The Final Rule for the No Surprises Act was released in August 2022, containing changes to the materials an independent dispute resolution (IDR) entity must consider in the IDR process. The No Surprises Act, a part of the 2021 Consolidated Appropriations Act, restricted healthcare providers from balance billing patients enrolled in job-based and individual health plans when receiving out-of-network emergency care, non-emergency care from out-of-network providers within in-network facilities, and air-ambulance services from out-of-network providers. The July 2021 Interim Rules for the No Surprises Act established an IDR process to place the burden of negotiating a fair price for any out-of-network services on providers and health plans.
Before the No Surprises Act, insured patients who received services from an out-of-network provider could receive a bill for the difference between the provider’s charge and their health plan’s allowed amount, a practice referred to as balance billing. Patients receiving emergency care from out-of-network facilities and non-emergency care from out-of-network doctors within in-network facilities could be subjected to balance billing. As a result of a provider being out-of-network and non-contracting with a patient’s health plan, the provider could bill the patient over the plan’s allowed amount. Typically, the allowed amount is a pre-negotiated rate a contracted provider will receive from the health plan and the patient based on the services rendered. Contracted providers cannot balance bill a patient to exceed the patient’s health plan’s allowed amount. However, if a patient received a balance bill from an out-of-network provider, they were responsible for the bill on their own. The No Surprises Act intends to prevent these unfair balance billing practices from plaguing patients.
Throughout this past year, the Act created to safeguard patients’ rights was met with resistance from the American Hospital Association (AHA) and the American Medical Association (AMA). The AHA and AMA criticized the Act’s IDR process, which established a negotiating forum for health plans and out-of-network providers unable to determine appropriate payment. The Act’s July 2021 Interim Rules required government-certified IDR entities to select the settlement offer closest to the health plan’s qualifying payment amount (QPA). The QPA is the health plan’s median contracted rate for the same or similar services in the geographic area relevant to the dispute. Healthcare providers were quick to point out that the IDR process heavily favored health plans, as a health plan’s QPA swayed the IDR process’ possible outcome.
Medical providers pursued litigation in early 2022 regarding the legality of the IDR process. In February 2022, Texas Medical Associates sued the U.S. Department of Health & Human Services, claiming the IDR process skewed arbitration results in favor of health plans. The District Court found that the October 2021 Interim Rules created unbalanced arbitration processes and caused a procedural injury to providers. Thus, the court vacated the Act’s Interim Rules relating to the IDR process.
In response to the lawsuit, the Act’s Interim Rules were revised in August 2022, removing the regulations the District Court vacated. The Final Rules of August 2022 specify that an IDR entity should select the offer that best represents the value of the service after considering the QPA and all permissible information submitted by the parties to reflect the appropriate out-of-network rate. While the QPA will continue to be a factor in the IDR process, the settlement offer is not predetermined by the QPA alone. To facilitate health plan transparency, the updated Final Rules also require health plans to disclose “downcode” information, which is the health plan’s reasoning for changing or removing the coding of a disputed claim.
Between April 2022 and August 2022, over 46,000 IDR claims were initiated, a substantially higher amount than the Department for Health & Human Services anticipated for the whole year. Further litigation can be expected regarding the IDR process. While the August 2022 Final Rules substantially adjusted the IDR bargaining field, the AMA and AHA have stated they intend to “make their voices heard in court” soon about ongoing issues with the Act’s IDR process still favoring health plans through the use of the QPA.