Surprise Medical Billing Guidance Includes Final Regulations, FAQ Guidance, and More

Practical Law Legal Update w-036-6347 (Approx. 9 pages)

Surprise Medical Billing Guidance Includes Final Regulations, FAQ Guidance, and More

by Practical Law Employee Benefits & Executive Compensation

Federal IDR Process Under the NSA

The federal IDR procedures are for use by group health plans, 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.

The federal IDR procedures can be invoked by a party after:

A provider receives an initial payment (or notice of payment denial) from a plan or insurer regarding an NSA-covered item or service.
The parties are unsuccessful in determining the payment amount using an open negotiation process.

In July 2021, the Departments issued interim final regulations (IFRs) that implemented numerous provisions under the NSA and applied to group health plans and health insurers (86 Fed. Reg. 36872 (July 13, 2021); see Legal Update, Departments Implement Balance Billing Requirements Under No Surprises Act). The July 2021 IFRs addressed, among other topics, calculation of a plan's or insurer's median contracted rate (known as the qualifying payment amount (QPA)). The QPA may be the basis for determining how much a plan or insurer must pay for NSA-covered items or services provided by OON providers.

In October 2021, the Departments issued additional IFRs under the NSA that addressed (among other topics) the IDR process for disputed items and services (see Legal Update, Departments' IFRs Address Independent Dispute Resolution (IDR) Procedures and Surprise Medical Billing). Under the October 2021 IFRs, IDR arbitrators were required to choose a payment amount (from the parties' competing offers) that was closest to the QPA unless certain conditions were met. The IFRs essentially established a rebuttable presumption that the amount closest to the QPA was the proper payment amount.

The rebuttable presumption from the October 2021 IFRs was challenged by health providers, and in February 2022 a federal district court vacated certain provisions involving the presumption with respect to non-air amulance services (see Legal Update, Texas District Court Vacates Rebuttable Presumption Under No Surprises Act Regulations). In August 2022, the same district court vacated the presumption as applied to services provided by air ambulance service providers (see Legal Update, Texas District Court Vacates Rebuttable Presumption Under No Surprises Act Rules for Air Ambulance Service Providers).

Final Regulations Reflect District Court Vacatur of QPA Requirements

In issuing their August 2022 final regulations, the Departments noted that the regulations are narrow in scope and only address certain aspects of the federal IDR process (as discussed below). The Departments will address other provisions of the July 2021 and October 2021 IFRs in future rulemaking.

Additional Disclosure for Plans and Insurers: Downcoded Payment Amounts

The final regulations impose additional disclosure requirements on plans or insurers that engage in the practice of "downcoding" amounts for NSA-covered items and services. Under a definition added by the regulations, downcoding refers to a plan's or insurer's practice of changing a service code or modifier where that change results in a lower QPA than the amount initially billed by the provider. If the QPA is based on a downcoded service code or modifier, the final regulations require the plan or insurer to disclose in its initial payment or payment denial notice:

That the service code or modifier was downcoded.
The reason why the service code or modifier was downcoded.
The QPA that would have applied if the service code or modifier had not been downcoded.

Payment Determinations in the Federal IDR Process

In issuing the final regulations, the Departments addressed the district court decisions vacating the QPA rebuttable presumption under the October 2021 IFRs. Accordingly, the final regulations remove language that generally required IDR arbitrators to choose a payment amount (from the parties' competing offers) closest to the QPA. Instead, the final regulations require IDR arbitrators to select the offer that best represents the value of the item or service. In making this determination, IDR arbitrators must consider:

The QPA for the applicable year for the same item or service.
All other information submitted by the parties.

The Departments acknowledged that there may be times when the QPA alone does not adequately account for one or more of the factors addressed in additional information submitted by a party. However, IDR arbitrators must not consider information that is:

Not credible.
Not relevant.
Already accounted for in the QPA.

The final regulations also include several new examples regarding payment determinations.

IDR Arbitrator's Written Decisions

The final regulations retain the requirement that IDR arbitrators submit their written decisions regarding parties' disputes (including the underlying rationales) to the Departments and the parties. As the Departments noted, the district court decisions concerning the rebuttable presumption vacated the requirement that IDR arbitrators provide an explanation of the credible information submitted by a party that clearly demonstrated that the QPA was materially different from the appropriate OON rate. However, the courts' decisions did not vacate the overall written decision requirement. The final regulations require IDR arbitrators to provide a written explanation of their decisions—but now including information demonstrating that the offer selected best represents the value of the item or service.

Effective Date and Applicability Date

The final regulations are effective 60 days after publication in the Federal Register. The provisions apply with respect to items or services furnished on or after the final regulations' effective date for plan years beginning on or after January 1, 2022.

FAQ Guidance Under the NSA

In addition to the final regulations, the Departments issued FAQ guidance under the NSA. The FAQs address:

