December 9, 2021

ACEP and EDPMA Officially Respond to the Extremely Flawed Second Interim Final Regulation Implementing the No Surprises Act

Earlier this week, ACEP and the Emergency Department Practice Management Association (EDPMA) submitted an official response to the second interim final regulation implementing the No Surprises Act. As you all probably recall from my numerous posts about this extremely flawed reg, it includes a disastrous policy to make the qualifying payment amount (the QPA—i.e., the median in-network amount) as the primary factor that the arbiter can consider during the independent dispute resolution (IDR) process when determining the appropriate payment amount for out-of-network services. Although the arbiter still will consider the other factors listed in the No Surprises Act, a party in the dispute must provide “credible information” to the arbiter related to those factors that clearly demonstrates that the QPA is “materially different” from the appropriate out-of-network rate. Otherwise, the arbiter must select the offer closest to the QPA.

While this policy has definitely garnered the most attention, it is not the only policy in the reg—and if you need a refresher of what’s in it, please click here for ACEP’s summary.

Our comprehensive response follows-up on the letter that we submitted on August 10, 2021 specifically related to the IDR process, as well on our initial response letter to the reg sent on November 11.

Overall, our letter focuses on four key areas:

ACEP and EDPMA’s Significant Objection to Flawed IDR Process

ACEP and EDPMA spend a significant portion of the letter highlighting our concerns with the IDR policy. Some of our concerns about this policy may seem familiar, as I laid them in detail in a previous Regs & Eggs post.

  • Inconsistent with Congressional Intent: First, we go into depth in our letter explaining why and how the approach the Departments of Health and Human Services, Labor, and Treasury (“the Departments”) take in the reg is inconsistent with the legislation. To prove this, we go over the legislative history of the No Surprises Act, which demonstrates that the specific language in the statute—which was a considered a compromise between the various Committees of jurisdiction—clearly states that the arbiter is required to consider equally a list of factors during the IDR process.
  • Consequences of the Policy: We then talk about the serious ramifications of the policy. We strongly believe that requiring arbiters to over-prioritize the QPA undermines the entire dispute resolution process and tilts in the scale significantly in favor of health plans. The policy also threatens the viability of physician practices, particularly in small or rural communities, which could lead to increased provider consolidation, and even more pressure on hospitals in these essential localities. Further, health plans will use the policy to drive in-network rates down to the artificially low QPA amount and force many providers out-of-network. This is already happening! Just since the publication of the reg, numerous physician practices have already received unilaterally-initiated termination notices from insurance plans for long-standing in-network agreements, including agreements that currently protect patients in rural and underserved communities. Many of them even cite implementation of the new law as the reason for the changes. This is precisely the consequence that we, along with many other provider organizations, cautioned the Departments to avoid.
  • Biased Justification Provided by the Departments: We are particularly disappointed with the justification provided by the Departments for making the QPA the presumptive payment amount in the IDR process. We strongly believe that the specific arguments that the Departments use demonstrate a bias against health care providers and, more specifically, display a fundamental misunderstanding of how the Emergency Medical Treatment and Labor Act (EMTALA) requirements affect the incentives that health plans and emergency physicians have when negotiating contracts.

Given the numerous flaws and misinterpretations around the policy and the implications these errors hold for the No Surprises Act implementation, we break down the major arguments the Departments include in the reg and point out some of the greatest areas of concern.

