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HHS Issues Final Rules for Surprise Billing Price Dispute Resolution

by | Aug 24, 2022 | News

The process is now slightly less rigged in insurers’ favor.

The No Surprises Act (Act), which took effect on January 1, 2022, bans providers from billing commercially insured patients for more than the in-network cost-sharing due under the patient’s insurance. Rather than stipulating a rate, the Act establishes an arbitration process for providers and plans to settle on the payment amount. Hospitals and doctors’ groups have virulently opposed the proposed regulations implementing that process because they favor insurers.

The process comes into play when and if the out-of-network provider is dissatisfied with the initial payment or notice of denial that the plan is required to furnish within 30 days of the date of service. The provider can then trigger a 30-day “open negotiation” process. If no resolution is reached, the sides can resort to a new independent dispute resolution (IDR), aka, “final offer” arbitration process under which each side submits its final payment offer and the arbitrator chooses between the two, based on which they believe is more “reasonable.”

The interim regulations list the factors the arbitrator must consider in deciding which final offer is more “reasonable.” First and foremost among these factors is what’s called the “qualifying payment amount” (QPA), defined as, essentially, the insurer’s median in-network rate for similar services in the geographic region as of 2019, indexed for inflation by the Consumer Price Index for All Urban Consumers (CPI-U). By assigning QPA primary importance, the regulations basically make health plans judge, jury, and executioner of what constitutes “reasonable” payment under the IDR process.

Last April, the American Medical Association and American Hospital Association filed a lawsuit asking the US District Court for the District of Columbia to strike down the interim regulation IDR provisions, claiming that placing primary emphasis on the QPA misinterprets the text and intent of the Act that gives payers too much control over reimbursement rates. It’s essentially the same argument that the Texas Medical Association (TMA) used to prevail in its own surprise billing lawsuit by securing a ruling that the IDR interim regulations violated the policies Congress intended to promote by adopting the Act. 

On Aug. 19, the U.S. Department of Health and Human Services (HHS) issued the final rule. While QPA remains the first factor for arbitrators to consider, the final rule clarifies that they can then consider other “credible” information “related” to the service in question and choose which offer of the two “best represents the value of the qualified IDR service.” Other factors that can be considered include: 

  • Level of training or outcome quality of whoever provided the service;
  • Acuity or condition of the patient;
  • Market share of a provider or insurer in a given region;
  • The training or experience of the provider;
  • The teaching status of a hospital or facility; and
  • Past efforts to enter into a network agreement between the provider and insurer.
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