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Last Updated: Jan 4, 2022

250x250 Surprise BillingThe omnibus federal government spending and pandemic aid bill passed by the United States Congress and subsequently signed into law in December 2020 included significant provisions aimed at protecting patients against surprise medical-bills and determining out-of-network provider payments.

The portions of the legislation regarding surprise billing are referred to as the No Surprises Act (“NSA” or “Act”). Most provisions of the Act take effect with the plan year for 2022. The Act required the promulgation of federal regulations to implement certain provisions.

Interim final rules (IFRs) have been published over the past few months. These IFRs generally take effect Jan. 1, 2022.

In a Nov. 17, 2021 letter, the Pennsylvania Medical Society (PAMED) joined other stakeholder groups in submitting comments advocating that these IFRs should be revised to better reflect the statutory language of the NSA. Particularly, in regards to how payment disputes should be resolved and how deciding entities should weigh relevant information submitted by parties in such disputes.

What Does the Act Provide?

The Act establishes standards for plans and providers to resolve payment for nonemergency services provided by non-participating (out-of-network) providers at participating (in-network) facilities, emergency services provided by non-participating providers and facilities, and air ambulance services. Under the Act, providers and plans must first attempt to resolve payment disputes between themselves before final resolution in a binding arbitration process referred to as Independent Dispute Resolution (IDR).

For services rendered by a nonparticipating provider (e.g., physician) at a participating facility or at a nonparticipating emergency facility: providers may not bill beyond the allowed cost-sharing amount imposed under the plan or coverage for such services. An initial payment, determined by the plan, or a notice of denial of payment will be sent to the provider from the plan within 30-days from when the provider transmitted their bill to the plan. Following receipt of initial payment or denial of payment, there is a 30-day window for either party (the provider or plan) to initiate open negotiations. The open negotiation period is a 30-day period during which the provider and plan may negotiate an agreement to resolve payment. If an agreement cannot be reached during the open negotiation period, the plan or provider has 4-days (from the last day of the open negotiation period) to notify the other party and the Secretary of (HHS) that they are initiating the IDR process.

The Act’s IDR process establishes an arbitration procedure that allows independent review of provider-plan disputes. Within 3-days following the date the IDR is initiated, the provider and plan must jointly select a certified IDR Entity (IDRE). The parties may continue negotiating during the 30-day IDR process and may agree on an amount of payment before the end of the IDR process (in such case both parties will share the cost to compensate the IDRE). Within 10-days of IDRE being selected, the parties must submit final offers, information requested by IDRE, and additional information, subject to certain exceptions, the parties would like related to their offers.

The IDRE has 30-days to select one of the offers. The Act lists the specific factors that the IDRE may consider in making its decision. Factors include the qualifying payment amount (QPA), contacted rates from the prior year, the patient’s acuity, the market share of the insurer and provider, teaching status of the facility, scope of services, any demonstrations of good faith efforts to agree on a payment amount, and other considerations (upon request by the IDRE or either party) such as the provider’s training and experience, the complexity of the procedure or medical decision-making. Note that the IDR entity cannot consider payment rates by public payors, including Medicare, Medicaid, CHIP, and Tricare rates. The party whose offer was not chosen by the IDR entity must pay IDR process costs. Payment, pursuant to the IDR entity’s determination, must be made to the provider within 30-days of the IDR entity’s decision.

Previous versions of the bill had included benchmark payment provisions instead of an arbitration process. In 2019, the Pennsylvania Medical Society (PAMED) sent a letter to congressional representatives urging reconsideration of a benchmark payment standard.

Interim Final Rules

To implement many of the Act’s provisions, the U.S. Department of Health and Human Services (HHS) in conjunction with several other federal agencies have issued a series of IFRs.

The first IFR was published in July 2021 and can be accessed here. With another rule being published in the Oct. 7, 2021 edition of the Federal Register, this latest rule can be accessed here.  

Regarding the first IFR, a fact sheet published by the CMS provided this summary:

  • The interim final rule protects individuals from surprise medical bills for emergency services, air ambulance services provided by out-of-network providers, and non-emergency services provided by out-of-network providers at in-network facilities in certain circumstances.
  • Coverage - If a plan or coverage provides or covers any benefits for emergency services, the interim final rule requires emergency services to be covered:
    • Without any prior authorization (i.e., approval beforehand)
    • Regardless of whether the provider is an in-network provider or an in-network emergency facility
    • Regardless of any other term or condition of the plan or coverage other than the exclusion or coordination of benefits, or a permitted affiliation or waiting period
  • What do emergency services include? - Emergency services include certain services in an emergency department of a hospital or an independent freestanding emergency department, as well as post-stabilization services in certain instances.
  • Cost sharing - The interim final rule also limits cost sharing for out-of-network services subject to these protections to no higher than in-network levels, requires such cost sharing to count toward any in-network deductibles and out-of-pocket maximums, and prohibits balance billing. These limitations apply to out-of-network emergency services, air ambulance services furnished by out-of-network providers, and certain non-emergency services furnished by out-of-network providers at certain in-network facilities, including hospitals and ambulatory surgical centers.

