The Big Picture
The Biden Administration released an interim final rule with comment period (IFC) on September 30 that answers an important remaining question under the No Surprises Act (NSA): How will the amount that health plans must reimburse out-of-network providers (known as the “out-of-network rate”) be determined when the payer and provider do not agree on the rate? The NSA, which prohibits surprise medical billing in many cases, says disputes over those reimbursements are to be determined by an arbitration process through an independent dispute resolution (IDR) entity, and identifies several factors that could or could not be evaluated in determining the out-of-network reimbursement rate. In addition, the IFC includes regulations related to the provider-patient dispute process and good faith estimates for uninsured patients.
The IDR Process. With respect to the IDR process, the IFC says that after the health plan and provider each propose a reimbursement rate in the arbitration, the IDR entity “must select the offer closest to the [qualifying payment amount (QPA)] unless the certified IDR entity determines that credible information submitted by either party clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate.” The QPA is the amount that patient cost-sharing is based upon and, in many cases, will be the median in-network rate, adjusted for inflation, that the health plan has negotiated with providers for the same service in the same geographic area. Payers had asked the Administration to establish a presumption that the QPA should be treated as the “out-of-network rate.” Thus, this provision in the IFC has been welcomed by payers but is not endorsed by hospitals and physicians, who contend that the presumption benefits payers in the IDR process. On October 4, the bipartisan leadership of the House Ways and Means Committee wrote to the Departments of Health and Human Services (HHS), Labor, and the Treasury (the Departments) to say that the IFC’s focus on the QPA does “not reflect the law that Congress passed,” although the Democratic chairs of the Senate Health, Education, Labor and Pensions (HELP) Committee and the House Energy and Commerce (E&C) Committee supported the regulation at the time it was released.
The IFC also establishes criteria to become a certified IDR entity1 and amends health plan external review rules to require that external review be available for the cost-sharing and surprise billing protections under the NSA. The IFC applies to issuers of group and individual health insurance coverage and employment-based group health plans, including grandfathered health plans, self-insured plans, and federal, state, and local government employee plans. The rules do not apply to short-term, limited-duration insurance or excepted benefit insurance, like vision, dental, or long-term care insurance. Under the NSA and existing regulations, the federal IDR process applies only when state law does not set the patient cost-sharing amount and the amount paid to out-of-network providers for a particular surprise medical bill. The NSA defers to state laws that set reimbursement rates in these situations.
External Review. The IFC also establishes when external review is available to patients regarding surprise medical billing. The IFC provides examples of types of adverse benefit determinations that entitle individuals (including those covered by grandfathered health plans) to an external review: (1) whether a claim is for emergency services that involves medical judgment or consideration of compliance with the cost-sharing and surprise billing protections; (2) whether a claim by a nonparticipating provider at an in-network facility is subject to the protections of the NSA; (3) whether an individual was capable of providing informed consent to waive protections of the NSA; or (4) whether cost-sharing was appropriately calculated for claims for ancillary services provided by out-of-network providers at in-network facilities.
Good Faith Estimates. The IFC also specifies the rules that apply to the issuance of good faith estimates (GFEs) of expected charges for items and services provided to uninsured (or self-pay) individuals. The NSA requires health care providers and facilities, upon scheduling an item or service or upon request, to inquire about the individual’s health coverage status and to provide a GFE of the expected charges for such item or service (including any item or service that is reasonably expected to be provided in conjunction with such scheduled or requested item or service by any providers or facilities). When the individual seeking an item or service is uninsured or decides not to use health coverage (self-pay), the GFE is to be provided to the individual.
These rules define the roles and responsibilities of “convening providers”/“convening facilities” (i.e., providers or facilities that receive the initial request for a GFE from self-pay individuals and that would be responsible for scheduling the primary item or service/the item or service that is the initial reason for the visit) and “co-providers”/“co-facilities” (i.e., providers or facilities other than a convening provider or a convening facility that furnish items or services that are customarily provided in conjunction with a primary item or service).
- To determine whether a GFE must be provided to the individual, the convening provider or facility must inquire and determine if the individual meets the definition of an uninsured (or self-pay) individual.
- The convening provider or facility must inform uninsured (or self-pay) individuals that GFEs of expected charges are available to them upon scheduling an item or service or upon request.
- Specifically, the convening provider or facility must provide written notice in a clear and understandable manner prominently displayed (and easily searchable from a public search engine) on the convening provider’s or convening facility’s website and in the office.
- Convening providers/convening facilities will be responsible for providing the GFE (for both the primary item/service and items/services provided in conjunction) to the uninsured (or self-pay) individual, which would require them to alert co-providers/co-facilities that are providing items or services in conjunction with the scheduled item or service when items or services are scheduled or a GFE is requested.
- Convening providers/facilities must contact all co-providers/co-facilities no later than one business day after the GFE request is received or after the primary item or service is scheduled, and request submission of expected charges for items or services by a specified date.
- The co-provider/co-facility is responsible for providing the requested information to the convening provider or convening facility within one business day of receipt of the request and must thereafter notify the convening provider if it anticipates any changes to the information it provided.
- If any changes in expected providers or facilities represented in a GFE occur less than one business day before the item or service is scheduled to be furnished, the replacement provider or replacement facility must accept the GFE as its expected charges for the items or services being furnished that were provided by the original provider or facility and represented in the GFE.
GFEs submitted by convening providers/facilities to uninsured (or self-pay) individuals must include the following elements:
- The patient’s name and date of birth.
- A description of the primary item or service (and if applicable, the scheduled date).
