August 24, 2022

Special Edition: The Wait is Over—The No Surprises Act Final Reg is Out!

At long last, the No Surprises Act final regulation has been released! ACEP’s comprehensive summary of the reg can be found here, but I want to highlight some of the major policies and their implications on you as emergency physicians and on other providers (note: I use the term “provider” in the statutorily defined sense, and therefore it could pertain to either the billing physician, group, or facility).

Many people reading the reg will immediately focus on the independent dispute resolution (IDR) process and the ultimate position the U.S. Departments of Health and Human Services, Labor, and Treasury (the Departments) took regarding the flawed qualifying payment amount (QPA) policy. I focused on that too, obviously, but another important overall takeaway is that the Departments did in fact actively try to address at least some of the issues that we’ve brought up in the past regarding health plan behavior and health plans’ adherence (or lack thereof) to the regulatory and statutory requirements of the No Surprises Act.  In other words, the Departments did listen to us in some cases, called out some of the egregious health plan behavior, and enacted policies that we specifically recommended. While we still have a long way to go to ensure that the No Surprises Act is implemented fairly and that the dispute resolution process is not skewed against providers, our advocacy is paying off in many respects!

With that as an introduction, let’s dig in! First, I’ll start with a positive policy. The final rule addresses an unfortunately common practice by insurers for emergency care, downcoding. Downcoding occurs when the health plan modifies the level of service that a provider bills to a lower one (i.e., you bill an ED E/M level 5 service, but the health plan disagrees that the treatment provided was that complex and only reimburses you for an ED E/M level 3 service) or removes a modifier. While downcoding, much to our disproval, is allowable under the Departments’ rules, ACEP and the Emergency Department Practice Management Association (EDPMA) had strongly argued for requiring more transparency by health plans when they downcode to help with negotiations during the open negotiations and federal IDR processes. In the earlier regulations, the Departments initially only required health plans to provide the QPA for the already-downcoded service, not what the QPA would have been for the originally billed service. ACEP had specifically requested that we receive the QPA for both the downcoded service level and the billed service, arguing that without this information, providers would be at a significant disadvantage during the federal IDR process as they try to make the case that they should receive a higher payment amount for that service. The Departments agreed with ACEP, and now for downcoded services, they are requiring that health plans provide the following information at the time of the initial payment or notice of denial:

  • A statement that the service/ modifier by the provider was downcoded;
  • An explanation of why the claim was downcoded; and
  • The amount that would have been the QPA had the service not been downcoded.

Again, this is exactly what ACEP asked for, and its inclusion in the final reg is a testament to the overall effectiveness of our advocacy. Possibly even more significant, the Departments added a formal definition of downcoding, defining the term appropriately to mean “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.” Having the practice of downcoding defined and codified in federal regulation is a really big deal that we should be able to use to support our future advocacy efforts on this damaging practice.

Now that we’ve discussed a big win for emergency medicine, we can move to a more controversial policy. As many of you know, we had been waiting a long time for a final resolution to the “flawed QPA policy.” Under this flawed policy, which was initially established in the second interim final reg implementing the No Surprises Act, the Departments had directed independent arbiters to consider the QPA (i.e., the median contracted rate for services) as the presumptive payment amount for out-of-network services in the federal IDR process. ACEP and many other stakeholders argued that this policy significantly tilted the scales of the negotiations process in favor of health plans, who are the ones that actually calculate the QPA. The policy also went directly against Congressional intent. In the law, Congress requires the arbiters to consider the QPA and additional factors and does not specifically call out one factor as the primary factor that the arbiter should weigh more heavily than others when rendering its decision.

There are numerous active lawsuits against this policy, one of which was put forward jointly by ACEP, the American Society of Anesthesiologists, and the American College of Radiology. Two of these lawsuits, one brought by the Texas Medical Association and the other by LifeNet, Inc., have already been ruled upon, with judges in both cases ordering that this flawed policy be invalidated nationwide both for health care providers and providers of air ambulance services respectively. The Departments issued guidance a few months ago in April complying with the Texas Medical Association court order and had instructed the independent arbiters not to weigh the QPA more heavily than the other factors.

While this guidance has been out there for a while now, we were expecting that this final reg would settle this issue once and for all. Would the reg codify the guidance or revert back to the original, flawed policy? If the latter, ACEP has previously signaled that our lawsuit, which has been placed on hold pending the release of the final reg, would likely kick back into full gear.

So, what did the Departments decide to do? Well, they decided to make things a bit more complicated (did you expect anything less)! The Departments state in the new reg that they are complying with the court orders and are instructing the independent arbiters to weigh both the QPA and the additional factors when deciding whether to select the offer of the health plan or the offer of the provider. Arbiters also no longer have to choose the offer closest to the QPA (a major win for us!) nor assume that the QPA is the presumptive payment amount. All in all, the arbiter must consider the QPA and all other additional information they receive that they deem credible and should choose the offer that best reflects the value of the service. This additional information includes factors such as patient acuity and complexity; training and experience of the provider; market share of provider/health plan; teaching status and case mix of facility; and previous experience attempting to enter into contractual agreements.

