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The No Surprises Act (“NSA”) became effective January 1, 2022, and has been the subject of lawsuits and criticisms since its inception. The goals of the No Surprises Act are to shield patients from surprise medical bills, provide to uninsured and self-pay patients good faith estimates of charges, and create a process to resolve payment disputes over surprise bills, which arise most typically in emergency care settings. We have written about  Part I and Part II of the NSA previously. This update concerns the Independent Dispute Resolution (“IDR”) procedure created by Part II but applicable to claims covered by Part I. The Centers for Medicare & Medicaid Services (“CMS”) finally opened the Portal for providers to submit disputes to the IDR process following some updated guidance regarding the arbitration process itself. 

The federal IDR process that the No Surprises Act creates is meant to resolve disputes between an out-of-network provider and a payor over what the out-of-network payment should be. Because the NSA limits providers to collecting the in-network cost-sharing amount from the patient, the remaining reimbursement amount must be paid by the insurance company. When state law does not set the out-of-network reimbursement rate and the provider does not agree on an amount established by the payor, the new federal IDR process will be used to determine the payment owed by the health plan to the provider. 

The IDR process is a “baseball” style arbitration: the arbiter must choose whichever side’s offer is closest to the amount the arbiter determines to be correct. Providers disfavor the IDR procedure outright because, in their eyes, it tips the scale in favor of payers. Specifically, providers took issue with the Part II guidance that requires arbiters to assume that the qualifying payment amount (“QPA”), the median in-network rate set by health insurers, is the appropriate out-of-network rate barring any meaningfully significant evidence from a provider to indicate otherwise. 

New CMS Guidance 

On February 23, 2022, the federal District Court in the Eastern District of Texas struck down key provisions of regulations implementing the NSA in Texas Medical Ass’n v. U.S. Department of Health and Human Services. For more information about this ruling, check out our previous Blog Post. The Texas district court vacated the portion of the IDR process requiring independent dispute arbiters to begin with the assumption that the QPA rate is the appropriate out-of-network amount to pay for the items or services in question. This ruling motivated CMS to publish updated Guidance in April 2022 to clarify their IDR process. 

The Guidance requires IDR arbiters to consider other information in addition to the QPA, or median in-network, rates for billed items or services. In addition to the QPA rate, providers can submit other items for the arbiter to consider, including:

• the level of training, experience, and quality and outcomes measurements of providers or facilities;
• the regional market share held by the provider or facility;
• the acuity of the patient, member or enrollee receiving the service or the complexity of the service;
• the teaching status, case mix and scope of services the facility or provider offers; and
• demonstration of good faith efforts, or lack of efforts, to enter into network contact agreements with one another.

Arbiters are directed to consider only information that they consider credible. However, the arbiters are not allowed to consider the usual and customary charges for the services, billed charges, or the amounts paid by government programs for such services during the IDR process. They also cannot decide the actual amount or impose a specific number on the parties. The only decision the arbiter can make is which offer is closest to the correct amount. The new guidance also clarifies that arbiters are not responsible for deciding whether in-network median contracted rates are correct. That responsibility, according to CMS, is outside their role to effectively aid in resolving the providers-payers dispute with IDR processes. 

Because CMS had to delay the opening of the IDR Portal, they have specified that certain flexibilities will be temporarily allowed. CMS warns providers that, due to the large volume of IDR claims that might be filed not that the Portal is open, CMS will:

• Grant requests for extensions submitted by the parties or certified IDR entities, as appropriate.
• Monitor the volume and provide additional guidance, including updates to the timeframes under the Federal IDR process, as necessary. Updates will be announced on www.cms.gov/nosurprises, and parties with disputes in process will be notified directly in advance of an update taking effect. 

Note that providers must undertake a thirty-day open negotiation period with the payor prior to submitting a claim to IDR. However, if you are a provider that has completed the thirty-day negotiation period and have been waiting to submit a claim to the IDR portal, now is the time to start that process. Typically, providers must submit an IDR claim within four days of the end of the negotiation period, but for now, the Departments will permit submission of a notice of initiation of the IDR process within fifteen business days following the opening of the IDR portal. Be sure to include information pertaining to the topics that IDR arbiters can now use in their review, summarized above, as well as any other relevant information that might help the arbiter understand what the appropriate rate should be. 

If you have any questions about the No Surprises Act and how it applies to your practice, or would like help working through the IDR process,  please contact BMD Healthcare and Hospital Law Members Ashley Watson (abwatson@bmdllc.com) or Daphne Kackloudis (dlkackloudis@bmdllc.com).