On August 26, 2022, the U.S. Departments of Health and Human Services, Labor and the Treasury (collectively, the “Departments”) published their first final rule (“Final Rule”) implementing certain requirements of the No Surprises Act. This third round of rulemaking is narrow in scope and generally: (1) Responds to stakeholder comments related to the federal independent dispute resolution (“IDR”) process; (2) Addresses two 2022 decisions by the United States District Court for the Eastern District of Texas that vacated portions of the October 2021 interim final rule (“IFR Part II”) related to the criteria to be considered when determining the appropriate out-of-network (“OON”) rate for OON items and services under the IDR process; and (3) Requires greater transparency into the qualifying payment amount (“QPA”) determination process utilized by health plans for OON items and services. The requirements outlined under the Final Rule will go into effect on October 25, 2022. For a refresher on the balance billing and patient cost sharing protections under the July 2021 interim final rule (“IFR Part I”), please refer to our article available here. For more information regarding the good faith estimate requirements for uninsured/self-pay patients and the patient-provider dispute resolution process, please refer to our previous articles on the IFR Part II available here and here.
QPA Presumption Eliminated
The IFR Part II established the federal IDR process as a mechanism for OON providers/facilities and health plans to resolve disputes regarding the appropriate OON rate for OON items/services subject to the balance billing prohibition under the No Surprises Act. Under the IFR Part II, the Departments required the IDR entity to select the party’s offer for the appropriate OON rate that was closest to the “QPA”, unless credible information submitted by the parties clearly demonstrated that the QPA was materially different from the appropriate OON rate – effectively creating a rebuttable presumption in favor of the QPA. Arguing that the language of the No Surprises Act did not contemplate a presumption in favor the QPA when determining the appropriate OON rate, multiple lawsuits were filed challenging the validity of this requirement. Ultimately, the United States District Court for the Eastern District of Texas vacated this presumption in favor of the QPA, holding that such presumption “rewrites clear statutory terms” for the framework to be used in deciding the appropriate OON rate under the IDR process.
Accordingly, in this Final Rule, the Departments revised the regulatory framework for determining the appropriate OON rate to remove this presumption and instead provided that, in determining which of the parties’ offers to select, the IDR entity must consider the QPA for the applicable year for the same or similar item or service, and then must also consider all additional information submitted by a party related to each of the following factors enumerated under the No Surprises Act to determine which offer best reflects the value of the item or service at issue:
- The level of training, experience and quality and outcomes measurements of the provider or facility that furnished the qualified IDR item or service;
- The market share held by the provider or facility or that of the plan or issuer in the geographic region in which the item or service was provided;
- The acuity of the patient receiving the item or service, or the complexity of furnishing the item or service to the patient;
- The teaching status, case mix and scope of services of the facility that furnished the item or service; and
- The demonstration of good faith efforts (or lack thereof) made by the provider or facility or the plan or issuer to enter into network agreements with each other, and if applicable, contracted rates between the provider or facility and the plan or issuer during the previous four (4) plan years.
Notwithstanding the foregoing, the Departments acknowledge that, in many cases, these additional factors will already be reflected in the QPA. Therefore, the Final Rule clarifies that the IDR entity is to evaluate the additional information to avoid double counting factors that are already accounted for by the QPA (such as patient acuity or the complexity of furnishing the item or service, unless there is a disagreement between the parties regarding whether such factor is appropriately represented in the QPA).
The No Surprises Act generally requires the IDR entity to explain its payment determination and underlying rationale in a written decision submitted to the parties and the Departments. The Final Rule clarifies that this written decision must include an explanation of its determination, including what information the IDR entity determined demonstrated that the offer selected as the appropriate OON rate is the offer that best represents the value of the OON item or service, including the weight given to the QPA and any additional credible information submitted by the parties. If the IDR entity relies on additional information when selecting the appropriate OON rate, it must include an explanation of why this information was not already reflected in the QPA. The Departments hope this new requirement will help ensure that these IDR entities evaluate all credible information and promote greater transparency regarding payment determinations.
Finally, the Final Rule also includes multiple examples to illustrate how the foregoing factors should be considered by an IDR entity when making a determination as to which offer best represents the value of an item or service and therefore, the appropriate OON rate.
Downcoding
After considering public comments to both the IFR Part I and II, in order to promote greater transparency, the Departments expanded the information that plans and issuers are required to disclose with each initial payment or notice of denial of payment for OON services subject to the balance billing prohibition under the No Surprises Act to include additional information if the plan or issuer “downcodes” the billed claim. The Final Rule defines the term “downcode” to mean “the alteration by a plan or issuer of a service code to another service code, or the alteration, addition or removal by a plan or issuer of a modifier, if the changed code or modifier is associated with a lower QPA than the service code or modifier billed by the provider, facility or provider of air ambulance services.”
Specifically, the Final Rule requires that when a QPA is calculated based on a downcoded service code or modifier, in addition to the information already required to be disclosed with an initial payment or notice of denial of payment, a plan or issuer must provide a statement that the claim was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered and which modifiers were altered, added or removed, as applicable; and the amount that would have been the QPA had the service code or modifier not been downcoded.
This additional information gives OON providers/facilities the opportunity to fully engage during the open negotiation period and in the IDR process in order that they may provide information to support their position that the downcoding was inappropriate and therefore the provider’s/facility’s offer best represents the value of the item or service at issue.
Additional No Surprises Act Resources
In addition to the Final Rule, the Departments published a variety of resources to assist providers and facilities with the implementation of the No Surprises Act, including:
- A set of updated FAQs
- A chart addressing the IDR process in the bifurcated states
- A status update on the federal IDR process
Future Rulemaking
The Departments indicated the Final Rule was “purposefully narrow in scope.” This round of rulemaking does not address comments related to other provisions in IFR Part I and Part II nor does it address requirements related to the provision of a good faith estimate for insured individuals. The Departments indicate that future rulemaking on those issues are forthcoming.
For more information on surprise billing or for assistance with the IDR process, please contact:
- Lisa Lucido at (248) 457-7812 or llucido@hallrender.com;
- Angela Smith at (317) 977-1448 or asmith@hallrender.com;
- Jennifer Hatchett at (859) 361-5706 or jhatchett@hallrender.com;
- Benjamin Fee at (720) 282-2030 or bfee@hallrender.com; or
- Matthew Reed at (317) 429-3609 or mreed@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer an individual’s questions that may constitute legal advice.