How the surprise billing protections apply to plans with no networks or closed networks.
How group health plans that do not have a provider network should calculate cost-sharing or the OON rate for OON items and services that are subject to the surprise billing provisions.
How the Public Health Service Act's (PHSA's) maximum out-of-pocket (MOOP) requirements apply to items or services subject to the NSA for nongrandfathered large group market plans or self-insured health plans that do not have provider networks.
Whether the surprise billing requirements apply to group health plans that generally do not provide OON coverage.
Whether the NSA requires a plan or insurer that covers emergency air ambulance services to cover non-emergent air ambulance services provided by a nonparticipating provider.
Whether the NSA's requirements apply to air ambulance services furnished by a nonparticipating provider when the point of pick-up is outside the US, and how a plan or insurer should identify the geographic region used to calculate the QPA when the pick-up point is outside the US.
How the surprise billing requirements apply to emergency services provided in a behavioral health crisis facility.
Regarding disclosures, whether:
- a group health plan that does not have a website can satisfy the public website disclosure rules by having its third-party administrator (TPA) post the information on its website; and
- plans and insurers must provide information about state laws on balance billing.
Which versions of the standard notice and consent form and model disclosure notice should be used.
How plans and insurers should calculate the median contracted rates for provider specialties when the service codes vary based on the provider specialty.
How a self-insured plan that offers multiple benefit packages administered by different TPAs should calculate the QPA.
When a plan or insurer must send an initial payment or notice of payment denial to an OON provider, facility, or provider of air ambulance services under the NSA.
When a provider, facility, or provider of air ambulance services may initiate open negotiation.
What constitutes an initial payment or payment denial notice.
The information a plan or insurer must include in the initial payment or payment denial notice when the recognized amount is the QPA.
Whether a provider, facility, or provider of air ambulance services may initiate open negotiation if the initial payment or payment denial notice does not comply with the NSA's disclosure requirements (as implemented).
Whether a plan or insurer can require OON providers, facilities, and providers of air ambulance services to manually enter information for each claim separately through a portal to initiate open negotiation—rather than submitting the standard open negotiation form.
Whether a group health plan that does not have a public website can satisfy the cost transparency requirements (that is, under final regulations implementing the ACA's cost transparency rules) by having its service provider post the machine-readable files on its public website (PHSA § 2715A (42 U.S.C. § 300gg-15a); see Practice Notes, Transparency in Coverage (TiC) Requirements Under the ACA: Public Disclosures and Content Requirements for Health Plan Public Disclosures of Costs Under the ACA).
When the Departments will update the list of codes for the items and services that must be included in the internet-based self-service tool required under the cost transparency rules (see Content Requirements for Health Plan Coverage Transparency Cost Disclosures Under the ACA Checklist: Internet-Based Self-Service Tool).

Model Notices

The Departments also provided the following model notices:

Q&A Guidance on the Federal IDR Process Under the NSA

Earlier in August 2022, the Departments issued technical guidance for IDR arbitrators, including guidance on batching and bundling items and services and eligibility issues.

Batching of Items and Services

The Q&A guidance addresses the batching of qualified items and services, including the appropriate method for batching anesthesia services. Payment amounts for anesthesia services are generally determined using a formula involving the anesthesia conversion factor (an amount agreed to by the payer and provider or facility), base unit for the service code, time unit, and physical status modifier unit. Under the guidance, anesthesia services may be batched if the services are billed using the same Current Procedural Terminology (CPT) code, even if the time units and physical status modifiers are different, provided the other requirements for batching are met.

The guidance clarifies that revenue codes, which indicate where services are provided, are not considered service codes. As a result, items or services with different services codes may not be batched, regardless of their revenue codes.

Under the guidance, there is no limit to how many qualified items or services can be batched. All items or services included in a batched dispute, however, must meet the requirements set out in the implementing regulations and HHS guidance. In addition, if an IDR arbitrator receives a batched dispute that includes items or services that were not furnished in the same 30-business-day period, the arbitrator must notify the parties that it will consider only the items and services that fall within the 30-business-day period. The guidance provides examples demonstrating how to determine whether items or services fall within the applicable period.

Regarding self-funded group health plans, the guidance provides that only items and services that would be paid for by the same self-insured plan may be batched. Items and services that would be paid for by different self-insured plans cannot be batched. If items and services are inappropriately batched, the IDR arbitrator may allow the initiating party for the ineligible items and services to resubmit them as a batched or single dispute, if certain conditions are met.

Bundling of Items and Services

The guidance also addresses what qualifies as a bundled arrangement that may be part of a single determination under the federal IDR process. Under the guidance, a bundled arrangement is an arrangement under which either:

A provider, facility, or provider of air ambulance services bills for multiple items or services under a single service code.
A plan or insurer makes an initial payment or notice of payment denial to a provider, facility, or provider of air ambulance services regarding multiple items or services under a single service code.

Disputes that are inappropriately bundled may be resubmitted as batched or single disputes, if certain conditions are met.

Eligibility for Federal IDR Process

The Departments' guidance also addresses eligibility requirements for the federal IDR process. When determining whether a dispute is eligible for the federal IDR process, IDR arbitrators should determine whether:

The item or service at issue is eligible for the IDR process.
The provider received an initial payment or notice of payment denial.
The required disclosures were provided with the initial payment or notice of payment denial.
The initiating party timely initiated open negotiation with the non-initiating party.
The initiating party timely initiated the federal IDR process.

The guidance details the steps an IDR arbitrator should take depending on the outcome of these determinations.

Failure to Submit Required Information Requested by IDR Arbitrator

If a party to the IDR process fails to submit required information requested by an IDR arbitrator, the guidance instructs the arbitrator to resolve the dispute based on the information submitted before the deadline.

Practical Impact

Collectively, this new set of surprise medical billing guidance covers a good deal of ground and is one of the most significant developments in the surprise billing space since the requirements became effective at the start of 2022. The final regulations are the Departments' formal response to the outcome of QPA litigation earlier this year that invalidated a rebuttable presumption regarding QPA calculations established in the Departments' earlier implementation efforts. Plans and insurers that followed this litigation likely will not be surprised by the final regulations' stance in that regard. However, other aspects, especially regarding downcoding, will warrant closer review—as will the more granular guidance on surprise billing in the related FAQ guidance and Q&As.

Surprise Medical Billing Guidance Includes Final Regulations, FAQ Guidance, and More | Practical Law