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No Surprises Act: No Surprise. More Information Yet to Come.

The Final Rule becomes effective Oct. 25, 2022.

The U.S. Departments of Health and Human Services, Labor and Treasury (the Departments) have issued the highly anticipated final rule further implementing the independent dispute resolution (IDR) process under the No Surprises Act (NSA).

This follows two recent federal court decisions (Texas Medical Association, et al. v. United States Department of Health and Human Services, et al. and LifeNet, Inc. v. United States Department of Health and Human Services, et al.) where the court vacated portions of the interim final rules requiring arbitrators in the IDR process to presume that the insurer’s median in-network rate (i.e., Qualifying Payment Amount) is the appropriate out-of-network rate. 

As expected, the final rule officially removes the rebuttable presumption in favor of the Qualifying Payment Amount (QPA). This means that the arbitrators no longer must select the offer closest to the QPA or assume that the QPA is the presumptive payment amount. Instead, arbitrators must now consider the QPA and all other factors, including the experience of the provider; the market share of the provider or health plan; patient acuity; teaching status, case mix and scope of services of the facility; and prior good faith efforts made by the provider or the plan to enter into network agreements with each other, and if applicable, contracted rates between the provider and he plan during the previous 4 plan years.

Unfortunately, however, the Departments still believe that the QPA will often represent the appropriate out-of-network rate because in many cases, they contend, the QPA already accounts for these additional factors. The Departments emphasize that each factor should only be weighted once, and so to the extent any of those factors are already included in the QPA, the arbitrator is instructed to disregard them. For example, if a provider submits additional information about patient acuity to support a payment rate and the arbitrator determines that the QPA is based on the in-network rate for a service code that already accounts for patient acuity, then the arbitrator should not consider this additional information.

While the new double-counting rule complies (barely) with the court’s decisions in Texas Medical Association and LifeNet, it is still improperly favoring the QPA and indirectly instructing arbitrators to favor the QPA.

The Departments also addressed some of the concerning payer behaviors we have seen.

Notably, the final rule requires health plans to provide additional information to providers when they “downcode” a claim, which occurs when the health plan modifies the level of service that a provider bills to a lower one. At the time of the initial payment or notice of denial, the health plans must provide:

  1. A statement that the service code or modifier billed by the provider was downcoded;
  2. An explanation as to why the claim was downcoded; and
  3. The amount that would have been the QPA had the service code or modifier not been downcoded.

This information must automatically accompany the QPA without having to be separately requested by the provider. The Departments note that they are continuing to consider whether additional disclosures related to QPA methodologies should be required.

The final also rule clarifies that it is not permissible for health plans to require the use of an online portal for providers to initiate the open negotiation period. Health plans can create open negotiation portals, but they cannot refuse to accept the standard notice of initiation from a provider.

The Departments also released 23 frequently asked questions, along with a status update of the IDR process. Notably, FAQ 20 clarifies that if a health plan fails to provide all the required information along with the initial payment or notice of denial, the provider can still initiate the open negotiations period within 30 business days of receiving the initial payment or notice of denial. Providers do have the option of requesting an extension or submitting a formal complaint if the health plan does not provide the required information.

The final rule, unfortunately, does not address all areas of the NSA covered by the interim rules issued last year. The Departments indicated that they plan to finalize other provisions “at a later date.”

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