However, the Departments throw in a curve ball, and create additional policies that they claim will “promote consistency and predictability in the process, thereby lowering administrative costs and encouraging consistency in appropriate payments for out-of-network services.” Specifically, the Departments still believe that the QPA, if calculated correctly (big if!), is a credible payment amount and must always be considered since it a quantitative figure, listed first in the statute, and reflects the typical amount that health plans pay in-network providers for the service. And the Departments claim that the QPA will often represent the appropriate out-of-network payment rate since in many cases it already encompasses the additional factors that the No Surprises Act requires the arbiter to consider.

Let’s break this last point down. The Departments are stating here that the QPA in many (but not all) cases already accounts for certain factors, such as patient acuity and complexity. For example, in the Department’s view, the QPA for an emergency department (ED) evaluation and management (E/M) level 5 service (CPT 99285) may already account for the patient’s high acuity and complexity and therefore is an accurate payment amount. To avoid “double counting” these factors which are already reflected in the QPA, the Departments instruct the independent arbiters NOT to consider these factors unless the arbiters believe that the factors are both “credible” AND not accounted for yet in the QPA.

The Departments provide five examples of when the independent arbiter should consider the additional factors separately and when they should discount them since they are already accounted for in the QPA. Even with these examples, it is unclear exactly how providers will convince the independent arbiter to consider the additional factors beyond the QPA. If the health plan simply states that the additional factors are already incorporated into the QPA, the burden is on the provider to prove why this isn’t the case. The Departments are also now requiring the independent arbiters to explain in their written decisions for each case what weight they gave to the QPA and other factors—and, if they did consider other factors, why they thought that this information was already not reflected in the QPA. Thus, the default option for independent arbiters appears to be to rule that at least some of the additional factors are already baked into the QPA.

All in all, the Departments still seem to be heavily favoring the QPA in the name of “establishing a fair, cost-effective, and reasonable IDR payment determination process that does not have an inflationary impact on health care costs.” However, as you know from previous Regs & Eggs blogs posts, the QPA is in fact already an artificially low number that does not reflect actual market rates. In the first interim final reg implementing the No Surprises Act, the Departments established a QPA calculation methodology that would yield low QPAs specifically because the QPA is used to establish the cost-sharing amount that patients are responsible to pay. While ACEP supports keeping costs down for patients, we argued that because this was the clear goal of the QPA methodology, the Departments did not ensure that the QPA would be an accurate representation of prevailing market rates for specific clinical services.

We also have concerns about the accuracy of the QPA calculations. I personally have heard many stories from our members about them receiving what they think are extremely low QPAs that “don’t pass the laugh test.” The Departments make it clear that it is not the responsibility of providers or the independent arbiter to question whether the QPA was calculated correctly. Rather, if a provider believes that the QPA was calculated incorrectly, they can submit a complaint and have regulators investigate it. The Departments also note that they are committed to conducting audits on health plan QPA calculations. Thus, the accuracy of the QPA depends on the regulator’s ability to oversee these calculations and actually enforce the calculation requirements. In the meantime, we have to just assume in the IDR process that the QPAs are valid and calculated correctly.

Overall, the double-counting portion of the new rule appears constructed to just barely comply with the letter of the court’s determination while trying to preserve as much QPA supremacy as possible.

Before moving on to other policies, I would note that the Departments’ assertion that the additional factors are often already included within the QPA appears to conflict with the way the No Surprises Act is constructed. If Congress thought that the factors were already incorporated into the QPA, why does the law list them separately and ask the independent arbiter to consider both the QPA and those factors? The law also does not in any way require the independent arbiter to consider whether the additional factors are already included in the QPA and omit them from consideration if they did think that they are already embedded in the QPA.

Now let’s move on! While this policy is definitely problematic, as I mentioned previously, there are some other policies in the reg and in supporting documents that the Departments released with it that actually are beneficial. I already discussed the downcoding policy, which again, was something that ACEP had specifically asked for! Another positive policy relates to the open negotiations process—the 30-business day period of negotiations that must occur before the federal IDR process can be triggered. We have been hearing of many cases where health plans are forcing providers to use proprietary web portals to initiate this process and are not accepting the standard notice of initiation of open negotiation that providers are sending to the health plan. Under current regulations, all providers need to do to start the open negotiations process is send the standard notice to health plans and make a good faith effort that they receive it. Sending the notice starts the 30-business day clock for the open negotiations period. By not accepting the notice and forcing providers to use an often difficult to access web-based portal to initiate the period, the health plans have tried to delay the open negotiations process from starting. And, in some cases, even claimed that it never began in the first place. Remember that for insurers, cash flow is king – they can save millions of dollars by delaying payments to providers even just by a single day when done across the board.  The Departments reaffirm in this final reg that providers just need to send the notice to start the open negotiations clock. While health plans are allowed to set up proprietary web portals, they cannot require providers to use them. This is a major acknowledgment from the Departments of insurers once again trying to game the system and will hopefully help put a stop to the practice-- which is really now being used by health plans to try to slow down the dispute resolution process.

