On September 30, the Centers for Medicare & Medicaid Services (CMS) issued its second interim final rule (IFR) to address large out-of-pocket costs to consumers from “surprise billing.” The IFR released yesterday is the second set of rulemaking issued by the Biden-Harris Administration to implement certain provisions of the No Surprises Act, which was included as part of the Consolidated Appropriations Act, 2021, that was signed into law last December. Part II of the rule announced yesterday aims to provide an avenue to settled out-of-network (OON) provider and payment rates and outlines cost estimates for the uninsured. Additionally, it addresses a pathway for a dispute resolution processes for the uninsured.
Rule Specifics
There are numerous notable parts of the rule. The Independent Dispute Resolution (IDR) process is particularly important. This provision in the rule describes the federal IDR process which only applies to out-of-network emergency air ambulance services and non-emergency out-of-network providers at in-network facilities after open negotiations have failed. The IDR process is initiated if, after parties partake in a 30-day open negotiation period to determine a payment rate, negotiations fail. At that point, the parties will have four business days to initiate the IDR process, with three additional days to agree upon an independent resolution entity. If the negotiating parties cannot agree on an independent negotiators, the Departments will have six days after the initiation of the IDR to select a negotiator for the conflicting parties. Ten days after the negotiator is selected, the parties must submit their payment offers to the dispute negotiator. The dispute resolution entity then has 30 days after its initial selection to make a payment determination.
Resolution entities must initially operate under the assumption that the qualified payment amount (QPA), the plan or issuer’s average rate for that service, is the correct out-of-network amount. However, this baseline is subject to change if a party submits additional information that proves a substantial difference between the service provided and the QPA.
Furthermore, providers, facilities, plan issuers, and general members of the public can petition to remove or deny certification from an independent dispute resolution entity. Additionally, entities must abide by monthly reporting requirements to align with CMS’s effort to enhance transparency. The Departments will begin to certify entities for January 1, 2022, based on applications submitted by November 1, 2021.
The rule further requires that providers and facilities inquire about the health insurance status or potential claim status of an individual when scheduling an item or service for, or if requested by, that individual. Providers and facilities are required to issue a good faith estimate of anticipated charges for services to an individual who is either uninsured or considered self-pay. Specifically, individuals who qualify under these two categories either: (1) do not have benefits covering an item or service under specified health plans or (2) have such benefits under specified health plans, but do not seek to have a claim submitted to their plan, issuer, or carrier for the item or service.
The rule also establishes a patient-provider dispute resolution process to determine a payment amount in the event that an uninsured or self-pay individual receives a good faith estimate and is subsequently billed for an amount substantially in excess of said estimate. The rule provides eligibility details for this dispute resolution process, a definition of “substantially in excess,” and further information on the selection process for SDR entities that will oversee dispute resolution.
Physician Groups Concerned
The American Hospital Association (AHA) issued a statement with concerns regarding the rule. “Hospitals and health systems strongly support these protections and the balanced approach Congress chose to resolve disputes,” said Stacey Hughes, AHA’s executive vice president, in a statement. “Disappointingly, the Administration’s rule has moved away from Congressional intent and brought new life to harmful proposals that Congress deliberately rejected. Today’s rule is a windfall for insurers. The rule unfairly favors insurers to the detriment of hospitals and physicians who actually care for patients. These consumer protections need to be implemented in the right way, and this misses the mark.”
Providers are concerned with how the IDR process works. “Congress was quite clear that to ensure an equitable and balanced system to resolve disputes, no single factor should be given preference over others,” said Emily Volk, MD, president of the College of American Pathologists, in a statement. “However, the new rules will favor payment rates developed by insurance companies, which will only exacerbate ongoing health plan manipulation and disincentivize insurers from offering fair contracts to physicians caring for patients.”
The rule requires that dispute arbitrators start by looking at the insurer’s median contracting rate, otherwise known as the “qualifying payment amount” (QPA).
The arbitrator “must begin with the presumption that the QPA is the appropriate out-of-network rate for the qualified IDR item or service under consideration,” according to the rule. “These interim final rules further provide that the certified IDR entity must select the offer closest to the QPA unless the certified IDR entity determines that credible information submitted by either party clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate.”
“Making a health plan’s calculated ‘qualifying payment amount’ — which does not reflect real-world payment rates — the primary factor in independent dispute resolution arbitration will cause large imaging cuts and reduce patient access to care, regardless of their insurer,” said Howard Fleishon, MD, chair of the Board of Chancellors at the American College of Radiology, in a statement. “We look forward to working with other provider groups and the departments of Health and Human Services, Labor, and Treasury … to bring regulatory implementation in line with what the new law actually demands.”