On August 19, 2022, the Departments of Health and Human Services (HHS), Labor (DOL), and the Treasury (IRS) issued the joint final rules and additional FAQs regarding the implementation of the Consolidated Appropriations Act, 2021 (CAA). One of the topics addressed in this joint release relates to the No Surprises Act (NSA). Specifically, the Qualified Payment Amount (QPA) within the federal Independent Dispute Resolution (IDR) process. The NSA created a Federal IDR process for disputed amounts, with a goal to establish a fair, cost-effective, and reasonable IDR payment determination process that does not have an inflationary impact on health care costs. This rule applies to group health plans and insurance carriers offering group or individual health insurance coverage beginning on and after January 1, 2022.
As background, the NSA establishes Federal cost-share limits for participants (and beneficiaries) in certain emergency situations where the member does not have control over choosing a facility location or provider for services. Specifically, in the event of: (i) emergency services provided by nonparticipating providers in healthcare facilities, (ii) non-emergency services by nonparticipating providers in in-network facilities, and (iii) air ambulance services. In such cases, the NSA limits the patient payment to the in-network cost-sharing amount and prohibits a service provider from seeking payment from the patient of the difference between what the plan pays and the outstanding service balance; or ‘balance bill’. The NSA effectively removes the individual from any billing dispute.
To address the discrepancies between an out-of-network facility or provider and the plan, the NSA requires carriers and group health plans to develop an average payment amount for each facility or provider service subject to the law. The law also limits the timing of when an initial payment or notice of denial must be made, and establishes a timeframe for payment dispute resolution.
NSA Limits on Member Cost-Sharing Amount
The NSA requires payment for facilities and services subject to the NSA be calculated based on a ‘recognized amount’. A ‘recognized amount’ is either (i) an amount determined by an applicable All-Payer Model Agreement under 1115A Social Security Act, (ii) if no All-Payer Model Agreement, then an amount specified by State law; or (iii) if neither (i) or (ii), then the lesser of the billed charge or the Qualified Payment Amount (QPA). Though the state and Federal landscape on these provider payments is ever-changing, the NSA ‘recognized amount’ is likely, at least in the beginning, to rely upon the development of a QPA or billed charge. Wherein the Federal Independent Dispute Resolution process (IDR Process) will come into play.
Each issuer and group health plan must develop a QPA for each item or service. The QPA calculation is generally based on the plan’s median contracted rate that was in effect for the item or service as of January 31, 2019 (increased for inflation). However, if a plan/issuer has contracted rates that vary based on provider specialty for a particular service, then the median contracted rate (QPA) must be calculated separately for each provider specialty. Group health plans that do not have sufficient information to calculate a median contracted rate, or do not have a network of participating providers (e.g. reference based pricing plans) must still calculate a QPA, but must do so using an eligible database, in accordance with the regulations. A self-funded plan may rely upon a plan’s third-party-administrator to determine a median contracted rate using the average of all self-insured group health plans administered by the TPA, rather than developing a QPA specific for each plan sponsor.
Information to be Provided with Payment & Timeframes
The issuer or group health plan must make an initial payment or issue a denial of payment to the facility or provider within 30 calendar days of the service. It is notable that the initial payment does not have to be equivalent to the QPA (or the QPA less the individual’s cost-sharing amount). However, issuers and plans must be transparent as to the method used to determine the payment amount, including a meaningful disclosure of information.
Along with the initial payment or denial of payment, the plan/issuer must include the calculation of the QPA for each item or service, a statement certifying whether the QPA applies for the purposes of the recognized amount, the contracted rates for the specific items, a statement as to whether the QPA was determined using an underlying fee schedule rates or a derived amount (including whether there is risk-sharing, bonus, penalty, or other incentive-based or retrospective payments included within the contracted rates). Each explanation of benefits must also provide a telephone number and email address in order to dispute the payment made.
The Appeal Process for NSA-Subjected Claims
If the facility or service provider do not agree with the initial payment made by the issuer or group health plan, either party may initiate a ‘negotiation period’ within 30 days of the initial payment or denial of payment. This ‘negotiation period’ is intended for both parties to work towards an adjusted payment amount. If an agreement as to the payment is not determined during this 30-day negotiation period, the facility or service provider may then initiate the Federal IDR process within 4 business days. There is a fee to initiate the Federal IDR process with a certified IDR entity.
Upon initiation of the IDR process, the selected IDR entity must, within 30 days, determine the appropriate payment amount. The IDR entity must consider the QPA for the applicable year as well as other information requested by or submitted by the parties to the extent it is creditable and not otherwise prohibited.
The IDR entity decision must include an explanation of its determination, including what information the certified IDR entity determined demonstrated that the offer selected as out of network rate is the offer that best represents the value of the qualified IDR item, including the weight given to the QPA and any additional credible information. There is no appeal beyond the IDR entity decision.
Plan sponsors with fully insured benefits can rest easy because insurance carriers will likely handle the details behind the NSA and any provider payment disputes. However, if you are a plan sponsor of self-funded benefits, then you should reach out to your third-party-administrator to ensure that there is a process in place to handle any facility or provider payment disputes within the NSA framework. Plan documents and SPDs will need to be updated as well. As always, contact the AssuredPartners Employee Benefits team with specific questions.
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