The No Surprises Act, meant to make health care costs more transparent, sometimes appears anything but transparent itself. For those of you following along, new regulations expanding on the No Surprises Act keep rolling out, and one of the areas requiring the most guidance is the method created by the Act to resolve disputes about some payments — Independent Dispute Resolution (IDR).
The current guidance on IDR from the Centers for Medicare & Medicaid Services (CMS) applies to plan years beginning on January 1, 2022, and to services provided before October 25, 2022. More guidance should be coming soon for services provided on or after October 25. Read on for help figuring out what you need to know now.
What is Independent Dispute Resolution (IDR), Who Uses It, and When Is It Used?
The No Surprises Act IDR is a process to resolve disputes about specific out-of-network charges. The No Surprises Act primarily targets out-of-network payment amounts that can come as a surprise to patients. To help minimize the financial hit to the patient caused by a big out-of-network bill, the No Surprises Act limits patient responsibility for some of these services to no more than in-network cost-sharing amounts. Because this is much less than the share patients have paid in the past, the No Surprises Act has a few things to say about the amount health plans must pay the providers.
Because it would be no surprise that the health plans and the providers might disagree about these payment amounts, the No Surprises Act created a way for settling disputes. This method is federal IDR, which either the provider or the health plan can initiate. In IDR, a certified independent dispute resolution entity reviews the case and decides how much the payment should be.
What is a Qualified Payment Amount (QPA)?
The No Surprises Act and its regulations do not give the IDR entity free rein to make decisions about a case. One of the things an IDR entity must consider is the qualified payment amount. CMS defines the QPA as the median of the contracted rates the plan recognizes for:
- Same or similar service
- Services provided by a provider in the same or similar specialty
- Services provided in the same geographic area as the service at issue
The QPA adjusts for inflation.
No Surprises Act IDR Process
The federal IDR process involves several steps. Before initiating IDR, the parties must negotiate for a certain amount of time. Once the IDR process starts, the No Surprises Act requires the parties to give notice. Then the IDR entity is selected, and the parties each submit their offer of what they think the payment amount should be. After reviewing the case, the IDR entity chooses one of these offers within a specified timeframe. Following the IDR decision, payment must occur by the established due date. The parties then have a cooling-off period when they can't initiate the IDR process with the same party for a while.
More details about each step are as follows:
The process begins when a health plan either denies payment or pays the provider. Within 30 business days of either of those two events, the provider or the health plan can initiate an open negotiations period. The party initiating the open negotiations period must give written notice to the other party that it intends to negotiate. The written notice must include these specifics:
- The date of the service or item provided
- The service codes
- The initial payment amount or the written notice of payment denial
- An offer
- The sender's contact information.
Fortunately, for parties to start negotiations, the federal government created a standard form for your use.
Once the notice sends, the open negotiations period starts. This period goes on for 30 business days, the second 30-business-day period in the process so far. Note that you aren't required to hold out for the full 30 business days before reaching an agreement. Once you've agreed, the process ends. But, if you disagree, you must wait 30 business days before moving to the next step in the process.
If you're still in the process of negotiations when the 30-day period expires, you can keep talking. But the clock will keep ticking on the time limits for the remaining stages of the process, so to protect yourself, you should also start moving along with the next steps.
One point to note is if the notice of intent to negotiate never reaches the other party, the rest of the process could be moot. If the other party doesn't receive it, the open negotiations period technically did not happen, and any decision by the IDR entity is likely unenforceable. So, be very careful to ensure you've got good contact information for the other party before sending your notice, and include a way to confirm they received it, such as a read receipt or certified mail. If you're not sure you have good contact information, you can try to get an extension of your timeframe by emailing FederalIDRQuestions@cms.hhs.gov (keep moving along with the process until you hear from them, though).
If the open negotiations period ends with no agreement, either party can initiate the federal IDR process. Delivering a Notice of IDR Initiation to the federal government and the other party starts the No Surprises IDR process.
