By Danae Delano, Roberta Watson and Barry Salkin
Last November, we published a law alert regarding the first two rounds of regulatory guidance on the No Surprise Billing portion of the Consolidated Appropriations Act, 2021 (the “CAA”). Since that date, separate District Courts in Texas, at the urging of providers, invalidated a portion of the regulations applicable to the independent dispute resolution (“IDR”) for non-participating providers and a portion of the IDR provisions applicable to air ambulance services. In response to these court decisions and a series of comments on the prior interim final regulations, the Departments of Treasury, Labor and Health and Human Services (the “Agencies”), issued revised final regulations. The Agencies explain in the preamble to the final regulations that these rules are narrow in scope and intended to address only a limited number of issues that are applicable to the no surprise billing requirements under the CAA. The IDR process has been overwhelmed since it was implemented due to significantly more claims being filed than anticipated and these court decisions invalidating the interim final regulations. The IDR arbitrations began slowly moving forward when the Agencies issued a similar directive in April prior to the release of the revised final requestions. These final regulations increase transparency requirements with regard to qualified payment amounts (“QPAs”) set by a plan or issuer and also give providers a slight edge in the IDR process by not tying the process so strictly to QPAs, which has been expected since the issuance of the directive in April.
One of the issues on which the Agencies received significant comments was the disclosure of downcoding by plans or issuers in response to a non-participating provider’s submission for payment. A non-participating provider would submit a claim for services based on one or more medical codes, and the plan or issuer, upon review, would determine that the services should have received a different code that would provide a lower reimbursement rate. This information could be requested by the non-participating provider, but it was not part of the mandated disclosure provided with the initial payment or notice of denial of payment.
The concept of downcoding was discussed in the preamble to the previously issued regulations but was not formally defined. The revised regulations define “downcoding” 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 healthcare provider, facility or provider of air ambulance services. If a QPA is based on a downsized service code or modifier, in addition to the information already required to be disclosed in connection with an initial payment or notice of denial of payment, a plan or issuer must disclose in writing that the service code or modifier billed by the non-participating provider or air ambulance service was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and which modifiers were added, altered, or removed, if any; and the amount that would have been the QPA had the service code or modifier not been downcoded. This additional disclosure significantly increases transparency in the QPA from a provider’s perspective.
In response to the court decisions invalidating portions of the regulation and to comments it received regarding the July 2021 and October 2021 interim final rules, the Agencies modified the IDR process in providers’ favor by reducing the emphasis on QPA consideration. The certified IDR entity must select the offer that such entity determines best represents the value of the qualified IDR item, weighing only the following factors:
- the QPA for the applicable year for the same or similar item or service; the level of training, experience, and quality and outcomes measurements of the provider or facility that furnished the qualified IDR item or service;
- the market share held by the provider or facility or that of the plan or issuer in the geographic region in which the qualified IDR item or service was provided;
- the acuity of the participant or beneficiary receiving the qualified IDR item or service, or the complexity or acuity of furnishing the qualified IDR item or service to the participant or beneficiary;
- the teaching status, case mix, and scope of services of the facility that furnished the qualified IDR item or service, if applicable;
- a demonstration of good faith efforts or lack thereof made by the provider or facility or the plan or issuer to enter into network agreements with each other and, if applicable, contracted rates between the provider or facility, as applicable; and
- information provided by a party, either in response to a request by the certified IDR entity or on their own, that does not include information provided to the certified IDR entity as part of the initial submission.
The regulations further provide that the certified IDR entity should evaluate whether the information is credible and relates to the offer submitted by either party for the payment amount for the item or service that is the subject of the payment dispute. If a statement is not credible or does not relate to either party’s offer for the payment amount, or it is otherwise taken into account (i.e., because no item can be double counted), it must not be considered. The regulations contain a series of examples illustrating the application of these rules. The rules for air ambulance services are generally the same, although different factors, which are reserved in these final regulations, would be taken into account.
The certified IDR entity’s written decision must include an explanation of their determination, including what information the certified IDR entity determined demonstrated that the selected out of network rate best represents the value of the qualified IDR item or service, including the weight given to the QPA and the other factors listed above. If the certified IDR entity relies on information other than the QPA in selecting an offer, the written decision must include an explanation of why the certified IDR entity concluded that information was not included in the QPA.
While the No Surprise Act regulations are generally effective January 1, 2022, these modifications to the regulations will not be in effect until six months after their publication in the Federal Register.
While these changes were “no surprise,” given the court decisions and the April directive by the Agencies, plans and issuers should be aware of the increased transparency that will be required in the form of required downcoding disclosures and the reduced emphasis on QPAs in the IDR process going forward.