CONSUMER NOTE: THIS PROCESS INVOLVES PROVIDERS AND INSURANCE COMPANIES…NO CONSUMER INVOLVEMENT
The No Surprises Act1 is a component of federal law that will take effect beginning January 1, 2022. The government has recently issued two interim final rules (IFRs), which update the existing regulation. It prohibits “surprise billing” in the following settings:
- Emergency services performed by an out-of-network provider or at an out-of-network facility2
- Air ambulance services
- All services performed by an out-of-network provider at an in-network facility
In any of these cases, a patient may unknowingly receive services from an out-of-network provider. Prior to this legislation, the out-of-network provider could bill the patient for the difference between their billed charges for the service and the payment from the insurer, a practice known as balance-billing.3
This law explicitly prohibits providers from balance-billing patients in these scenarios. It also establishes a methodology for insurers to calculate the qualifying payment amount (QPA), which is used to determine member cost sharing. The QPA can influence the initial payment submitted by the insurer and it is a benchmark amount for payment disputes.
The provider can refuse the initial payment offered by the insurer as reimbursement for services provided and can instead negotiate directly with the insurer during an initial period or, after that period, trigger a third-party arbitration process called Independent Dispute Resolution (IDR), which must be performed by a certified IDR entity.
Qualifying payment amount (QPA)
The QPA is defined4 as the median of the contracted rates5 recognized by the insurer. It should be calculated separately for insurance market, provider specialty, service rendered, and geographic region, where sufficient information is available. The definitions for each of these criteria come with varying degrees of specificity.
“Insurance market” is a general term that broadly identifies the line of business for the services provided. For example, separate QPAs should be calculated for an insurer’s individual, commercial large group insured, commercial small group insured, and commercial self-funded lines. Self-funded plan sponsors may choose to use their specific negotiated rates or the rates for all self-funded groups administered by the same entity. If the insurer uses a rental network, the QPA should reflect that network’s contracted rates.
If a health care facility or provider initiates the IDR process, both the facility or provider and the health plan will submit to an arbitrator a proposed payment amount, and information regarding the following factors:
- The calculated QPA
- The provider’s training and experience
- The complexity of the procedure or medical decision-making
- The patient’s acuity
- The market share of the health plan, and the provider or facility
- Whether the care was provided at a teaching facility
- The scope of services
- Any demonstration of good faith efforts to agree on a payment amount; and
- The contracted rates from the prior year
- The arbitrator will then choose one of the two proposals as the amount of the payment. Under the current regulations, the arbitrator cannot come up with his or her own payment amount. Arbitrators are paid through fees assessed to the entities that use the IDR process.
- Many details about the IDR process related to health plan payments for out-of-network services are forthcoming, including what weight arbitrators should give to each of the factors provided.