Earlier this week, Senate Bill 316 (the “Bill”) was filed in the North Carolina state legislature. The Bill covers a large swathe of healthcare-related issues, and the additional regulatory elements of the Bill would likely have far-reaching impacts on hospitals and the provision of healthcare in the state if the Bill were to become law. However, several elements of the Bill are likely mirrored, or at least echoed in spirit, by existing federal law and regulatory frameworks.
Billing Transparency and Right to a Good-Faith Estimate:
Part II, Section 2.1 of the Bill requires “greater transparency in healthcare provider billing practices,” including a requirement that healthcare providers (excluding pharmacies), whether or not the healthcare provider participates in the patient’s healthcare provider network, provide certain written disclosures to patients regarding consumer protection rights. S.B. 316, Part II, Section 2.1 largely mirrors the spirit of the federal No Surprises Act and related federal regulations and guidance, including the federal model disclosures. At a broad scale, federal No Surprises framework ultimately aims to prevent balance billing by out-of-network providers (“nonparticipating healthcare providers,” in the language of the Bill) for non-emergency services “unless notice and consent requirements are met for certain items and services.” However, S.B. 316, Part II, Section 2.1 classifies “repeated failure to comply” with the rules as a violation of the state Unfair and Deceptive Trade Practices law.
Both the proposed state-level notice law and federal law require certain disclosure to include the identification, by name, of nonparticipating healthcare providers. See S.B. 316 Section 2.1; Frequently Asked Questions for Providers About the No Surprises Rules, April 6, 2022. However, the federal “No Surprises” disclosure requiring out-of-network provider names requires patient consent rather than simply giving patients notice, as in the case with the proposed state-level law. And ultimately, the federal framework is more effectual than the proposed state law in that the federal framework bans many types of balance bills for emergency services, anesthesiology services, and radiology services. In contrast, the state-level proposed framework simply requires notice to be given to patients of the possibility of additional billing and, under Part II, Section 2.2.(c), forbids insurers from “penaliz[ing] an insured … unless contracting healthcare providers able to meet health needs of the insured are reasonably available to the insured without unreasonable delay.” Of course, under basic principles of federal supremacy hospitals must ensure compliance with federal law even if it is more stringent than state law, as it appears to be in this case.
Notably, Part III, Section 3.2 of the Bill states that patients are entitled to a “good faith estimate” of the price of services within three days of a request for such an estimate. When a patient requests such an estimate, “the patient’s final bill … shall not exceed more than five percent … of the good-faith estimate provided to the patient pursuant to this section.” While the “5%” requirement is not incorporated into federal law, it shares a common thread with federal advanced explanation of benefits (AEOB) and good faith estimate requirements under the No Surprises Act. Again, any violation of the fair notice requirements in S.B. 316 would trigger liability under the state’s Unfair and Deceptive Trade Practice law.
Switch to Quarterly Data Reporting Requirements:
One of the chief elements of S.B. 316 is the requirement in Part I, Section 1.1 that “On a quarterly basis, each hospital shall provide to the Department [of Health and Human Services], utilizing electronic health records software, the following information about the 100 most frequently reported admissions by DRG for inpatients as established by the Department…” The five categories of requested information include “The amount that will be charged to a patient for each DRG if all charges are paid in full without a public or private third party paying for any portion of the charges,” the “average negotiated settlement” that is required for each patient for each DRG without any public or private third party contribution, the amount of Medicaid reimbursement for each DRG, the amount of Medicare reimbursement for each DRG, and, “For each of the five largest health insurers providing payment to the hospital on behalf of insureds and teachers and State employees, the range and the average of the amount of payment made for each DRG.” The Bill imposes a civil penalty for noncompliance with the quarterly reporting requirement.
