In July 2021, the U.S. Departments of Health and Human Services, Labor, and the Treasury (the Departments) released an interim final rule, “Requirements Related to Surprise Billing, Part I” (Part I IFR). In October 2021, the Departments released a second interim final rule, “Requirements Related to Surprise Billing, Part II” (Part II IFR).
On August 26, 2022, a Final Rule regarding “Requirements Related to Surprise Billing” was published in the Federal Register. The rulemaking is purposefully narrow in scope, and addresses only two topics: (1) information that a plan or issuer must share about the qualifying payment amount (QPA) when a service is down-coded; and (2) the factors that a certified IDR entity will consider in making a payment determination in light of the decision issued in Texas Medical Association, et al., Case No. 6:21-cv-425 (E.D. Tex) (February 23, 2022). Additional provisions of the interim final rules will be addressed in future rulemaking.
Information to be shared about the QPA.
In situations where a plan or issuer has downcoded a billed claim and asserts that the QPA that corresponds with the downcoded claim is the correct total payment amount, the provider, facility, or provider of air ambulance services must be made aware that the item or service has been downcoded and provided information regarding both the QPA for the downcoded claim and the amount that would have been the QPA had the service code or modifier not been downcoded. The Departments are of the view that this information may be critical to the provider, facility, or provider of air ambulance services in developing an offer or submitting information if it believes the QPA calculated by the plan or issuer does not best represent the value of the item or service provided.
The Final Rule contains the following example:
[I]n a dispute that concerns a qualified IDR service for which the plan or issuer downcoded the billed service code, the provider, facility, or provider of air ambulance services may present information showing that the billed service code was more appropriate than the downcoded service code. In such an instance, the certified IDR entity could determine that the QPA based on the downcoded service code does not sufficiently encompass the complexity of furnishing the qualified IDR service because it was based on a service code for a different service than the one furnished.
The Final Rule defines the term “downcode” to mean “the alteration by a plan or issuer of a service code to another service code, or the alternation, 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.”
In addition the information already required to be provided with an initial payment or denial of payment, the Final Rule requires that a plan or issuer provide a statement that the service code or modifier billed by the provider, facility, or provider of air ambulance services 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 altered, added or removed, if any; and the amount that would have been the QPA had the service code or modifier not been downcoded.
Payment Determinations Under the Federal IDR Process
The Part II IFR provided that, not later than 30 business days after the selection of the certified IDR entity, the certified IDR entity must select one of the offers submitted by the plan or issuer or the provider, facility, or provider of air ambulance services as the out-of-network rate for the qualified IDR item or service. In determining which offer to select, prior to the decision in Texas Medical Association, the certified IDR entity was instructed to first look to the QPA, and then to additional information requested by the certified IDR entity from the parties and other additional credible information submitted by the parties. The certified IDR entity was instructed to select the offer closest to the QPA, unless the certified IDR entity determined that the additional information requested by the certified IDR entity and the credible information submitted demonstrated that the QPA was materially different from the appropriate out-of-network rate, or if the offers were equally distant from the QPA but in opposing directions. In such situations, the certified IDR entity was instructed to select the offer that best represented the value of the item or service, which could be either party’s offer.
The decision in Texas Medical Association vacated the portions of the Part II IFR that created a rebuttable presumption in favor of the QPA. Under the Final Rule, the certified IDR entity is not required to select the offer closest to the QPA. Rather, the certified IDR entity should select the offer that best represents the value of the item or service under dispute after considering the QPA and all permissible information submitted by the parties. For non-air ambulance items and services, additional information to be considered (in addition to the QPA) includes:
- 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 item or service was provided;
- The acuity of the individual receiving the item or service, or the complexity of furnishing the item or service to the individual;
- The teaching status, case mix, and scope of services of the facility that furnished the item or service; and
- The 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), the contracted rates between the provider or facility and the plan or issuer as applicable, during the previous 4 plan years.
- Other information provided in response to a request from the certified IDR entity
Although the Final Rule walks back the presumption that the QPA is the correct payment amount, the Departments’ commentary suggests that all information ought not to be granted in equal weight. The Final Rule instructs the certified IDR entity to avoid giving weight to information if it is already accounted for by an of the other information submitted by the parties. The certified IDR entity is instructed to consider whether additional information is already accounted for in the QPA:
[B]ecause the plan or issuer is required to calculate the QPA using median contracted rates for service codes, as well as modifiers (if applicable), and because service codes and modifiers in many cases reflect patient acuity and the complexity of the service provided, these factors will often already be reflected in the QPA.
See p. 52629 et seq. (providing examples).
The Certified IDR Entity’s Written Decision
The Part II IFR required that a certified IDR entity explain its payment determination and underlying rationale in a written decision submitted to the parties and the Departments in a form and manner specified by the Departments. The Part II IFR also required the certified IDR entity to include in its written decision and explanation of the credible information that the certified IDR entity found to demonstrate that the QPA was materially differing from the appropriate out-of-network rate, if the certified IDR entity did not choose the offer closest to the QPA.
As a result of the Texas Medical Association decision, the Final Rule expands the written decision requirements to provide that a written decision must now include an explanation for its decision in all cases, and not only when the offer furthest from the QPA is selected. Under separate guidance, the Departments will specify the form and manner for all written decisions. Note that the Final Rule also requires that, if the certified IDR entity relies on additional information or circumstances in selecting an offer, its written decision must include an explanation of why the certified IDR entity concluded that this information was not already reflected in the QPA.
For more information on the issues related to this article, please contact Jessica L. Gustafson, Esq. at jgustafson@thehlp.com, Abby Pendleton, Esq. at apendleton@thehlp.com, or the Health Law Partners at (248) 996-8510 or (212) 734-0128 or by email at partners@thehlp.com.