Departments' Surprise Billing Guidance Addresses Court Vacatur of QPA-Related Rules

Practical Law Legal Update w-040-9781 (Approx. 8 pages)

Departments' Surprise Billing Guidance Addresses Court Vacatur of QPA-Related Rules

by Practical Law Employee Benefits & Executive Compensation

Federal IDR Process Under NSA

The NSA's federal IDR process is for use by group health plans, health insurers, and providers in determining out-of-network (OON) rates for:

Emergency services.
Nonemergency items and services delivered by OON providers at in-network facilities.
Air ambulance services furnished by OON providers of air ambulance services.

(See Group Health Plans and Health Insurance Toolkit.)

Texas District Court Ruling Vacated Certain Regulatory Provisions (Aug. 24, 2023)

In a ruling issued on August 24, 2023, a Texas district court vacated certain provisions of the Departments' July 2021 regulations and parts of related guidance documents (Tex. Med. Ass'n v. HHS, (E.D. Tex. Aug. 24, 2023) ("August 24 ruling"); see Legal Update, Texas District Court Vacates Still More Provisions Under Surprise Billing Regulations and Guidance; Federal IDR Process Temporarily Suspended). The August 24 ruling vacated:

Certain provisions involving the QPA calculation method, for example:
- inclusion of contracted rates for items and services regardless of how many claims were claims paid at the contracted rate;
- use of contracted rates of all the self-funded health plans administered by the same entity;
- rules addressing QPA calculations for providers in the same or similar specialty; and
- exclusion of bonus, incentive, and risk-sharing payments—and single case agreements (see Practice Note, Surprise Medical Billing for Group Health Plans: Overview: Participating Emergency Facility; Health Care Provider and Facility; Single Case Agreements).
A provision under which the 30-calendar-day timeframe for a plan or insurer to provide an initial payment or payment denial notice for air ambulance services began when the plan or insurer received enough information to decide a claim for payment (referred to as a clean claim).

However, the court upheld other challenged aspects of the Departments' regulations, for example, rules:

Requiring disclosure of information about the QPA.
Defining geographic regions based on census divisions for QPA calculations involving ambulance services.

In light of the August 24 ruling, the October 2023 FAQs address how plans and insurers should calculate:

QPAs for purposes of individuals' cost-sharing.
Disclosures with an initial payment or notice of denial of payment.
Required disclosures and submissions under the federal IDR process.

Required Changes to QPA Calculation Method

The Departments acknowledged in their FAQs that the August 24 ruling required changes to the method for calculating QPAs. In general, plans and insurers must calculate QPAs consistent with the NSA and its implementing regulations that remain in effect after the ruling. Other than the FAQs, the Departments stated that they would not be issuing guidance addressing the QPA method in response to the August 24 ruling. As a result, plans and insurers must calculate QPAs using a good faith, reasonable interpretation of the NSA and remaining regulations.

The Departments also recognized that:

The August 24 ruling could require plans and insurers to review "millions of existing QPAs" and recalculate many of them.
This review and recalculation process would be more time-consuming, complicated, and expensive than under the original version of the July 2021 regulations.

The Departments also observed that some plans and insurers would need to calculate individuals' cost-sharing for NSA-covered items and services before new QPAs could be calculated.

Use of Enforcement Discretion

In light of these concerns, the Departments indicated that they would exercise enforcement discretion concerning relevant NSA provisions for plans, insurers, or other parties to payment disputes under the IDR process. The enforcement discretion is available:

To parties that use QPAs calculated consistent with the July 2021 regulations' method and guidance in effect immediately before the August 24 ruling.
For items and services furnished before May 1, 2024 (that is, the first day that is six calendar months after the October 2023 FAQs' issuance date).

The Departments' enforcement discretion applies to:

QPAs for purposes of individuals' cost-sharing.
Furnishing required disclosures with an initial payment or payment denial notice.
Providing required disclosures and submissions under the federal IDR process.

For more information, see Practice Note, Surprise Medical Billing for Group Health Plans: Overview: Preventing Surprise Medical Bills That May Lead to Medical Debt.

The Departments indicated that although they might eventually extend this enforcement discretion as to QPA calculations, any extension likely would not last beyond November 1, 2024.

Departments' Approach to NSA Implementation and QPA Calculations

In light of the August 24 ruling, the Departments' approach to NSA implementation regarding affected QPA methods will emphasize assisting (rather than penalizing) plans, insurers, and others that work diligently and in good faith to:

Recalculate QPAs.
Comply with the NSA and regulations remaining in effect after the August 24 ruling.

QPA-Related Disclosures

Under the FAQs, plans and insurers must continue to make QPA disclosures with their initial payments (or payment denial notices) to OON providers, facilities, and air ambulance services providers. These disclosures (which were not vacated by the August 24 ruling) must be timely made on request from a provider or facility. These disclosures include statements certifying that:

The QPA applies for purposes of the recognized amount.
Each QPA was calculated consistent with the regulations (29 C.F.R. § 2590.716-6).

Regarding the latter requirement, a plan or insurer may certify that a QPA was calculated consistent with the regulations if it was determined using a good faith, reasonable interpretation of the NSA and regulations remaining in effect after the August 24 ruling.

For items and services provided before May 1, 2024, the Departments will exercise enforcement discretion as to QPA disclosures if a plan or insurer:

Certifies that the QPA was determined consistent with the method under the July 2021 regulations and guidance in effect immediately before the August 24 ruling.
Timely discloses that it is using a QPA calculated in this manner on request by a provider, facility, or provider of air ambulance services.

