New No Surprises Act Announcements Indicate Bumpy Road Ahead
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October 12, 2023 – The bumpy road toward implementing the No Surprises Act took another turn last Friday, October 6, 2023. The US Departments of Health and Human Services (HHS), Labor and the Treasury (collectively, the Departments) provided additional guidance on the qualifying payment amount (QPA) and the independent dispute resolution (IDR) portal. These announcements signal that all stakeholders, including providers, health plans, patients and certified IDR entities, are in for more uncertainty in the days and months ahead. To help me describe the updates and their impact on providers, I’m bringing in my colleague Kristen O’Brien.
The Departments released frequently asked questions (FAQs) on how they plan to respond to the Texas Medical Association (TMA) III federal district court decision. Before digging into the FAQs, here are some quick reminders:
- The QPA, or median contracted rate, is used for two purposes: to determine patient cost-sharing for certain out-of-network services, and as one of the factors that certified IDR entities (arbiters) consider when determining the appropriate payment amount in the dispute resolution process.
- The first interim final rule implementing the No Surprises Act was released in July 2021 and established the methodology that health plans must use to calculate QPAs. Many provider groups believe that this methodology can yield artificially low amounts that do not reflect market rates. The QPA methodology was challenged in the TMA III court case. In August 2023, the district court issued a ruling that invalidated several components of the QPA methodology, including the inclusion of contracted rates for items and services “regardless of the number of claims paid at that contracted rate”; the use of contracted rates of all self-insured group health plans administered by the same entity; rules governing calculation of the QPA for providers “in the same or similar specialty”; the exclusion of bonus, incentive and risk-sharing payments; and the exclusion of single case agreements.
In the FAQs, the Departments explicitly clarify that they disagree with the TMA III decision and that the US Department of Justice will appeal the decision. That alone is big news, as this was the first public indication that the Departments intend to challenge the ruling! Since the court decision is now in effect (pending appeal), the Departments lay out how the QPA should be calculated by insurers and treated by certified IDR entities in the meantime.
With respect to the calculation of the QPA, the Departments state that they “do not intend to issue interim guidance . . . [and that] plans and issuers are expected to calculate QPAs using a good faith, reasonable interpretation of the applicable statutes and regulations that remain in effect after the TMA III decision.” HHS states that it will exercise enforcement discretion from now until May 1, 2024, if health plans calculate the QPA incorrectly based on the invalidated QPA methodology. That’s a long time! HHS also states that it is considering a longer enforcement discretion period up to November 1, 2024. The Departments similarly will exercise enforcement discretion for providers that bill patients the incorrect cost-sharing amount based on a previously calculated QPA. The guidance encourages states that are the primary enforcers of the relevant No Surprises Act provisions to adopt a similar enforcement approach.
The Departments clarify that insurers are still required to provide all disclosures related to the QPA when they submit the initial payment or notice of denial. However, the Departments will exercise enforcement discretion for disclosures related to a QPA that was incorrectly calculated. Providers will have to specifically ask health plans whether they calculated the QPA based on the invalidated methodology or according to the methodology outlined in the No Surprises Act statute.
With respect to the IDR process, the Departments state that certified IDR entities can still consider the QPA “in light of the TMA III decision” as well as any other relevant factors. Certified IDR entities may request, and disputing parties may provide, additional information relevant to the submitted QPA.
So, what does this mean for providers? The Departments are effectively stating that because they don’t agree with the TMA III decision and plan to appeal it, they will not actively enforce compliance for at least six months. They describe in the FAQs how difficult it will be for health plans to calculate the QPA without any guidance beyond the language of the No Surprises Act. Thus, while health plans are “supposed to” calculate the QPA according to the methodology as written in the statute, they will not be prosecuted for failure to comply with the rules. Essentially, “enforcement discretion” does not mean no regulation or oversight, but it does indicate that the Departments will take a hands-off approach.
Since both Kristen and I are parents to young kids, we would refer to what the Departments are doing as a parent “no-no.” It would be as if we told our kids that they must eat broccoli instead of cookies—but our kids know where the cookies are, and we don’t pay close attention to them and expect them to do as they are told. We also may not reprimand them when they inevitably eat the cookies instead of the broccoli, so they feel there are minimal consequences for their actions. Therefore, at the next opportunity and all the others going forward, what are they going to do? They are going to eat cookies every time!
The provider community also fears that if health plans can calculate QPAs without oversight, QPAs might decrease over time, as there would be little consistency in their calculation and little accountability if they were reduced from their current values.
Further, since the Departments are telling certified IDR entities that they still can consider the QPA during the IDR process—but are not giving them any guidance about how to handle QPAs that are calculated according to the invalidated methodology—IDR payment determinations may be inconsistent, with different certified IDR entities applying different policies when considering QPAs. It is also up to certified IDR entities to figure out what the vague instruction to “consider the QPA submitted in light of the TMA III decision” practically means. “In light of” isn’t exactly the clearest of terms! In all, the IDR process was intended to be a balanced and fair approach to resolving payment disputes, but the Departments may have made it more challenging for certified IDR entities to achieve that goal.
