On August 26, 2022, the U.S. Departments of Health and Human Services (HHS), Labor and the Treasury (the Departments) have issued a highly anticipated third interim final rule (IFR) implementing the No Surprises Act (NSA). The August 2022 Final Rule is narrow in scope and responds to two recent decisions by the Eastern District of Texas vacating portions of the October 2021 Interim Final Rule, Requirements Related to Surprise Billing: Part II, and incorporates stakeholder comments solicited by the Departments. Importantly, the August 2022 Final Rule removes the qualifying payment amount (“QPA”) as the presumptive factor in independent dispute resolution payment decisions and requires health plans to submit additional information in the IDR process for cases where a claim at issue was “downcoded” by the plan. The Final Rule took effect October 25, 2022, 60 days after its publication in the Federal Register.
More on Final Rule
In the Final Rule, the Departments explain the QPA is no longer the “presumptive” factor in payment determinations. The QPA is the median payer contracted rate for a particular item or service in a particular region. Moving forward, certified independent dispute resolution (IDR) entities “should select the offer that best represents the value of the item or service under dispute after considering the QPA and all permissible information submitted by the parties.” This clarification follows a federal court’s ruling siding with a medical association’s argument that the agency’s original interpretation of a “presumptive” QPA stretched beyond the legal confines of the original statute that vacated relevant provisions of previously finalized IFRs.
Additionally, the Final Rule directs IDR entities not to “double count” criteria that are already accounted for within the QPA or by information already submitted by either party. The Departments specifically mention that patient acuity and complexity of service provided may “in many cases” already be reflected in the QPA by virtue of being accounted for in the service codes and modifiers themselves, while acknowledging that there may be exceptions where the complexity or intensity goes beyond what is customarily reflected in the codes.
The Departments further note that even if information is deemed credible, it may not always affect the value of the final payment determination for that particular service. For example, in cases where level of training and experience of the provider is not necessary to provide the service, nor does it make an impact on the quality of care provided, it may not be relevant to the final payment amount. The Departments also reiterate that final payment determinations should center on the particular items or services based and the facts and circumstances of the dispute, rather than examining a plan’s QPA methodology. However, the Departments will conduct audits of issuers’ QPA calculation methodologies.
This IFR also requires payers and issuers to provide additional information to providers and facilities when they have “downcoded” a claim, defined as altering the service code or a modifier to lower the QPA to an amount less than that billed by the provider or facility. If this occurs, in addition to the information already required with an initial payment or notice of denial of payment, the plan or issuer must also provide a statement that includes that the service code or modifier billed by the provider or facility was downcoded, an explanation of why it was downcoded (including a description of which service codes and/or modifiers were altered, added or removed), and what the QPA would have been had the service code or modifier not been downcoded.
This IFR clarifies that plans or issuers cannot force providers to use proprietary portals or web-based systems and may not deny receipt of a notice of initiation of an open negotiation period on that basis. The rule also clarifies that if a provider or facility sends the standard notice of initiation of open negotiation to the email address identified by the plan or issuer in the notice of denial of payment or initial payment, that transmission would satisfy the requirement to provide notice to the opposing party.
Moving forward, in addition to previously finalized criteria, certified IDR entities will also be required to submit a written statement detailing their reasons for a particular determination of an out-of-network rate in all cases. Previously, they were only required to do so when not choosing the QPA. This information must be submitted to HHS, as well as both involved parties.
The Departments also reiterate that prohibited factors such as usual and customary charges, the amount that would have been billed had balance billing provisions not applied, and payment rates for public payors should not apply to final payment amount determinations. The rule reiterates that certified IDR entities are expected to conduct a thorough review of all information submitted to ensure that prohibited factors are not included and may ask the disputing parties for confirmation that information submitted does not include any of these prohibited factors.
The Departments note that the rule is “purposefully narrow in scope” and is intended to address “only certain issues critical to the implementation and effective operation of the Federal IDR process.” It does not address explanation of benefits requirements, which are expected to be addressed in future rulemaking.
New York Judge Dismisses Lawsuit
A New York federal judge dismissed a surgeon’s legal challenge that sought to roll back key pieces of a federal law that protects patients from surprise out-of-network bills. Judge Ann Donnelly ruled against the surgeon, finding that the law is constitutional, and dismissed the case for lack of standing and dismissed the surgeon’s request for a preliminary injunction.
Daniel Haller, a surgeon, and his private practice filed suit in December against federal regulators alleging that the ban on surprise billing was unconstitutional along with the independent dispute resolution process, the way in which providers and payers are supposed to resolve payment disagreements. Haller said the law deprives physicians the right to be paid a reasonable value for their services, according to the complaint.
Donnelly said Haller and his team did not show that they even went through the arbitration, or IDR, process, “much less that the IDR process resulted in a payment amount below the reasonable value,” according to the opinion.
“At the time of oral argument — almost six months after the Act went into effect — the plaintiffs could not say whether they had participated in the IDR process. They do not allege that the IDR process has caused any concrete harm, so their claims of constitutional injury are speculative,” Donnelly said.