  • We strongly disagree with the Department’s assertion that the QPA should be considered primary since it represents a “reasonable market-based payment for relevant items and services.” We lay out multiple reasons why the QPA is in fact NOT an accurate representation of prevailing market rates for specific clinical services, reiterating many of the comments we made in our response to the first interim final reg the Departments released which focused on the QPA calculation.
  • We dispute the assertion that just because the QPA is listed first in a list of factors the arbiters must consider, that it should be the primary factor. This is nonsensical, as the statute does not in any way state that the QPA should be more important than the additional factors that are listed, let alone that the QPA should be a rate of payment that requires significant effort and disproportionate weight of evidence from the other factors or other evidence to refute.
  • We strongly question the Department’s assertion that the QPA is a transparent amount that both parties can fully understand. While it is true that health plans are required to provide information about the QPA to providers, that information does NOT include many details about the specific components of the QPA that can help providers understand how it was calculated. In all, the QPA is NOT a transparent amount, as the individual components of the QPA that health plans use in their calculations do not need to be disclosed to health care providers. Another example of how the lack of transparency regarding the QPA can put providers at a significant disadvantage during the IDR process is with respect to downcoded claims. The discrepancy in information about the QPA will make it extremely difficult for providers to successfully dispute downcoded claims. Due to the inherent advantage that health plans have in the IDR process for downcoded claims, health plans will now have even more of an incentive to downcode claims.
  • Lastly, we point out the inappropriate tone and bias that the Departments use throughout the reg—particularly their implication that providers are solely responsible for surprise medical bills and that the flawed QPA policy is needed to avoid higher costs that health plans could pass to individuals in the form of higher premiums. Nowhere in the reg do the Departments discuss the role that health plans play in causing surprise medical bills—even though, as you all know, there are two parties in every contract negotiation! With respect to the Departments statements around premiums, they imply that health plans would lower premiums if costs decreased. That assertion is laughable, as health plans would never decide to decrease premiums if they were able to cut costs. They have proven over and over again that they would simply absorb those savings as profits.
  • Overall Request: We call on the Departments to immediately revise the reg and issue immediate guidance to give arbiters the discretion to consider all the allowable and relevant information submitted by the parties to determine a fair out-of-network payment to physicians, without creating a presumption that directs IDR entities to consider the offer closest to the QPA as the appropriate payment amount. We note that our request for the Departments to modify the reg would NOT delay the implementation of the critical patient protections embedded in the No Surprises Act.

Missed Statutory Deadlines and Lack of Critical Information Needed for Implementation

ACEP and EDPMA point out the major areas where the Departments have either not issued any guidance or have not provided enough information for providers to be able to fully understand and operationalize the requirements. We specifically highlight:

  • The mission-critical need to provide more clarity around how providers will know whether a state or the federal law will apply to a specific claim; and
  • Our longstanding request that health plans provide much more information about the QPA to providers, including the QPA for the Current Procedural Terminology (CPT®) code(s) that was submitted by the provider on the claim if the health plans modified the service or code(s) present on the original claim.

With respect to the areas where the Departments have not yet provided any guidance or requirements, we note that they disproportionately focus on health plans—signaling that the Departments are showing a significant bias in terms of trying to shield health plans from taking on new requirements but have made no effort to reduce the administrative burden or the significant impact that the No Surprises Act requirements will have on providers and facilities.

Incongruent Timelines for Batched Services

The No Surprises Act allows providers to batch claims together for the arbiter to consider during the IDR process. The goal of batching is to reduce administrative burden and the overall costs of using the IDR process to resolve disputes. However, while ACEP and EDPMA support the concept of batching, we believe that the some of the timelines and processes outlined in the statute and reg are confusing and need to be clarified. We provide an example of how the established timeline for allowing claims to be batched can unintentionally lead to some claims being separated from those that the statute contemplates being eligible for batching together—thus forcing an unintended over-reliance on the IDR process and significantly threatening the viability of small provider practices due to delayed cash flow.

Good Faith Estimates (GFE) for Uninsured and Self-Pay Individuals:

The reg requires providers to give uninsured or self-pay individuals good faith estimates (GFE) for scheduled services and “upon request.” ACEP and EDPMA fully support protections for the uninsured and efforts to increase transparency in the pricing and costs of health care services. However, while the GFE provisions seem only to apply to scheduled care—and not unscheduled emergency care—some of the language in the reg particularly the fact that patients can trigger the GFE requirements “upon request.” This could be construed by some as, in fact, applying to unscheduled care in the emergency department.

We argue in our letter that unlike scheduled medical care for a discrete clinical condition or well-described service, an emergency provider cannot know what medical condition a patient has, nor what will be required to diagnose or stabilize the condition. Furthermore, under EMTALA, patients are not allowed to receive information about costs prior to being stabilized. Doing so could potentially cause the patient to delay critical care. Therefore, we would like the Departments to unequivocally state that the “upon request” GFE requirement does not apply to ED services due to the unique requirements of EMTALA and the essential characteristics of acute, unscheduled care.

Those are the highlights of the letter! Unfortunately, it is unclear when the Departments plan to respond to the comments—and it is even more unclear if they would change any policies as a result of the comments. Sadly, it appears that litigation (rather than well-founded comments made during the regulatory process!) is the only way in which the Departments would ever (be forced to) change their minds.

Now we must switch gears to focusing on the implementation of the law and answering any operational questions you all may have as the requirements go into effect in less than a month on January 1, 2022. There are still a ton of unanswered operational questions! ACEP and EDPMA will be collecting these questions and passing them on the Departments. We hope the Departments respond to these issues in a timely manner and release additional technical and operational guidance as needed.

Until next week, this is Jeffrey saying, enjoy reading regs with your eggs.

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