The IFR specifies that cost-sharing amounts for such services furnished by nonparticipating emergency facilities and nonparticipating providers at participating facilities must be calculated based on one of the following amounts: (1) an amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act; (2) if there is no such applicable All-Payer Model Agreement, an amount determined by a specified state law; or (3) if there is no such applicable All-Payer Model Agreement or specified state law, the lesser of the billed charge or the plan’s or issuer’s median contracted rate, referred to as the qualifying payment amount (QPA).Under the IFR, the QPA is generally the median of the contracted rates of the plan or issuer for the item or service in the geographic region.

The most recent IFR was published in the Oct. 7, 2021 Federal Register. A fact sheet on this latest rule was published by the Centers for Medicare and Medicaid Services (CMS).

The rule requires providers/facilities to provide good faith estimates to uninsured or self-pay patients starting Jan 1, 2022. The good faith estimate will include expected charges for the primary item or service the patient is receiving, as well as for any other items or services that would reasonably be expected to be provided as part of the same scheduled or requested items/services.

The IFR also details on the IDR process that providers, facilities or providers of air ambulance services, and health plans or issuers will use to determine final payment beyond allowable patient cost-sharing for certain out-of-network healthcare services in situations where the No Surprises Act prohibits surprise billing. A certified IDRE will then work with the health plan and provider or facility to decide the payment amount. When deciding which offer to select in an IDR, the rule specifies that the IDRE must begin with the presumption that the QPA is the appropriate out-of-network rate for the or service under consideration. The IDRE must select the offer closest to the QPA, unless there is credible information submitted by the parties clearly demonstrating that the QPA is materially different from the appropriate out-of-network rate, based on the additional circumstances allowed.

More information on the latest IFR and the IDR process can be found in this general fact sheet.

PAMED and AMA Advocacy: Concerns with QPA Calculation and the IDR Process

Concerns have been raised with the method used to calculate the QPA and the QPA’s importance in the IDR process.

Specifically, there is concern that QPA calculation will generate rates not reflective of actual market-rate physician payments. Under the rule, small and large payment contracts will be weighted equally for purposes of calculating the QPA. This means that each contract is considered one data point to be used in determining the median contracted rate, regardless of how many providers’ rates may be covered under a contract. Because of this method of calculation, the QPA could be skewed lower than the actual median of all provider rates in an area.

The American Medical Association (AMA) has raised these concerns with HHS and has urged that the QPA is considered by IDREs in context and does not play an oversized role in the IDRE’s decision making. There is concern regarding dispute resolution fairness if QPAs are calculated too heavily in favor of payors.

More information on these issues can be found in a statement recently issued by the AMA, which can be accessed here.  

On Nov. 17, 2021, PAMED submitted a letter, with the AMA and other national as well as state medical associations, requesting that HHS revise the most recent IFR to conform with the NSA’s statutory language to allow an IDR entity the discretion to consider all the relevant information submitted by the parties to determine a fair out-of-network payment to physicians, without creating a rebuttable presumption that directs an IDR entity to consider the offer closest to the QPA as the appropriate payment amount. This letter can be accessed here.

Comments will be accepted by HHS until Dec. 5, 2021. Interested parties can submit comments electronically or via one of the alternative methods listed here.

Additional Information

CMS has launched a website dedicated to the No Surprises Act, which can be accessed here.

Additional information on the Act can be found on the AMA’s website here. The AMA has developed a detailed high-level summary of the Act, which can be accessed here, as well as a guide, which can be accessed here.

The AMA also has developed summaries of the IFRs, Part I can be accessed here and Part II can be accessed here. Additional information from the AMA regarding the IFRs can found here. The AMA has also developed a Toolkit for Physicians on Preparing for Implementation of the NSA, this toolkit can be accessed here.

The Pennsylvania Insurance Department has also developed a website dedicated to the No Surprises Act, this website can be accessed here.

PAMED will continue to monitor implementation of the Act as well as the promulgation of accompanying regulations and provide updates accordingly.


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