Title I of Section BB of the Consolidated Appropriations Act, 2021 (the “Act”), the Temporary Final Rules issued by the Departments of Health and Human Services, Treasury and Labor (“Departments”) in July 2021 (see our article over here) and October 2021 (see our post over here), ushering in a new era for group health plans, health insurance issuers, and Medicare providers that aims to prevent sudden medical bills and provide a system for resolving disputed claims.
On August 19, 2022, the Ministries issued Final Rules (“Final Rules”) containing comments on the Temporary Rules, clarification of certain requirements set forth in the Act and the Temporary Rules and calculating relevant federal court rulings. In particular, the Final Rules primarily address three distinct but related topics: (1) abolishing the “rebuttable presumption criterion,” (2) adding new rules regarding “lowering markup,” and (3) reminding arbitrators of their written requirements. The final rules will be effective on October 25, 2022.
Background: the law
In general, the law established a structure for resolving billing disputes arising from out-of-network emergency care and services provided by an out-of-network provider at an in-network facility. For such out-of-network services, the cost of such services shall be based on the “Amount Recognised” – the amount specified by state law (if any) or the amount less than the invoice amount and Qualified Payment Amount (“QPA”). QPA is generally the plan/issuer’s average contract price for a particular item or service, indexed for inflation. When an invoice is received from an out-of-network provider, the plan/issuer can make an initial payment or decline the payment. In either case, the plan/issuer must provide the out-of-network provider QPA, legally defined information, and contact information if the provider wishes to initiate the 30-day open negotiation period. If the Provider and Plan/issuer cannot agree on an appropriate cost within the 30-day open negotiation period, the dispute enters into the “Federal IDR Process”. Simple, isn’t it? not exactly.
Canceling a rebuttable presumption
The Interim Final Rule issued in October 2021 required the approved IDR entity (the arbitrator) to determine the offer closest to QPA (in most cases) and to establish a “rebuttable presumption” that QPA is the correct price. However, the Texas federal courts have invalidated the rebuttable presumption standard.
Taking into account the viewpoint of the courts, the final rules issued on August 19th overturn the rebuttable presumption that QPA is the correct price. The final rules also waive the requirement that an approved IDR entity must choose the offer closest to QPA. Instead, the approved IDR entity must determine the offer that best reflects the value of the item or service provided, by first looking at the QPA and then considering “additional information” relevant to the dispute. For these purposes, Additional Information includes information relating to:
- level of training, experience, quality and outcome measures for the service provider;
- The market share held by the provider or plan/issuer in the region in which the item or service is offered;
- The severity of the individual receiving the medical service or the complexity of providing the medical service to the individual;
- Teaching status, mix of cases and scope of services of the facility that provided the medical service;
- Demonstrate good faith efforts (or lack thereof) by the provider or plan/issuer to enter into contracted network or rate agreements with each other during the previous four years; And the
- Applications submitted by an approved IDR entity.
Increase transparency when decoding
Administrations recognized that the plan/issuer had a “bottom code” when specifying QPA. As defined in the Final Rules, decoding means “a change by a plan or issuer of a service code to another service code, or a change, addition or removal by a plan or issuer of a modifier, if the modifier’s code or issuer is associated with a QPA less than the service code or The rate charged to an air ambulance service provider, facility, or air ambulance service provider.” For example, if a patient goes to the emergency room for the flu, but the plan/issuer decides to determine the QPA based on the service code/rate for the common cold.
As briefly mentioned above, when the plan/issuer makes an initial payment on a claim or refuses to pay, the plan/issuer must provide in writing to the provider the QPA for each item or service, a statement certifying that the plan/issuer has determined that the QPA is the “recognized amount it,” a statement that the QPA was calculated in accordance with applicable regulations and information about the 30-day open negotiation period and the subsequent federal IDR process. Additionally, if the Provider requests, the Plan/issuer must provide: information about whether QPA includes contracted rates that were not on a fee-for-service basis and whether QPA is determined using base fee schedule rates or a derivative amount, information to determine A qualified database (if used to identify QPA), relevant service code identification information (if used to identify QPA), and a statement that the contracted plan/issuer rates include risk sharing, reward, penalty, or other incentive-based, retroactive, or Payment adjustments.
As part of the goal of increasing transparency and facilitating an open negotiation process, administrations have decided that in the event of a QPA downgrade, the plan/issuer must, in addition to the above information, provide a statement that the service token has been decoded, explaining the reason for the claim decoding (including That description of the changed code) and the amount of QPA if the code had not been encoded.
After a final decision has been reached, the authorized IDR entity must, in all cases, explain in writing its decision, including the reason for its determination, the information it considered, the weight given to the QPA and other information it considered. This written decision shall be submitted to the Parties and Administrations. The departments are considering the form and manner of this written decision, which will be issued in future directives.
In the aftermath of the enactment of the No Surprises Act and the subsequent issuance of the Temporary Final Rules, the perception was that the rules favored schemes/issuers at the expense of service providers. The Final Rules reward the playing field in three ways.
First, the final rules nullify the rebuttable assumption about QPA and require the authorized IDR entity to consider not only the QPA, but also other factors. Other factors may indicate that a higher QPA is appropriate.
Second, the final rules try to limit coding slash. The plan/issuer should now provide important information if its coding is downgraded. Providing the additional information comes with an increased cost of compliance, while also allowing the authorized IDR entity to use more data in determining the correct price.
Finally, a properly performed QPA will undoubtedly include some of the additional factors mentioned above, and the inclusion of some of these factors, provided, of course, that these additional factors are not counted twice, may make the QPA more accurate than the calculation made in the blank.
The Final Rules expand the Provisional Final Rules and include the Court’s deletion of some provisions. It adds a high degree of transparency and balances the interests of plans/issuers and service providers. However, the numerous rules surrounding the process increase the complexity and compliance costs for both medical providers and plans/issuers. Additionally, the final rules almost presuppose that approved IDRs are well trained in medical procedures, medical billing, and insurance. We believe departments will release more guidance, making the final rules not as final as their name might suggest.