Group health plans are required to comply with the No Surprises Act (the “Act”), which became effective on January 1, 2022. The Act was signed into law on December 27, 2020, as part of the Consolidated Appropriations Act. Starting January 1, 2022, consumers have new billing protections when receiving emergency care, non-emergency care from out-of-network providers at in-network facilities, and air ambulance services from out-of-network providers. Under the Act, excessive out-of-pocket costs are restricted, and emergency services must be covered without any prior authorization, regardless of whether or not a provider or facility is in-network. Importantly, the rules mandate independent dispute resolution (“IDR”) when there is a dispute between the payor and the provider regarding the QPA calculation.
The QPA is determined by first identifying the median in-network (“contracted”) allowed amounts for the same or similar item or service provided in the geographic region in the year immediately preceding the year in which the item or service is furnished, and then increasing that rate by the percentage increase in the CPI-U over the preceding year. A group health plan must have at least three (3) contracts in place in the same geographic market to determine the median contracted rate for the applicable service. Out-of-network (“OON”) providers and facilities are no longer entitled to receive their billed changes when providing services covered under the Act but only entitled to the QPA. In the event a group health plan cannot establish a median contracted rate for a service, the plan may use their third-party administrator’s QPA (determined over their book of business), an administrative entity's median contracted rate, or the rate established by an eligible database.
The IDR Process
The IDR process allows OON providers and facilities to dispute the QPA determined by the plan. However, the process does not apply if the patient has consented to be balanced billed and has waived the protections of the Act. Prior to initiating IDR, the disputing parties must engage in a 30-business-day Open Negotiation Period to attempt to reach an agreement regarding the QPA. The Open Negotiation Period begins on the day that the initiating party sends the Open Negotiation Notice in the mail or electronically if certain requirements are met. A party may not initiate the IDR process if, with respect to an item or service, the party knows or reasonably should have known that the provider or facility provided notice and obtained consent from a participant, beneficiary, or enrollee to waive surprise billing protections consistent with the Act.
If open negotiations do not result in an agreement between the parties by the end of the 30-business-day period, a plan or provider may, during the 4-business-day period beginning on the 31st business day after the start of the Open Negotiation Period, initiate the IDR process. The initiating party must provide this written Notice of IDR Initiation to the other party by mail or electronically if certain requirements are met. After the Certified IDR Entity is selected, each party has ten (10) days to submit an offer of what the party believes is the appropriate out-of-network rate for the item or service, in addition to information regarding the provider and the geographic region for purposes of the QPA any other information the party would like to be considered. Under certain circumstances, items or services can be sent in batches if billed by the same provider to the health plan during a thirty (30) day period. The Certified IDR Entity is required to accept one (1) of the two (2) offers made within thirty (30) days. The decision is final and cannot be appealed.
Please feel free to contact us with any questions regarding QPA determination or the IDR process.
© Boutwell Fay LLP 2022, All Rights Reserved. This handout is for information purposes only and may constitute attorney advertising. It should not be construed as legal advice and does not create an attorney-client relationship. If you have questions or would like our advice with respect to any of this information, please contact us. The information contained in this article is effective as of January 2022.