Effective on Jan. 1, 2022, the No Surprises Act helps patients understand healthcare costs before they receive care. Specifically, it protects patients from receiving surprise medical bills. Such bills arise when patients inadvertently receive care from out-of-network physicians, hospitals, and other healthcare providers.
On Aug. 19, 2022, the U.S. Department of Health and Human Services and the Treasury issued a third final rule for the No Surprises Act. It will go into effect on Oct. 25, 2022.
Read on to learn more about the No Surprises Act's final rule and how it changes the federal independent dispute resolution process. We'll also cover how it changes other aspects of the No Surprises Act, such as the transparency rule for payers, disclosures and notices, out-of-network and no-network insurance plans, and air ambulance services.
Changes to Federal Independent Dispute Resolution Process With No Surprises Act Final Rule
The third final rule for the No Surprises Act changes many aspects of the federal IDR process. Here's how:
Initial Payment and Open Negotiations
According to the final rule, federal officials will remind insurers and plans to send initial payments or payment denial notices within 30 calendar days after an out-of-network provider sends an No Surprises Act-covered bill. The 30-day period starts when the payer gets the data required for a clean claim.
Providers can't begin the open negotiation period until they have received an initial payment denial or payment. This applies even if the insurer or plan fails to send the initial payment denial or payment within 30 calendar days. Accordingly, providers must wait on the initial denial or payment. Both the initial payment denial and payment trigger a 30-business-day timeline for initiating open negotiations.
Providers may proceed with the open negotiation period when the insurer or plan fails to disclose the information required in the initial denial or payment as long as they wait for the initial notification. Additionally, a party can start the federal IDR process at the end of the open negotiation period if the opposing party does not respond during the 30-business day period.
Qualifying Payment Amount Change in Methodology
The methodology for determining Qualifying Payment Amount has changed. The QPA is the median payer contracted rate for a certain service or item in a particular region.
Specifically, the final rule requires insurers and plans that vary their contracted rates based on provider specialty to calculate a separate median contracted rate per specialty. Plans and insurers must do this when there is a material difference between different specialties' median contracted rates after considering non-specialty variables. Separate median contracted rates aren't required if there is a nonmaterial difference.
For example, if a plan or insurer pays an anesthesiologist more for anesthesia services than it would pay a gastroenterologist, it must calculate a median contracted rate separately for each specialty.
Self-funded group health plans should calculate the QPA when they offer multiple benefit package options administered by third-party administrators. In such circumstances, contracted rates don't have to be compiled from various mutually exclusive benefit package options. Instead, the QPA can be specific to a service or item under the participant or beneficiary's benefits package option.
QPA Is Not a "Presumptive" Factor Going Forward
This is the most significant change in the final rule. Under the most recent interim final rule, IDR entities were told to pick the offer closest to the QPA. The only exception was if the parties provided credible data showing that the QPA materially differs from the appropriate out-of-network rate.
The final rule, effective Oct. 25, 2022, does not tell IDR entities which offer to pick. Instead, it focuses on IDR entities' process for choosing offers. Specifically, the final rule instructs IDR entities to pick the offer that best represents the value of the service or item under dispute. In doing so, IDR entities must consider:
- The QPA.
- All additional information submitted by a party or requested by the IDR entity. This information must be related to a party's offer that is deemed credible by the IDR entity and cannot be already accounted for in other information before the IDR entity.
Additional Criteria in Payment Determination
The final rule requires IDR entities to avoid "double counting" criteria already included in the QPA or information submitted by either party. The HHS and the Treasury mention that service complexity and patient acuity may already be reflected in the QPA because they are included in the modifiers and service codes. They also acknowledge that there may be exceptions where the intensity or complexity goes beyond what the codes usually reflect.
The HHS and the Treasury also note that even if the information submitted by either party is credible, it may not always impact the final payment determination of a particular service.
Additionally, the final payment determinations should focus on the particular services or items and the circumstances and facts of the dispute rather than on examining a plan's QPA methodology. The HSS and the Treasury will audit issuers' QPA calculation methods.
Prohibited factors like customary and usual charges and payment rates for public payers should not apply to final payment amount determinations.