The timeframe is very tight for initiating the No Surprises Act IDR process. Once the open negotiations period ends (the 31st business day after the period started), you have four business days to file the Notice of IDR Initiation.
You deliver your notice to the other party on the same day that you deliver it to the federal government departments involved, including the Department of Health & Human Services, the Department of Labor, and the Department of the Treasury. Each plays a role in the No Surprises Act. You can submit the notice to the Departments through the federal IDR portal.
Here's what the notice needs to include:
- Initiating party type (Are you a provider? Are you a facility?)
- Information about the service or items under dispute. This information must be enough to identify them, so you will need to include the following, if applicable:
- Description of the items or services
- Explanation of batching of some or all items or services
- Dates of each of the items or services
- Location where the items or services were provided, including state or territory
- Service and place-of-service codes
- Type of qualified IDR item or service (emergency, for example)
- Whether cost sharing was allowed, and if so, how much
- Whether the plan made an initial payment, and if so, how much
- The QPA for each item or service
- Information about the QPA provided to the provider, including the calculation used for the total amount
- The parties' names and contact information
- The open negotiations period start date
- A preferred certified IDR entity
- An attestation that the items or services subject to the dispute are qualified to be part of the federal IDR process
- General information about the IDR process
There's a standard form for the Notice of IDR Initiation too.
Selection of IDR entity
The next step is to select an IDR entity within another very tight timeframe: the IDR entity selection period is within three days of initiating IDR.
If the party that initiated the IDR process identified a preferred IDR entity, then the party receiving the notice can object. If there's no objection within three days, the initiating party gets their preferred choice. To object, the non-initiating party gives the initiating party notice of objection, which must propose a different certified IDR entity. The initiating party then can agree or object to the alternative.
One business day after the three days are up, four days after the IDR process began, the initiating party has to file a Notice of Certified IDR Entity Selection (or failure to select) through the federal IDR portal. If you did not reach an agreement on an IDR entity, the Departments designate one for you randomly.
Submission of offers for payment determination to IDR entity
Once you have an IDR entity selected, it's time to submit offers. The parties have ten business days after the IDR entity designation to submit their certified proposals to the IDR entity.
The most critical component of the certified offer is the actual offer for the out-of-network rate, which must be expressed both as a dollar amount and as a percentage of the QPA. In addition, the certified offer should include the following:
- Information breaking down batched qualified IDR items or services. If the batched items or services have different QPAs, the parties should provide them. Parties may make varying offers for items or services with different QPAs, but you cannot for items or services with the same QPA.
- Information requested by the IDR entity. Always provide any requested information.
- Provider information. Give a range for the number of employees or the number employed by the provider at the facility. Also, identify a practice specialty or type.
- Plan information. Provide the plan's coverage area and the relevant geographic region for QPA purposes. Group health plans should state whether they are fully insured or partially or fully self-insured. Health plans must provide the QPA for the applicable year for the same or similar item or service.
Selection of payment offer by IDR entity
After both parties have submitted their offers, the IDR entity selects an offer. The IDR entity has 30 business days to do so.
The IDR entity does not have free rein to select an offer. There's a host of factors that the IDR entity must consider when making the selection:
- The QPAs for the applicable year
- Credible information regarding any of the following (note that many other factors apply to providers of air ambulance transport):
- The provider's level of training, experience, and quality and outcome measurements
- The market share held by the provider or facility in the geographic region and how it impacts the out-of-network rate
- The patient's acuity level or the complexity of furnishing the item or service to the patient
- How the teaching status, case mix, or scope of services impacts the out-of-network rate
- Explanation of the parties' good-faith efforts, or lack thereof, to form network agreements and, if applicable, contracted rates between the provider/facility and the plan during the previous four plan years.