- An itemized list of items or services, grouped by each provider or facility, reasonably expected to be provided for the primary item or service, and items or services reasonably expected to be furnished in conjunction with the primary item or service, for that “period of care,” which includes the day or multiple days during which the GFE for a scheduled or requested item or service (or set of scheduled or requested items or services) is furnished or is anticipated to be furnished.
- Applicable diagnosis (i.e., ICD) codes, expected service codes, and expected charges associated with each listed item or service, where the “expected charge” is “the cash pay rate or rate established by a provider or facility for an uninsured (or self-pay) individual, reflecting any discounts for such individuals, where the GFE is being provided to an uninsured (or self-pay) individual.”
- The name, NPI and TIN of each provider or facility represented in the GFE, and the state(s) and office or facility location(s) where the items or services are expected to be furnished by such provider or facility.
- A list of items or services that the convening provider or convening facility anticipates will require separate scheduling and that are expected to occur before or following the expected period of care for the primary item or service (with a disclaimer notifying the individual that separate GFEs for such services will be issued upon request or if these separate services are scheduled).
- Disclaimers noting that the GFE is only an estimate; that there may be additional items or services not reflected in the GFE that the convening provider/facility recommends as part of the course of care; that patients may access the patient-provider dispute resolution process if the actual billed charges are substantially in excess of the expected charges contained in the GFE; and that receipt of the GFE does not obligate the recipient to obtain the items or services from any of the providers or facilities identified in the GFE.
GFE information submitted by co-providers or co-facilities to convening providers or convening facilities must include all the relevant points above (items 1, 2, 4 and 5, and the final disclaimer that receipt of a GFE does not impose contractual obligations on the recipient).
Patient-Provider Dispute Resolution Process: Uninsured or self-pay individuals are eligible to participate in the patient-provider dispute resolution process if actual charges exceed the GFE by $400 or more. Individuals may initiate the dispute resolution process by submitting notice to HHS within 120 days of receiving the initial bill containing the disputed service and paying an administrative fee. The dispute will be reviewed by a Selected Dispute Resolution (SDR) entity contracted with HHS. The rules include guidelines regarding the certification and selection of SDR entities to manage the process. If the parties do not settle the dispute, the SDR entity will decide whether the difference between actual charges and the GFE is justified. The SDR entity must use the GFE as the presumptive appropriate amount, unless the provider establishes by credible information that the difference was caused by provision of medically necessary services that were unexpected and could not have been reasonably foreseen at the time the GFE is made.
Total payment is determined by individual consideration of each item or service. If the billed charge for a service is at or below the GFE, the payment will be the billed charge. If a provider has not carried its burden to justify a billed charge in excess of the GFE, the payment shall be the amount listed in the GFE. Finally, if the excess charge is justified, the payment amount will be the lesser of (1) the billed charge; or (2) the median payment amount for the same or similar service in the geographic area, unless the median payment is less than the GFE, in which case the amount shall be the GFE amount.
The final payment will be the sum of the SDR entity’s determinations for each individual item or service, subject to offsets for the administrative fee, which will be subtracted from the provider’s payment if the SDR entity decides that the total payment is less than the total billed charges. Absent evidence of fraud or misrepresentation, the SDR entity’s determination is binding on the parties involved, unless they agree to settle for a different amount.
The federal dispute resolution process will be unavailable if states provide a dispute resolution mechanism that meets or exceeds protections set forth in the NSA. To be considered at least as consumer-protective as the federal process, the state process should (1) be binding, unless the provider or facility offers a lower amount; (2) take into consideration the provider’s/facility’s GFE; (3) have a fee that is equal to or less than the federal administrative fee; and (4) have in place adequate conflict-of-interest standards. If a state dispute resolution process does not meet these standards, individuals will have the option to use either the state or the federal process.
The NSA was enacted as part of the Consolidated Appropriations Act, 2021 (CAA), in December 2020, and generally applies beginning January 1, 2022. The September 30 IFC is one of several rulemakings implementing CAA health coverage requirements. The Departments say they will begin another rulemaking this year on pharmacy benefit reporting under the CAA, and additional CAA requirements will be addressed in rulemaking next year. Comments on the September 30 IFC will be due by December 6, but the rules will generally apply from January 1, 2022, without further action by the Departments.
NOTE: To help you navigate the challenges and complexities that the No Surprises Act (NSA) introduces, Manatt Health is launching an NSA Toolkit that includes four high-value components to be delivered across the next six months:
- An NSA Tracker that will track guidance from state and federal regulators on how state and federal laws apply. Updated every two weeks to keep pace with new developments, the tracker will provide brief summaries as well as links to each state regulation, bulletin or other guidance.
- Deep-dive analyses of all new NSA-related regulations and their implications.
- Detailed checklists for providers and payers providing a step-by-step road map to compliance requirements.
- Access to Manatt on Health: Insights You Trust, Manatt’s premium information service that delivers in-depth insights and analysis focused on the legal, policy and market developments that matter to you, keeping you ahead of the trends shaping our evolving health ecosystem. Manatt on Health includes weekly analyses of federal and state health reform activity; detailed regulatory and guidance summaries and analyses of key federal legislation; and 50-state trackers of state actions across a range of key topics, from telehealth changes to 340B to Drivers of Health. The NSA Toolkit gives you three options for accessing Manatt on Health—a full 12-month subscription at a 10% discount, a six-month subscription or a one-month free trial.
1 The Centers for Medicare & Medicaid Services (CMS) released technical guidance providing additional detail on IDR entity certification for calendar year 2022.