On November 5, 2021, 152 members of the U.S. House of Representatives submitted a letter to the Secretaries of the Departments of Health and Human Services, Labor, and the Treasury (the Departments) urging the Departments to amend the second interim final rule implementing the independent dispute resolution (IDR) process under the No Surprises Act to comply with the letter of the law. The Representatives assert that by establishing the qualifying payment amount (QPA) as the presumptive out-of-network rate, the interim final rule contradicts Congress’s bipartisan intent to enact a fair, balanced dispute resolution process to resolve payment disputes between providers and plans. This letter comes on the heels of Texas Medical Association’s federal lawsuit challenging the portions of the interim final rule relating to the IDR process.

The No Surprises Act, enacted in December 2020, prohibits balance billing patients for out-of-network emergency services and non-emergency services rendered by out-of-network providers at in-network facilities. When the No Surprises Act applies, the out-of-network rate payable by the plan is determined by state law or an all-payer model, if applicable. In the absence of state law, reimbursement is determined by the IDR process when the payor and provider cannot agree on a negotiated out-of-network rate. In the IDR process, both parties must submit final offers for payment along with supportive written material to an IDR entity who is required to select between the two offers. The No Surprises Act directs the IDR entity to consider seven factors in making the payment determination, including the qualifying payment amount, which is defined as the plan’s median in-network rate for same or similar items or services in the geographic area; the provider’s level of training experience, and quality outcomes; the market share of the provider and plan; teaching status, case, mix, and scope of services of the provider; patient acuity; demonstrations of good faith efforts to enter into a network agreement with the other party; and, if applicable, prior contracted rates between the parties in the previous four years. The IDR entity cannot consider the provider’s usual and customary rate or the rates paid by government reimbursement programs.

On April 29, 2021, in anticipation of regulations implementing the IDR process, Senators Hassan and Cassidy sent a letter to Secretary Becerra, Secretary Yellen, and Secretary Walsh emphasizing Congress’s desire for the IDR process to be fair and balanced for both providers and facilities on the one hand, and payors and issuers on the other. On September 30, 2021, the Departments issued the second set of implementing regulations which, in part, provided significant additional detail regarding the IDR process and placed a thumb on the scale in favor of the QPA. The second interim final rule established that the IDR entity should presume that the QPA is the appropriate payment amount and should select the offer closest to the QPA unless either party submits credible evidence to establish that the appropriate payment amount is materially different than the QPA. If the IDR entity does not choose the offer closest to the QPA, then the written decision must explain the additional consideration relied upon, whether the information was credible, and the basis by which it determined that the credible information demonstrated that the QPA was materially different from the appropriate out-of-network rate. Additional information on the second interim final rule is available here in a previous issue of Health Headlines.

The portions of the second interim final rule relating to the IDR process have been the topic of much controversy. On October 28, 2021, the Texas Medical Association filed suit in federal district court alleging that the Departments ignored the text of the Act and congressional intent, effectively rewriting portions of the No Surprises Act by requiring the IDR entity to presume the QPA is the appropriate payment amount. The Texas Medical Association asked the court to strike the IDR portions of the second interim final rule that are contrary to the statute and reinstate the process set out in the No Surprises Act.

On November 5, 2021, 152 U.S. Members of the House of Representatives (the Members) submitted a bipartisan letter to Secretary Becerra, Secretary Yellen, and Secretary Walsh (the Secretaries) urging the Secretaries to amend the second interim final rule to align with the letter of the statute and Congress’s intent in enacting the No Surprises Act. Specifically, the letter explained that the No Surprises Act was the result of multiple years of bipartisan and bicameral deliberations wherein Congress considered and declined to implement a benchmark rate in favor of a fair and balanced IDR process. The letter explains that, under the No Surprises Act, the IDR entity is required to consider any information submitted by the parties in light of each of the seven enumerated factors to evaluate the unique circumstance of each billing dispute with no one factor being the default.

The Members explain that the IDR process as implemented does not reflect the way the No Surprises Act was written, does not reflect a policy that could have passed Congress, and does not create a balanced process to settle payment disputes. Instead, the Members assert that the second interim final rule changed the statutory IDR process by creating a de-facto benchmark out-of-network rate. The Members expressed concern that this could incentivize insurance companies to drive payment rates down, which could result in narrower provider networks and decreased patient access to care, particularly in rural and urban underserved areas. The letter urges the Secretaries to amend the second interim final rule to specify that the IDR entity should not default to the QPA but instead consider all of the factors enumerated in the No Surprises Act.

A copy of the Members’ letter is available here. The Departments are still accepting comments on the second interim final rule. Comments are due no later than 5 p.m. on December 6, 2021, and may be submitted here.