The final rule also expects certified IDR entities to review all information submitted to ensure prohibited factors aren't included. Certified IDR entities may also ask disputing parties to confirm that the information submitted does not have any of these prohibited factors.
Insurance Plans With "Downcoding" Must disclose More Information
The final rule requires issuers and payers to provide additional information to facilities and providers when they have "downcoded" a claim. Downcoding involves altering the modifier or service code to decrease the QPA until it's less than the facility or provider's billed amount.
If downcoding happens, the issuer or plan must provide:
- A statement explaining why the modifier or service code billed by the facility or provider was downcoded. Include an explanation about which modifiers or service codes were altered, removed, or added.
- The QPA.
- The information required, with an initial notice of payment denial or payment.
Plans Can't Force Providers To Use Proprietary Portals or Online Systems
Plans and issuers cannot force providers to use web-based systems or proprietary portals. For that reason, they are also barred from denying receipt of a notice of initiation of open negotiation.
The final rule also states that if a facility or provider sends the standard notice of initiation of open negotiation to the email address identified by the issuer or plan in the initial payment or notice of payment denial, that message will satisfy the No Surprises Act's notice requirement.
IDR Entities Are Now Required To Provide Written Explanations Accompanying Final Payment Determinations
Certified IDR entities must always submit written explanations detailing their reasons for determining out-of-network rates. Previously, they were only required to do this when not choosing the QPA. IDR entities must submit their explanations to HHS and both parties involved.
Transparency Rule for Payers
A payer transparency rule requires insurers and plans to release negotiated rates for:
- In-network providers
- Historical out-of-network billed changes and allowed amounts
This requirement came into action on July 1, 2022. Insurers and plans must publicly release the negotiated rates in a machine-readable file.
The sponsor of a group health plan can satisfy the machine-readable file posting requirement if its service provider posts the data on its website on the plan's behalf. The plan and the sponsor must do this according to a written agreement. Otherwise, the plan may be liable if the service provider fails to post the information. The plan must post a link to the machine-readable file if it has a public website.
This rule also requires plans and insurers to make cost-sharing estimates and price comparison information available through an internet-based self-service tool for 500 specific services and items starting Jan. 1, 2024. Federal offices will update the list for the already-identified 500 services and items every quarter. They will also provide a reasonable time frame for insurers and plans to update their tools.
Changes to Disclosures and Notices
Insurers, plans, facilities, and providers must post a publicly available notice about the No Surprises Act's balance billing and patient protection requirements on their sites. Plans and insurers must include this disclosure in every No Surprises Act item and service benefit explanation.
According to the frequently asked questions for the final rule, if a sponsor of a health group plan doesn't have its own website, it can satisfy this requirement by getting its service provider to post the information on its site. This should be done according to a written agreement. The plan also needs to state that this has been done so they can be held responsible if the service provider doesn't post the information.
Note that insurers and plans aren't required to provide information on all state laws about surprise billing. The No Surprises Act needs information only on "applicable" state laws. Hence, insurers and plans can satisfy this requirement by including only state law information that applies to their enrollees.
Additionally, HHS revised previously issued standard consent and notice forms. Providers can use these forms when asking patients to waive their No Surprises Act protections.
HHS has also revised model disclosures for notifying individuals about their No Surprises Act protections. Providers, plans, facilities, and insurers can use either the revised or initial versions until the end of 2022. However, the revised disclosures and forms will be required for services and items furnished on or after Jan. 1, 2023.
Out-of-Network and No-Network Insurance Plans
Several FAQs for the final rule explained how the No Surprises Act applies to plans that don't have a provider network, such as plans that use reference-based pricing.
No Surprises Act protections apply when an enrollee uses an air ambulance or covered emergency care. However, enrollees won't be shielded from out-of-network bills for nonemergency care. That's because the No Surprises Act only applies to nonemergency care when an individual receives care at an in-network facility. Plans without provider networks do not have in-network facilities, so No Surprises Act protection would never apply to enrollees in this plan. As a result, out-of-network providers and air ambulance companies providing emergency care are barred from sending balance bills to patients enrolled in these plans. However, this protection does not extend to nonemergency services.