For more information, see Practice Note, Surprise Medical Billing for Group Health Plans: Qualifying Payment Amounts (QPAs): QPA Disclosures Made with Initial Payments or Payment Denial Notices.

How IDR Arbitrators Should Review Submitted QPAs

In light of the August 24 ruling, the FAQs address how IDR arbitrators should review QPAs submitted in an IDR payment dispute. Specifically, IDR arbitrators can consider the parties' submitted QPAs among any other factors and additional information (setting aside certain prohibited information under the regulations) in evaluating which party's offer best reflects the value of a disputed item or service as the OON rate. In making this determination, an IDR arbitrator may:

Request (and the disputing parties may provide) additional information relevant to the submitted QPA.
Consider this additional information in determining the appropriate payment amount for an item or service.

However, this assumes the additional information does not include certain prohibited factors specified in the regulations (for example, usual and customary charges, and payment or reimbursement rates expressed as a proportion of usual and customary charges) (29 C.F.R. § 2590.716-8(c)(4)(v)).

Insufficient Information to Decide Payment Claims Within 30 Days: Air Ambulance

The FAQs address how plans or insurers (in light of the August 24 ruling) should handle the situation where they lack enough information to determine a claim for payment within 30 days after a bill for air ambulance services is sent by an OON provider. The Departments observed that the August 24 ruling did not vacate provisions under the July 2021 regulations requiring plans or insurers, within 30 days after a charge for air ambulance services is sent by an OON provider, to:

Determine whether the services are covered.
Send the provider an initial payment or payment denial notice, if the services are covered.

(29 C.F.R. § 2590.717-1(b)(4)(i).)

As a result, plans and insurers should make reasonable efforts to determine coverage and provide initial payments or payment denial notices under the plan within the 30-day timeframe.

Role of DOL Claims Regulations

In addressing this issue, the Departments noted that the claims regulations under ERISA, as expanded by the Affordable Care Act's (ACA's) internal claims and appeals rules, require plans and insurers to communicate with participants, beneficiaries, and their authorized representatives (which could include air ambulance services providers) in providing a full and fair review of benefit claims (ERISA § 503 (29 U.S.C. § 1133); 29 C.F.R. § 2560.503-1; see Practice Note, Internal Claims and Appeals Under the ACA). Under the regulations, a plan or insurer that does not receive enough information to make a claim determination may inform the participant or beneficiary of the specific information necessary to complete the claim. According to the Departments, if plans and insurers comply with these regulations, doing so should allow providers to submit bills with enough information for the plan or insurer to decide a claim for payment within the 30-day timeframe (and consistent with the NSA).

Under the claims regulations, as a result, plans and insurers should communicate with providers to obtain the information they need to conduct a full and fair review (within 30 days) to evaluate whether the items or services at issue are subject to the NSA and, if so, send an initial payment or payment denial notice. In the Departments' view, this dialogue should occur before a plan or insurer denies a claim that may be subject to the NSA (that is, on the grounds that the provider did not provide enough information).

A plan or insurer that is unable to determine coverage within the 30-day timeframe should:

Provide a notice of benefit denial under the claims regulations (29 C.F.R. § 2560.503-1).
Communicate the grounds for the denial in a way that does not incorrectly suggest that the furnished service was determined not to be a covered service.

Balance Billing and Air Ambulance Services

The FAQs confirm that the NSA still prohibits OON providers of air ambulance services from balance billing participants or beneficiaries for air ambulance services for which benefits are available under the plan. Under the NSA, an OON provider of air ambulance services may not bill or hold liable a participant or beneficiary for a payment amount for the service that exceeds the applicable cost-sharing permitted under the NSA (ERISA § 717(a)(1)-(2) (29 U.S.C. § 1185e(a))). This NSA requirement was not changed by the August 24 ruling.

OON providers of air ambulance services may not balance bill participants or beneficiaries for claims involving ambulance services that are denied for lack of sufficient information until it is determined that the services are not covered under the plan.

Because of the August 24 ruling, the Departments expressed concern that:

Plans and insurers might deny air ambulance services claims that are otherwise covered due to lacking information needed to determine (within the governing 30-day timeframe) whether the service is covered.
OON providers of these services might then incorrectly attempt to bill individuals directly for the services in excess of the applicable cost-sharing allowed to be charged under the NSA (see Practice Note, Surprise Medical Billing for Group Health Plans: Overview: Patient Protections for Emergency Services Under the ACA: Cost-Sharing Rules).

These actions would violate the NSA and could lead HHS to impose penalties against an OON provider of air ambulance services (that is, in a state where HHS enforces the NSA's balance-billing provisions). OON providers in this situation should avoid billing individuals more than the permitted cost-sharing amount until the provider can conclude that the service at issue is not covered under the plan (meaning that it is not governed by the NSA's surprise billing safeguards).

Practical Impact

In many cases, the process deadlines under the Departments' IDR regulations require quick turn-around times. For example, under one of the rules at issue in these FAQs, plans must process a claim submitted by a provider, and send an initial payment or payment denial to the provider, within 30 calendar days. As a result, plans and insurers may be interested in the Departments' views (in these FAQs) concerning the amount of back-and-forth with providers that should occur before a plan or insurer can reasonably deny an NSA-covered item or service on the grounds that a provider did not submit information.

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