The federal No Surprises Act (Act), went into effect on Jan. 1, 2022. The Act protects patients under qualified health plans from receiving “surprise” medical bills that occur when a patient receives a “balance bill” from an out-of-network provider for the difference between the out-of-network charge and the amount paid by the patient’s health insurance plan. This primarily occurs following care from an out-of-network provider during emergency services or when a patient receives non-emergency services from an out-of-network provider at an in-network facility.
During July 2021, Parsons Behle & Latimer provided an overview of the Act and its impact on healthcare facilities and providers which can be found here. This article will focus on the Independent Dispute Resolution (IDR) process under the Act.
On Sept. 30, 2021, the Centers for Medicare & Medicaid Services (CMS), along with several other agencies, jointly issued a second interim final rule (Rule)[1] that outlined the process providers and insurers must follow for a disputed out-of-network medical bill.
Prior to initiating the IDR process, the provider and insurer must engage in a 30-day “open negotiation” period to determine an agreeable payment rate.[2] If those negotiations fail, either party may initiate the IDR process. Pursuant the IDR process, the parties jointly select a neutral, certified IDR entity to essentially act as an arbitrator to resolve the dispute (IDR Entity). The parties then each submit their offers for payment, and the IDR Entity issues a binding decision selecting one of the parties’ offers as the out-of-network payment amount. Both parties pay an administration fee for use of the IDR Entity, which for 2022 is $50.[3] Additionally, the non-prevailing party (meaning the party whose rate was not selected) must pay the IDR Entity fee for using the IDR process. CMS has indicated the estimated fee for most IDR Entity arbitrations will be approximately $400.[4]
Until recently, under the Rule, the IDR Entity making the payment determination was required to begin with the presumption that the qualifying plan amount (QPA) was the appropriate payment amount. The QPA is described as being generally the plan or issuer’s median contracted rate for the same or similar service in the specific geographic area. Parties are then permitted to submit additional documentation as to why the QPA should not be the applicable payment amount.
The Rule then provided that for the IDR Entity to deviate from the offer closest to the QPA, “any information submitted must clearly demonstrate that the value of the item or service is materially different from the QPA.”[5] “Factors” the IDR Entity may consider include the training, experience, quality and outcomes of the provider or facility, market share held by the provider or facility, and the complexity and acuity of the patient’s care.
After the Rule was issued, several parties, including the Texas Medical Association, American Medical Association and American Hospital Association, filed suit based on the Rule’s failure to assign weight to any of the factors the IDR Entity must consider, and the Rule’s focus on QPA as the primary factor determining payment.[6],[7] In the lawsuits, the parties are asking courts to find that relevant provisions of the Rule regarding the factors impacting payment exceeded the government’s statutory authority, and request that the court vacate those provisions and enjoin the government from enforcing the same.
On Feb. 23, 2022, a federal judge in Texas struck down the portion of the Rule requiring the IDR Entity begin with the presumption that the QPA is the correct payment amount.[8] The court explained that because the Act required the IDR Entity to consider all factors in addition to the QPA with no weight assigned to any one factor, the Rule’s rebuttable presumption in favor of the QPA conflicted with the Act, and thus ,that provision of the Rule was vacated. The court also held that the government’s failure to comply with the notice and comment period was a separate basis to set aside the challenged portions of the Rule.
Accordingly, going forward, providers are still required to engage in the IDR process, but the IDR Entity is now required to consider all factors equally instead of presuming the QPA is the proper payment amount.
To discuss this or related issues, contact Jamie Riley by calling 208.562.4900 or by sending an email to jriley@parsonsbehle.com.
[1] Federal Register: Requirements Related to Surprise Billing; Part II
[2] Requirements Related to Surprise Billing; Part II Interim Final Rule with Comment Period | CMS
[3] Calendar Year 2022 Fee Guidance for the Federal Independent Dispute Resolution Process Under the No Surprises Act (cms.gov)
[4] See id.
[5] Requirements Related to Surprise Billing; Part II Interim Final Rule with Comment Period | CMS
[6] AMA-et-al.-v.-HHS-Complaint.pdf (sixthcircuitappellateblog.com)
[7] TMA-v.-Depts-Opinion.pdf (sixthcircuitappellateblog.com)
[8] See id.
