The Departments of Labor, Treasury, and Health & Human Services have finalized regulations regarding the dispute resolution process implemented under the No Surprise Billing Rules in the Consolidated Appropriations Act. The Departments also have issued important FAQ guidance that addresses many other elements of the No Surprise Billing Rules.
- The new final regulations illustrate the Departments’ commitment to quickly implementing and enforcing the protections established in the No Surprise Billing Rules.
- Federal litigation challenging the interim regulations has shaped how the Departments have crafted these final rules.
- New FAQ guidance provides comprehensive and far-reaching explanations for many other elements of the No Surprise Billing Rules that are not included in the final regulations.
The Bottom Line
Plans and providers should be aware of the changes to the dispute resolution process under the No Surprise Billing Rules. In particular, sponsors of group health plans should consult with their claims administrators to confirm that they are prepared to implement these new rules–particularly with respect to the determination and application of the qualifying payment amount (or QPA). Additionally, both plans and insurers should take note of the new and updated model notices regarding balance billing and ensure that they are posted in a manner consistent with the new FAQ guidance.
New guidance issued on August 19, 2022, by the Departments of Labor, Treasury, and Health & Human Services (the Departments) adds to the growing library of regulations and FAQs issued pursuant to the Consolidated Appropriations Act (CAA). As discussed in our previous briefing on the subject, the No Surprise Billing Rules component of the CAA introduced new protections against balance billing for out-of-network services provided in certain settings: specifically certain emergency services, out-of-network services at an in-network facility, and air ambulance services. The billing rules also include a new system for independently resolving disputes when plans and providers are unable to agree on an appropriate price for the out-of-network services.
Following the enactment of the CAA, the Departments issued interim final rules in June 2021 and again in October 2021. The new package of guidance builds on this previous guidance and includes (1) regulations to address a court decision that vacated a portion of the prior rules, and (2) FAQ guidance regarding the portions of the No Surprise Billing Rules that remain subject to interim regulations.
The new regulations finalize a limited portion of the previous interim rules relating to the CAA’s controversial independent dispute resolution (IDR) process. The IDR process resolves pricing disputes for out-of-network coverage when the plan and the provider are unable to arrive at an agreed-upon amount for the billed services.
The Departments issued interim rules in October 2021 that sketched out the mechanics of the new IDR process, but those procedures were immediately challenged in court by a physician trade association and air ambulance providers. What followed was a series of opinions from the U.S. District Court for the Eastern District of Texas that vacated key portions of the interim rules relating to the IDR process.
Recognizing the need to address “certain issues critical to the implementation and effective operation of the Federal IDR process,” the Departments have finalized a limited portion of the interim rules, focusing primarily on the following three important elements of the IDR process:
- Downcoding. One of the central features of the IDR process is the qualifying payment amount or QPA. The QPA is the median of the payment amounts that a plan (or, more likely, insurer or third party administrator) has negotiated with network providers for a particular item or service in a defined geographic area. The interim final rules require plans and issuers to disclose the QPA at the time of the initial payment or notice of denial of payment. If either the provider or the plan disputes the initial payment amount, the parties can enter into a 30-day negotiation period. If the parties still cannot agree on a payment amount, the QPA is one of the factors considered when the dispute moves to the independent review stage. Many commenters expressed concern that plans and issuers could manipulate the QPA by using different service codes than the codes that providers originally used in their bills. The Departments define this practice as “downcoding.” To ensure transparency in the QPA calculation process, the final regulations require plans and issuers to (1) state whether a QPA is based on a downcoded service code, (2) explain why the claim was downcoded, (3) provide a description of which service codes were altered, and (4) disclose the amount that would have been the QPA had the service code not been downcoded.
- Factors To Be Considered by the IDR Entity. The IDR process requires the provider and the plan/insurer to each submit a proposed amount for payment and the third party conducting the IDR review (the IDR entity) to select one of the two proposals. Under the prior rules, the IDR entity had to select the offer closer to the QPA absent credible evidence demonstrating that the other proposed amount was more appropriate. This portion of the prior rules became the subject of intense scrutiny and speculation and was specifically vacated by the district court in its opinions. In response to the court’s opinions, the final regulations direct the IDR entity to consider both the QPA and all other additional information and to determine which of the proposed amounts best reflects the value of the item or service provided. The regulations include a list of specific factors that may be considered in the determination (the factors for air ambulance services differ from those for emergency services or at an in-network facility).
- Written Decision of the IDR Entity. The final regulations also address the content of the IDR entity’s written decision. Specifically, the IDR entity must prepare a written explanation of its determination that provides reasons for its decision, identifies the factors considered, and describes the weight given to the QPA and any additional information submitted during the IDR process.
These final rules will go into effect 60 days after their publication in the Federal Register.
As noted above, the new final regulations address only a small subset of the myriad components in the No Surprise Billing Rules. To help plans and issuers comply with these rules, the Departments have provided supplemental FAQ guidance that addresses the following topics:
- application of the No Surprise Billing Rules to plans that do not have a network of providers (such as plans that use referenced-based pricing for claims in lieu of a provider network);
- further clarification of how the interim rules apply to air ambulance claims, including U.S.-bound flights that originate in a foreign country;
- new and updated model notices to comply with the obligation to make certain disclosures regarding balance billing protections;
- instructions on posting the balance billing notice;
- new and updated model disclosure and consent forms for non-participating providers and facilities to use when seeking a patient’s waiver of his or her protections against balance billing;
- additional details regarding the calculation of the QPA; and
- further information about the dispute resolution process, including the timing and manner of denied payment notices, initiation of the open negotiation periods between plans and providers, and the Federal IDR Process.
Ballard Spahr attorneys in the Employee Benefits and Executive Compensation and Health Care Practice Groups advise plan sponsors and plan administrators on how to navigate these ever-changing health care laws. Please contact us if you have questions.