I noted earlier that the Departments released supplementary information along with the reg. They issued a set of 23 frequently asked questions (FAQs), along with a status update of the federal IDR process.

There are two FAQs that I want to touch upon:

  • FAQ # 14 discusses “ghost rates” in insurer QPA calculations, which are leading to artificially low QPAs. Under this practice, which was illuminated by a recent Avalere study that ACEP, the American College of Radiology, and the American Society of Anesthesiology commissioned jointly, health plans are including rates for certain specialty services in the contracts of other unrelated specialists who rarely or never bill for the service. Since these specialists never bill for the service, often they do not negotiate the rate in their contracts and simply accept the low rate offered by the insurer. The Departments are now requiring plans to calculate a separate median contracted rate for each provider specialty if the contracted rates for a service varies based on the specialty. For example, if the median contracted rates for emergency medicine services are clustered around a certain amount for emergency physician contracts, but at another, “materially different” rate for all other specialists, the insurer would be required to calculate separate QPAs. The Departments will give health plans 90 days from August 19, 2022 (November 17, 2022) to start calculating QPAs in this way. While overall this is an extremely positive development, I am a little concerned about the use of the term “materially different.” The Departments do not define the term in the FAQs, but rather state that it “depends on all the relevant facts and circumstances.” Therefore, it is possible for health plans to take advantage on this ambiguity by simply claiming that different contracted rates among specialists are not materially different.
  • FAQ # 20 states that if a health plan fails to hand over all the information that they are required to provide along with the initial payment or notice of denial, a provider can still initiate the open negotiations period within 30 business days of receiving the initial payment or notice of denial. The federal IDR process can be initiated 30 business days after open negotiation period begins. In other words, the timelines for both the open negotiation and federal IDR processes remain intact. Providers do have the option of requesting an extension to initiate the Federal IDR process by emailing a request for extension due to extenuating circumstances to Providers can also submit a formal complaint. The Departments note that if either the health plan or provider do not provide required information, they may receive an adversarial decision from the independent arbiter. This is also a helpful clarification, as many members have been concerned about how the lack of information from health plans affects the overall timeline of the dispute resolution process.

The federal IDR status update that was also released acknowledges that there is a huge backlog of unresolved disputes. Over 46,000 disputes were initiated through the federal IDR portal between April 15th and August 11th, which is “substantially more than the Departments initially estimated would be submitted for a full year.” Over 1,200 disputes have been resolved, and 21,000 (nearly half) have been challenged by the non-initiating party as not eligible for the federal IDR process. The independent arbiters have already found over 7,000 disputes ineligible for the federal IDR process, and, conversely, have found that a number of the challenged claims were in fact eligible.

The primary cause of delays in the processing of disputes is the complexity of determining whether disputes are eligible for the federal IDR process. According to the Departments, “eligibility for the federal IDR process rests on a number of factors, such as state/federal jurisdiction, correct batching and bundling, compliance with applicable time periods, and completion of open negotiations.

The Departments state that the process is improved when all parties provide all the required information. For this reason, the Departments published a checklist for insurance plans including the information that they are required to disclose with the initial payment or notice of denial of payment. The Departments are continuing to publish guidance to help disputing parties and independent arbiters resolve disputes expeditiously, including the most recent set of guidance for independent arbiters. The Departments have worked to provide guidance, trainings, webinars, and other resources to stakeholders to help them understand the federal IDR process and will continue to publish additional guidance to help independent arbiters and disputing parties resolve disputes expeditiously.

Well, that’s a summary of the reg and the supporting documents! The policies in the reg go into effect 60 days after its publication in the Federal Register (which should be in the next few days, so that puts us at approximately the end of October for the policies to start). Lastly, it is important to note that the reg only focuses on a couple of issues and does not touch upon many of the policies that were included in the previous interim final regs (like the calculation of the QPA, batching in the federal IDR process, etc.). The Departments state that they intend to finalize the remaining provisions of the interim final regs after further consideration of the public comments they have received.

I personally think this is enough for now, as these finalized policies are already giving stakeholders like ACEP a lot to chew on!

Until next week, this is Jeffrey saying, enjoying reading regs with your eggs!

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