August 22, 2022

Highly Anticipated Third Final Rule on Surprise Billing Released

Holland & Knight Alert
Suzanne Michelle Joy

Highlights

  • The U.S. Departments of Health and Human Services (HHS), Labor and the Treasury (the Departments) have issued a highly anticipated third final rule implementing the No Surprises Act (NSA).
  • Among the notable provisions are: 1) the Qualifying Payment Amount (QPA) will no longer be the "presumptive" factor toward final payment determinations, 2) additional criteria should not be "double counted" if accounted for within QPA calculations, and 3) plans must submit additional information in cases where they "downcode" a claim.
  • The rule goes into effect 60 days after being published in the Federal Register and is generally effective for plan years on or after Jan. 1, 2022.

The U.S. Departments of Health and Human Services (HHS), Labor and the Treasury (the Departments) have issued a highly anticipated third final rule implementing the No Surprises Act (NSA). The rule, issued on Aug. 19, 2022, goes into effect 60 days after being published in the Federal Register and is generally effective for plan years on or after Jan. 1, 2022.

Notable provisions include:

  • The Qualifying Payment Amount (QPA) will no longer be the "presumptive" factor toward final payment determinations.
  • Additional criteria should not be "double counted" if accounted for within QPA calculations and may not impact the final payment amount if it does not impact the value of that particular service, even if the information is determined to be valid.
  • Plans will be required to submit additional information in cases where they "downcode" a claim.

For a refresher on the previous two interim final rules (IFRs), see Holland & Knight's previous alerts:

Additional information can be found in these resources:

Qualifying Payment Amount (QPA) No Longer the "Presumptive" Factor in Payment Determinations

The final rule states that the QPA (i.e., the median payer contracted rate for a particular item or service in a particular region) will no longer be the presumptive amount. Moving forward, certified independent dispute resolution (IDR) entities "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." This clarification follows a federal court's ruling siding with a medical association's argument that the agency's original interpretation of a "presumptive" QPA stretched beyond the legal confines of the original statute that vacated relevant provisions of previously finalized IFRs.

Consideration of Additional Criteria

The final rule directs IDR entities not to "double count" criteria that are already accounted for within the QPA or by information already submitted by either party. The Departments specifically mention that patient acuity and complexity of service provided may "in many cases" already be reflected in the QPA by virtue of being accounted for in the service codes and modifiers themselves, while acknowledging that there may be exceptions where the complexity or intensity goes beyond what is customarily reflected in the codes. The Departments further note that even if information is deemed credible, it may not always affect the value of the final payment determination for that particular service. For example, in cases where level of training and experience of the provider is not necessary to provide the service, nor does it make an impact on the quality of care provided, it may not be relevant to the final payment amount. The Departments also reiterate that final payment determinations should center on the particular items or services based and the facts and circumstances of the dispute, rather than examining a plan's QPA methodology. However, the Departments will conduct audits of issuers' QPA calculation methodologies.

Additional Information Required to Be Disclosed by Plans and Use of Proprietary Portals

This rule requires payers and issuers to provide additional information to providers and facilities when they have "downcoded" a claim, defined as altering the service code or a modifier to lower the QPA to an amount less than that billed by the provider or facility. If this occurs, in addition to the information already required with an initial payment or notice of denial of payment, the plan or issuer must also provide a statement that includes that the service code or modifier billed by the provider or facility was downcoded, an explanation of why it was downcoded (including a description of which service codes and/or modifiers were altered, added or removed), and what the QPA would have been had the service code or modifier not been downcoded. This information must automatically accompany the QPA without having to be separately requested by the provider or facility. The Departments note that they are continuing to consider whether additional informational disclosures related to QPA methodologies should be required.

This rule clarifies that plans or issuers cannot force providers to use proprietary portals or web-based systems and may not deny receipt of a notice of initiation of an open negotiation period on that basis. The rule also clarifies that if a provider or facility sends the standard notice of initiation of open negotiation to the email address identified by the plan or issuer in the notice of denial of payment or initial payment, that transmission would satisfy the requirement to provide notice to the opposing party.

Requiring Certified IDR Entities to Provide Written Explanations for All Final Payment Determinations

Moving forward, in addition to previously finalized criteria, certified IDR entities will also be required to submit a written statement detailing their reasons for a particular determination of an out-of-network rate in all cases. Previously, they were only required to do so when not choosing the QPA. This information must be submitted to HHS, as well as both involved parties.

Prohibited Factors

The Departments reiterate that prohibited factors such as usual and customary charges, the amount that would have been billed had balance billing provisions not applied, and payment rates for public payors should not apply to final payment amount determinations. The rule reiterates that certified IDR entities are expected to conduct a thorough review of all information submitted to ensure that prohibited factors are not included and may ask the disputing parties for confirmation that information submitted does not include any of these prohibited factors.

Provisions Not Included Within Scope of Rule

The Departments note that the rule is "purposefully narrow in scope" and is intended to address "only certain issues critical to the implementation and effective operation of the Federal IDR process." 


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.


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