in-network cost-sharing amounts under the covered person’s health benefits plan.[10] The new law requires that when a nonparticipating provider under non-emergency circumstances has advance knowledge that the provider is not contracted with the covered person’s health insurer, the provider shall inform the covered person of the provider’s nonparticipating status and advise the covered person to contact their health insurer to discuss their options.[11] The new law provides that a patient may appeal a health insurer’s determination regarding a surprise bill in accordance with the hearing procedures established by New Mexico’s Patient Protection Act.[12]
Emergency Care Reimbursement
The new law limits charges for emergency care by providing that a health insurer shall reimburse a nonparticipating provider for emergency care necessary to evaluate and stabilize a covered person if a prudent layperson would reasonably believe that emergency care is necessary, regardless of eventual diagnosis.[13] A health insurer may not require that prior authorization for emergency care be obtained by, or on behalf of, a covered person prior to the point of stabilization of that covered person if a prudent layperson would reasonably believe that the covered person requires emergency care.[14] However, a health insurer may impose a cost-sharing or limitation-of-benefits requirement for emergency care performed by a nonparticipating provider, but only to the same extent that the copayment, co-insurance, or limitation-of-benefits requirement applies for participating providers and is documented in the policy.[15]
Non-Emergency Care Reimbursement
For non-emergency care, the new law limits charges by providing that, other than applicable cost sharing that would apply if a participating provider had rendered the same services, a health insurer shall provide reimbursement for, and a covered person shall not be liable for, charges and fees for covered non-emergency care rendered by a nonparticipating provider that are delivered when: (1) the covered person, at an in-network facility, does not have the ability or opportunity to choose a participating provider who is available to provide the covered services; or (2) medically necessary care is unavailable within a health benefits plan’s network; provided that “medical necessity” shall be determined by a covered person’s provider in conjunction with the covered person’s health benefits plan and health insurer.[16] The new law provides that nothing shall preclude a nonparticipating provider from balance billing for non-emergency care provided by a nonparticipating provider to an individual who has knowingly chosen to receive services from that nonparticipating provider.[17]
Reimbursement Rate for Surprise Bills
The most contentious debate surrounding the new law was the debate on the appropriate rate for reimbursement of health care services provided by non-participating providers. The health insurers argued that the reimbursement rate should not be so high that providers were incentivized not to contract with health insurers, while providers argued for “adequate” rates for the services provided.
The new law settled upon a yet unproven reimbursement rate that is calculated using claims data reflecting the allowed amounts paid for claims paid in the 2017 plan year.[18] The new law defines “surprise bill reimbursement rate” as the sixtieth (60th) percentile of the allowed commercial reimbursement rate for the particular health care service performed by a provider in the same or similar specialty, in the same geographic area, as reported in a benchmarking database maintained by a nonprofit organization specified by the Superintendent of Insurance after consultation with health care sector stakeholders.[19] The new law provides that the nonprofit organization shall be conflict-free and unaffiliated with any stakeholder in the health care sector.[20] Based on statements made by representatives of the Office of Superintendent of Insurance during debates on the bill, Fair Health is highly likely to be the database selected by the Superintendent of Insurance.[21]
The new law also provides for a minimum reimbursement for providers. This minimum reimbursement was intended to shield providers from inadequate reimbursements, and minimum reimbursement was set at no less than one-hundred-fifty percent (150%) of the 2017 Medicare reimbursement rate for the applicable health care service provided.[22]
Reimbursement Rate Review
As the bill was debated, the underlying question was whether the selected reimbursement rate would be too high, too low, or just right. Because the selected reimbursement rate was highly contentious and yet to be proven, the new law requires the Superintendent of Insurance to convene the appropriate stakeholders, including rural providers, insurers, and consumer advocates, and review the reimbursement rate for surprise bills annually to ensure fairness to providers and to evaluate the impact on health insurance premiums and health benefits plan networks.[23] To ensure that the rate would be revisited in the future, the reimbursement rate (Section 13 of the Act) will be repealed on July 1, 2023.[24] This delayed repeal ensures that the Legislature must revisit the rate in the future and renew the reimbursement rate at an appropriate level for all interested parties. The new law also provides the Superintendent of Insurance the authority to require that health insurers report the annual percentage of claims and expenditures paid to nonparticipating providers for health care services.[25] In addition, the new law provides the Superintendent of Insurance the authority to require by rule a report on changes to the percent of claims paid as an emergency claim.[26]
Overpayments
In the case of overpayments by the covered person, the new law provides that, if a covered person pays a nonparticipating provider more than the in-network cost-sharing amount for services provided under circumstances giving rise to a surprise bill, the nonparticipating provider shall refund to the covered person, within forty-five calendar days of receipt of payment from the health insurer, any amount paid in excess of the in-network cost-sharing amount.[27] If a nonparticipating provider has not made a full refund to the covered person of any amount paid in excess of the in-network cost-sharing amount within forty-five calendar days of receipt, interest shall accrue at the rate set for payment of interest on a health plan’s liability for clean claims submitted by eligible providers to a health plan pursuant to Article 16 of the New Mexico Insurance Code.[28] A covered person may seek recovery of the amount the covered person has paid in excess of the in-network cost-sharing amount that a nonparticipating provider owes, plus interest, by filing an appeal with the Office of Superintendent of Insurance.[29]
Preservation of Health Care Cost Management by Insurers
With all of the restrictions placed on insurers, the Act attempts to preserve some of the insurers’ ways of controlling health care costs. The new law provides that nothing in the Surprise Billing Protection Act shall be construed to prohibit a health insurer from appropriately using reasonable health care cost management techniques.[30] The new law also provides that nothing in the Act shall be construed to create or imply a private cause of action for a violation of the Act.[31]
[1] Surprise Billing Protection Act, S.B. 337, 54th Leg., 1st Sess., 2019 N.M. Laws ch. 227, http://www.sos.state.nm.us/uploads/files/CH227-SB337-2019.pdf.
[2] Id. § 16.
[3] Id. § 12.
[4] Id. § 14(C)(13)(a).
[5] Id. § 14(C)(13)(b).
[6] Id. § 5(A).
[7] Id. § 14(A).
[8] Id. § 14(B).
[9] N.M. Stat. Ann. § 57-12-10(B) (2000 & Supp. 2018).
[10] Surprise Billing Protection Act § 5(D).
[11] Id. § 5(E).
[12] Id. § 5(B).
[13] Id. § 3(A).
[14] Id. § 3(B).
[15] Id. § 3(C).
[16] Id. § 4(A).
[17] Id. § 4(B).
[18] Id. § 13(B).
[19] Id. § 13(C).
[20] Id. § 13(D).
[21] See Fair Health, http://www.fairhealth.org (last visited June 13, 2019).
[22] Surprise Billing Protection Act § 13(C).
[23] Id. § 8(A).
[24] Id. § 15.
[25] Id. § 11(A).
[26] Id. § 11(B).
[27] Id. § 6(A).
[28] Id. § 6(B).
[29] Id. § 6(C).
[30] Id. § 9.
[31] Id. § 10.