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More Fairness for Reimbursement of Out-of-Network Services

Posted by Michael Brown on November 15, 2022 at 1:32 PM

Final Rules No Surprises Act surprise billing practicesRecently, the Departments of Health and Human Services, Treasury and Labor (collectively, the Departments), issued Final Rules relating to the 2020 No Surprise Act (NSA), a federal law which prohibits out-of-networks providers (‘OON Providers”) from billing patients for certain out-of-network charges if the patient did not know/consent to the use of the OON Provider (as opposed to the patient selecting an in-network provider for the same product or services). Effective October 25, 2022, the Final Rules are intended to ensure a more balanced approach to negotiations between OON Providers and group health plans and health insurance issuers (“Plans”) regarding payment for out-of-network products or services.

Background 
Following passage of the NSA, the Departments issued interim final rules in 2021 (Part 1 & Part 2, collectively, the “Interim Rules”) to help resolve payment disputes between OON Providers and Plans regarding who should pay and how much when out-of-network products or services are provided by OON Providers at a Plan’s in-network facility. Among other things, the Interim Rules required that:

  • Out-of-Network Services - the cost of out-of-network services is to be based on the “recognized amount,” which is either an amount determined by state law (if any) or the lesser of the billed amount and the Plan’s qualifying payment amount (QPA)

  • Qualifying Payment Amount - is defined as the median contracted rate for a particular item or service (indexed for inflation) that the Plan pays its in-network providers.

  • Negotiation Requests – when a Plan receive a claims from an OON Provider, it can either deny the claim or make an initial payment. In either case, the Plan must share its QPA with the OON Provider, along with any statutorily-specified information and its contact information. The OON Provider may then request a 30-day negotiation period with the Plan. If the OON Provider and Plan are unable to agree upon a payment, the dispute then enters the federal independent dispute resolution (IDR) process” using a certified IDR arbitrator.

After weighing comments to the Interim Rules, as well as state court rulings regarding the fairness of the negotiation process required by the NSA, the Departments issued the Final Rules.

Key Changes in the Final Rules
The Final Rules revise the Interim Rules by (a) eliminating the “rebuttable presumption standard,” (b) adding new rules regarding “downcoding,” and (c) reminding Arbitrators of their written requirements. These changes are described more fully below.

  1. Elimination of the Rebuttable Presumption
    Under the Interim Rules, an Arbitrator was required to select the offer amount closest to the QPA (in most cases) that would create a “rebuttable presumption” that the QPA was the correct price.  The Final Rules eliminated this standard. Now, an arbitrator must select the amount that best reflects the value of the OON product or service provided. In determining that amount, the Arbitrator may initially consider the QPA, but then may also consider “additional information” deemed appropriate by the Arbitrator, including (i) the OON Provider’s level of training and experience, as well as quality and outcomes measurements submitted by the OON Provider; (ii) the market share held by the OON Provider or the Plan in the region where the product or service is provided; (iii) the acuity of the individual receiving the product or service and/or the complexity of providing such to the patient; (iv) the teaching status, case mix and scope of services offered by the facility that provided the product/service; (v) a demonstration of good faith efforts (or lack thereof) made by the OON Provider and/or the Plan to enter into network agreements or contracted rates with each other during the previous 4 years; and (vi) additional information requests made by the Arbitrator.

  2. Downcoding
    Whereas the Interim Rules were silent on this issue, the Final Rules now address the situation where a Plan may try to “downcode” a product or service when determining the QPA. Under the Final Rules, downcoding is defined as “the alteration by a plan or issuer of a service code to another service code, or the alteration, addition or removal by a plan or issuer of a modifier, if the changed code or modifier is associated with a lower QPA than the service code or modifier billed by the provider, facility, or provider of air ambulance services.”  

    Accordingly, if an OON Provider requests to negotiate the Plan’s proposed payment, the Plan is now required to provide information about how the QPA was calculated. For example, did the QPA include contracted rates that were not on a fee-for-service basis? Was the QPA determined using underlying fee schedule rates or a derived amount? Likewise, the Plan must provide any information used to identify an eligible database (if used to determine the QPA), information to identify a related service code (if used to determine the QPA), and a statement that the plan/issuer’s contracted rates include risk-sharing, bonus, penalty or other incentive-based or retrospective payments or payment adjustments. Finally, if a QPA is downcoded by a Plan, the Final Rules require the Plan to provide a statement to this effect, along with an explanation of why (including a description of which code was changed) and the amount the QPA would have been had the code not been downcoded.

  3. Reminder to Arbitrators
    The Final Rules specifically remind Arbitrators of their obligation to explain in writing their determination, including the reason behind it, the information they considered, and the weight given to the QPA. This written determination must be provided to the parties and to the Departments. Additional guidance is expected from the Departments regarding the form and substance of such written determinations.

Impact of Final Rules on OON Providers
Since the NSA was passed, out-of-network providers across the healthcare spectrum – from physicians to laboratories, medical device providers and diagnostic imaging centers – have faced an uphill battle when seeking payment for services or products provided to patients. The Final Rules will hopefully level the playing field for negotiations between OON Providers and Plans. To that end, OON Providers can expect the following changes to this process:

  • OON Providers will no longer need to try and overcome the rebuttable presumption about the QPA as required by the Interim Rules;

  • Plans are prohibited from attempting to downcode a product or service provided by the OON Provider in order to pay less and must provide additional information to justify any attempts to downcode;

  • Arbitrators are now permitted to consider not only the QPA, but also additional Information submitted by the OON Provider, to help arrive at a more accurate QPA; and

  • By authorizing the consideration of additional information, both OON Providers and Plans can expect higher costs associated with the federal IDR process.

If you are an OON Provider with questions about the new Final Rules and their impact on your business, please contact Michael Brown at mbrown@outsidegc.com or 949-636-8128.

 

Michael Brown is a Partner with our California-based team, bringing over three decades of senior in-house counsel experience in the area of business, employment, healthcare, compliance, and privacy. Michael has served as in-house counsel to healthcare giants such as Tenet HealthSystems (hospitals), Apria Healthcare (Home medical equipment, respiratory and infusion therapy); Clarient, a GE Healthcare company (clinical laboratories); and Edwards Lifesciences (medical device) where he also was a member of the AdvaMed Diagnostic and Compliance Committee that revised the AdvaMed Code of Conduct for the medical device industry.

 

 

 

 

Topics: healthcare law, No Surprises Act, surprise billing practices, patient rights, out-of-network providers, out-of-network services

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