The IDR cannot consider some information when making its decision. The prohibited information includes the following:
- Usual and customary charges
- The charges that would apply if some of the No Surprises Act regulations had not (45 CFR 149.410, 149.420, and 149.440)
- The payment or reimbursement rate of a public payor, including Medicare, Medicaid, CHIP, or TRICARE
Written payment determination by IDR entity
The IDR entity has 30 business days from their selection date (note: this is not from the offer submission date) to issue a written determination selecting one of the offers. The decision, submitted through the federal IDR portal, must explain the rationale for the selected offer.
Payment is due within 30 business days following the IDR entity's determination. Either the plan pays the provider, or the health plan will receive a refund from the provider, depending on the offer selected. Note that the participant's cost-sharing is not affected by the IDR determination.
The IDR entity also refunds the prevailing party's IDR fee.
The payment determination's effect
A written payment determination by an IDR entity is binding on all the parties, and it is not subject to appeal on the merits. The only way to overturn an IDR determination is to show fraud or evidence of intentional misrepresentation of material facts to the IDR entity.
The cooling-off period
The No Surprises Act requires a cooling-off period after a written payment determination to prevent rapid-fire disputes between the parties. For 90 days after a payment determination, the initiating party cannot file another Notice of IDR Initiation again if it involves the following:
- the same parties
- the same or similar services or items
But wait, there's a twist. If during the cooling-off period, a dispute arises and the open negotiations period begins, the initiating party gets a different timeframe for filing the Notice of IDR Initiation. Instead of four business days following the end of the open negotiations period, you have 30 business days from the end of the cooling-off period to send the Notice of IDR Initiation.
No Surprises Act IDR Final Rule
On August 26, 2022, the Final Rule to the No Surprises Act IDR process went into effect. The July 2021 interim rules appeared to use the QPA alone as the basis for selecting an offer. Many stakeholders disagreed with that one-size-fits-all approach. To address that concern, the Final Rule requires the IDR entity to consider a list of credible factors in addition to the QPA to determine the value of the service. See above for that list.
In addition, each provider specialty should get its own separately calculated QPA. Because some medical specialties provide services that other providers' practices consider to be incidental, their contracted rate for the service would not accurately reflect the value of the service. Many critics of the Interim Rule pointed to radiology and anesthesiology as specialties that would be particularly affected. But note that a separately calculated QPA for different medical specialties is not necessary for services or items provided before November 17, 2022, according to question 14 of the August 19, 2022 FAQs.
Next, the Final Rule provided clarification about downcoding and QPAs. If a payer "downcodes" a service code to one with a lower QPA, then the payer has to tell the provider what it did, why it did that, and how much the QPA would have been before downcoding.
Finally, CMS has provided two model notice forms for patients that a practice must post. One version is for 2022, and the other version is for any year after 2022.
Five Tips to Expedite Your IDR Process
The No Surprises Act IDR process is lengthy. You don't want to make it any longer than it has to be. Read on to find out how to speed things up.
Preserve and provide documentation of initiating open negotiations
If unable to prove that you correctly initiated open negotiations, you can nullify the entire IDR process and have to start over again. You'll want to keep evidence you did it right. Most importantly, deliver your notice in a way that allows you to document that it was received, such as requiring a read receipt.
Batch cases correctly
Incorrectly batching cases can cause your offer to be out of alignment. When submitting the offer, itemize batched cases with different QPAs used for the various services.
Submit disputes involving bundled IDR items in the correct manner
Bundled IDR items can get complicated. Submitting disputes incorrectly in these cases is easy. Carefully review the rules and items to ensure you're using the correct manner.
Remember to include QPA with the initial payment or notice of payment denial
The initial payment or notice of payment denial must include the QPA. This QPA will form the basis for all further steps in the process, so ensure that it's accurate.
Use the same contact information provided with the initial payment or notice of payment denial
Contact information is critical. If you send notices to the wrong contact or include incorrect contact information in your Notice of IDR Initiation, you could risk jeopardizing the whole process. In the best-case scenario, you'll need extensions to ensure the other party has proper notice, prolonging everything.