Similarly, patients who receive emergency care from out-of-network providers should pay no more in cost-sharing than they would've if an in-network provider had given them care. As for the in-network cost-sharing for a plan with no network, it will be calculated based on the No Surprises Act's "recognized amount."
Generally, the recognized amount is determined by the QPA, a specific state law, or an all-payer model. If a payer lacks sufficient data to calculate a median contracted rate, it can calculate the QPA through an eligible database. Similarly, insurers and plans should calculate the out-of-network rate based on an all-payer model agreement or specific state law. If those don't apply, they can negotiate the out-of-network rate with the provider. The federal IDR process can also determine the out-of-network rate.
Annual Out-of-Pocket Maximums Under the Affordable Care Act
The FAQs also addressed the yearly out-of-pocket maximum under the Affordable Care Act, which is limited to in-network care.
According to guidance from 2014, insurers and plans that use reference-based pricing can't exclude or limit spending toward emergency services from a provider that doesn't accept the reference-based price. Therefore, this out-of-pocket spending must be included in the annual out-of-pocket maximum.
In the third final rule, however, federal officials have extended this to post-stabilization services considered emergency services, which happen when a patient has not consented. As a result, insurers and plans should not exclude or limit spending on providers that don't accept a reference-based price when such spending is for No Surprises Act-covered post-stabilization services.
The No Surprises Act Applies to Policies and Plans That Do Not Provide Out-of-Network Coverage
Finally, the FAQs clarify that the No Surprises Act applies to policies and plans that don't provide out-of-network coverage.
To illustrate, suppose nonemergency or emergency services are covered by the policy or plan but provided by an out-of-network provider. No Surprises Act protections apply even if the policy or plan does not include coverage for out-of-network services or items. As a result, a closed-network insurer or plan might end up giving benefits for out-of-network care due to the No Surprises Act.
Emergency Services Related to Mental Health Facilities
The FAQs for the third final rule acknowledge that individuals experiencing mental and behavioral health emergencies are served most effectively in nonhospital settings, including specialized mental health facilities.
According to this guidance, the No Surprises Act applies if a mental health facility providing behavioral health crisis responses services is:
- Allowed to provide emergency services under state laws
- Geographically distinct and separate from a hospital
Therefore, patients receiving No Surprises Act-covered emergency services from out-of-network mental health facilities should not receive surprise bills. This applies whether the mental health facility is licensed as a free-standing emergency department or a hospital emergency department. Either way, the facility's license does not need to use the term "emergency services."
Changes Regarding Air Ambulance Services
The No Surprises Act does not require insurers and plans that cover only air ambulance services for emergencies to cover air ambulance services for nonemergencies. However, if a plan or insurer covers benefits for air ambulance services, it must cover such air ambulance services provided by out-of-network air ambulance providers.
Note, though, that the No Surprises Act does not say which services and benefits insurers and plans must cover. So, if the plan or policy doesn't cover nonemergency air ambulance services, insurers and plans don't have to either. There is nothing in the No Surprises Act that requires these services to be covered or guards patients from surprise bills in such circumstances.
Additionally, patients are protected from air ambulances' out-of-network bills even if the pickup point is outside the United States. Federal officials will address which geographic region insurers and plans should use to calculate the QPA in such circumstances. For now, insurers and plans are expected to use a reasonable way to determine the geographic region. For example, they can base the geographic region on the border entry point to the United States after patient pickup.
Follow the No Surprises Act Final Rule
As you can see, the No Surprises Act final rule makes many changes to the act. These include:
1. Changes to the federal IDR process, including:
- Initial payment and open negotiations
- QPA change in methodology
- QPA will no longer be a "presumptive" factor from now on
- Additional payment determination criteria
- Prohibited factors
- More information must be disclosed by insurance plans with "downcoding"
- Plans can't force providers to use online systems or proprietary portals
- IDR entities will be required to provide written explanations accompanying final payment determinations
2. Transparency rule for payers
3. Changes to notices and disclosures
4. No-network and out-of-network insurance plans
- Annual out-of-pocket maximums under the Affordable Care Act
- Policies and plans that do not provide out-of-network coverage
5. Emergency services related to mental health facilities
6. Changes to air ambulance services