Unsurprisingly, many provider groups jumped on this announcement on October 6. While there has already been a perceived lack of Department enforcement over health plan behavior among the provider community, the Departments have now stated in writing that they may not actively enforce a key part of the No Surprises Act for a long time. Earlier this week, the American College of Emergency Physicians, the Emergency Department Practice Management Association, the Radiology Business Management Association, the American College of Radiology and the American Society of Anesthesiologists released a joint statement expressing their disapproval of the announcement. They stated that the “announcement providing insurers with significant enforcement relief on the QPA further erodes the critical foundations Congress built into the NSA [No Surprises Act] when it passed these important consumer protections into law.”
It is unclear what remedies providers have at this point. Right now, the only real avenue for redress is a complaint portal that often requires entities to submit individual instances of potential noncompliance without the ability to elevate more egregious disputes. Providers could also contact members of the US House of Representatives Ways and Means Committee who expressed concern about the lack of enforcement during a September 19, 2023, hearing on the No Surprises Act, telling them that the Departments are now explicitly stating that they are exercising enforcement discretion regarding the calculation of QPAs. Providers could also deliver that same news to the federal district court that invalidated the QPA methodology in the TMA III decision.
IDR Process Announcement
The Departments also announced on October 6, 2023, that they have reopened the federal IDR portal for new single and bundled disputes Processing of batched disputes remains suspended, however, while the Departments update batching guidance to align with the district court’s opinions and orders in TMA III and TMA IV. it is important to note that bundled disputes are not the same as batched disputes. Bundled disputes occur when multiple services are bundled together into a single claim/payment from a health plan. Batched disputes are multiple claims/payments that are batched together into one dispute.
The Departments will allow parties impacted by the suspension of the federal IDR process more time to submit and respond to new disputes:
- When an IDR initiation deadline falls between August 3, 2023, and November 3, 2023, parties will have until November 3, 2023, to initiate a new dispute (essentially 20 business days after the federal IDR portal reopens). We refer to this later as the “20-day grace period.”
- For new disputes initiated between October 6, 2023, and November 3, 2023, the deadline for certified IDR entity selection will be 10 business days after initiation, and the deadline to submit fees and offers will remain 10 business days after certified IDR entity selection.
- Disputing parties that were engaged in certified IDR entity selection when the federal IDR portal temporarily closed will have 10 business days from October 6, 2023, to agree on a certified IDR entity.
With respect to batched disputes, the Departments “are working quickly to issue updated guidance and make system changes needed . . . Once updated guidance is available and the necessary system changes are complete, the Departments will reopen the federal IDR portal for the initiation of new batched disputes and air ambulance disputes and will direct certified IDR entities to resume processing existing batched disputes.” No specific timing related to batched disputes is provided, and all other deadlines under the federal IDR process remain unchanged.
So, what does all this mean? Many providers view this as good, but still uncertain, news. While it is a step in the right direction that the portal is opening for single disputes, some providers have expressed disappointment that they still can’t batch claims.
Batching claims allows for administrative efficiencies and reduces overall costs, as disputing parties (providers and health plans) only have to pay one administrative fee for multiple claims. Continuing to prohibit the batching of claims takes away this tool that Congress specifically provided to help make a smoother process.
Now, providers face a choice: Do they act before the 20-day grace period ends to put forth single disputes that they have been waiting to put through the IDR portal, or do they hold them with the intention to batch some of them once the batching rules come out? Some provider groups have been holding thousands of claims as they have waited for the IDR portal to reopen. Putting all these claims in the IDR dispute process individually could be time-consuming and expensive, and it might contribute to the existing backlog of unresolved disputes. However, providers may not have a choice without clarification from the Departments if they want these claims to go through the process at all. It may be too risky to wait for the Departments to act.
The Departments have stated that they are actively working on new batching guidance and IDR portal updates to allow for batched disputes. But, without a specific timetable, providers cannot assume that the Departments will act before the 20-day grace period ends. The end result may be administrative headaches for providers and increased costs as they put in all their held claims one-by-one into the process.
All in all, the announcements are not great news in the eyes of providers (to put it mildly). But let’s not forget about patients as well. Because of the added confusion that a potential lack of enforcement and changing rules bring, patients could be charged with incorrect cost-sharing amounts. Better enforcement and clarity around the No Surprises Act requirements benefit all involved—including patients!
In terms of what is next, as Kristen and I said before, it could be a bumpy and expensive road ahead for providers. The Departments are working on additional batching guidance as well as an IDR operations proposed regulation that may include batching policies. Stakeholders are also in the midst of responding to a proposed reg that would significantly increase the fees associated with the IDR process. Those comments are due on October 26, 2023.
Thus, as we began the blog post, the No Surprises Act implementation journey continues to be bumpy and winding, and unfortunately, ultimately flawed in the minds of many of the stakeholders who are impacted by it.
Until next week, this is Jeffrey (and Kristen) saying, enjoy reading regs with your eggs!
For more information, please contact Jeffrey Davis. To access the full archive of Regs & Eggs, visit the American College of Emergency Physicians.
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