While the new quarterly cadence of the state-level reporting requirement is of course new for hospitals, it seems that most hospitals in the state will already have access to the above-required data as part of their rhythm of federal data reporting. Federal law requires hospitals to “establish (and update) and make public (in accordance with guidelines provided by the Secretary) a list of the hospital’s standard charges for items and services developed by the hospital, including for diagnosis-related groups established under section 1395ww(d)(4) of this title.” Section 2718 of the Public Health Service Act, codified in part at 42 U.S.C. § 300gg-18(e). The federal rule is likely more inclusive than the Bill: While the Bill requires relevant data regarding “the 100 most frequently reported admissions by DRG for inpatients,” the Hospital Price Transparency rule promulgated under the authority of 42 U.S.C. § 300gg-18 requires annual publication of the standard charges for “all items and services…”. 45 CFR § 180.40(a), emphasis added. Moreover, the federal law also sets forth the so-called “shoppable services” rule requiring “a consumer-friendly list” of often-used charges. 45 CFR § 180.40(b). While data submitted to the North Carolina Department of Health and Human Services would likely become public record, no explicit consumer-facing requirement exists in the proposed state-level framework. Part V, Section 5.1 of the Bill also authorizes the state Auditor to “periodically examine health service facilities” to assess pricing transparency measures and the prices being charged to uninsured or out-of-network patients.
The required Medicaid and Medicare reimbursement data for specific DRGs will likely be at arm’s reach for hospitals that already rely on such data to make budget projections and ensure the day-to-day financial efficacy of their service lines. And, while a civil penalty exists in the Bill, the maximum state-level civil penalty is $2,000 per day whereas the maximum federal civil monetary penalty varies by hospital size and, at its peak, is more than double the state-level penalty. 42 C.F.R. § 180.90(c)(2)(ii)(C). Ultimately, while there are certainly additional layers of detail required by the proposed state-level framework—a notable example being the quarterly state-level reporting requirement rather than the annual requirement under federal law—much of the required data is already shared with the federal government in some manner.
One additional difference between the federal and proposed state framework is that Ambulatory Surgical Centers (ASCs) are included in S.B. 316’s quarterly reporting requirement. S.B. 316, Part I, Section 1.1. The Bill requires that “On a quarterly basis, each hospital and ambulatory surgical facility shall provide to the Department, utilizing electronic health records software, information on the total costs for the 20 most common surgical procedures and the 20 most common imaging procedures, by volume, performed in hospital outpatient settings or in ambulatory surgical facilities, along with the related CPT and HCPCS codes.” In contrast, 45 CFR § 180.20 does not explicitly include ambulatory care centers in its definition of “Hospital,” rather defining a hospital as “an institution in any State in which State or applicable local law provides for the licensing of hospitals, that is licensed as a hospital pursuant to such law or is approved, by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing.”
Pre-Collections Referral Requirements, Facility Fees, and Other Miscellaneous Items:
Part III, Section 3.1.(c) of the Bill also requires that “A hospital or ambulatory surgical facility shall not refer a patient's unpaid bill to a collections agency, entity, or other assignee unless it has first presented an itemized list of charges to the patient detailing, in language comprehensible to an ordinary layperson, the specific nature of the charges or expenses incurred by the patient.” While federal law generally does not require this level of detail for patient billing, the itemization requirement reflects the spirit of the federal Hospital Price Transparency Rule.
Part VIII, Section 8.1 of the Bill also eliminates certain Certificate of Need (CON) review requirements for inpatient rehabilitation services, rehabilitation facilities, and rehabilitation beds. This is a fairly limited revision to the CON law in light of the expansive scope of CON law in the state.
Under S.B. 316, Part IV, Section 4.1.(a), healthcare providers are also not allowed to “charge, bill, or collect a facility fee unless the services are provided on a hospital's main campus, at a remote location of a hospital, or at a facility that includes an emergency department” and must follow annual reporting requirements detailing, in part, the “top 10 procedures and services … that generated the greatest amount of facility fee gross revenue.” Like the portion of S.B. 316 covering fair notice requirements, violations of the facility fee section of the Bill are considered violations of the state’s Unfair and Deceptive Trade Practice law. The facility fee section is a new proposed state-level requirement that reflects growing legislative concern surrounding facility fees at standalone clinics and other such “outposts.”
As of today, there are no indications as to whether this Bill is simply a “conversation-starter”-type piece of legislation or one that would pass without major alterations. The Healthcare team at Nelson Mullins is continuing to monitor the Bill and surrounding legislative discussions.
