A recent court decision has thrown out some of the rules that applied to the resolution of disputes under the No Surprises Act (NSA). As a result, insurers and health plans may see increases in their payments to out-of-network providers.
Recall that the NSA shields insured patients from so-called surprise (and often large) medical bills when they receive certain emergency or other services from out-of-network providers and air ambulance services. When the NSA applies, patients can’t be balance billed for anything beyond the cost-sharing amount that would be otherwise applicable for in-network providers. The NSA obliges insurers and health plans to negotiate with providers to settle the remainder of the bill. If negotiations fail to yield an agreement, the parties can request that the payment amount be determined through a binding independent dispute resolution (IDR) process conducted by a neutral third party (the IDR entity).
The NSA lists the various factors that an IDR entity must consider in rendering a decision including the training, experience, quality and outcomes measurements of the provider; the market shares of parities; the acuity of the patients and complexity of cases; the teaching status, case mix, and scope of services of the facility; and, most importantly for purposes of this discussion, the qualifying payment amount (QPA).
In a nutshell, the QPA for a given service is the median amount that an insurer or plan pay would for the same service under all of its in-network contracts in the same geographic area.
The Departments of Labor, Health and Human Services and Treasury (the Departments) were charged with crafting regulations detailing how the IDR process was to work. In doing so, they created a rule that required the IDR entity to give the QPA more weight than the other allowable factors in making their awards. The practical effect of this rule was to drive down the average amount of the awards.
Not surprisingly, healthcare providers were unhappy with the rule and sued to have it overturned, arguing that the methodology created by the Departments was not supported by the language of the NSA. The court agreed with the providers and struck down the rule.
In response, the Department wrote a new rule that they believed would address the deficiencies cited by the court in its decision. However, the providers felt that the new rule still gave undue weight to the QPA and again challenged it in court. Once again, they prevailed and on February 6, 2023, the court vacated the portions of the rule that governed how the IDR entities should make payment decisions. The effect of this decision was to leave the IDR entities with no detailed guidance on how to balance the various factors mandated by the NSA in making awards.
In response to this decision, on February 10, 2023, the Departments directed all IDR entities to cease making payment decisions pending further guidance and also directed them to recall any decisions made after February 6, 2023.
In the short term, the consequences of these decisions and the Departments’ response will be further delay in resolving NSA disputes. The system was already backlogged and the Departments have given no indication of how long it will be before the IDR process can restart.
In the long term, it is likely that plans will be required to pay more under any new rules than under either of the older ones. Sponsors of self-insured plans may wish to confer their TPAs and other service providers to help assess the impact of these developments on budgets and plan design.
The information and content contained in this blog post are for general informational purposes only, and does not, and is not intended to, constitute legal advice. As always, for specific questions concerning your health and welfare plan, or for help in operating your plan during the current COVID-19 crisis, please consult your own ERISA attorney or professional advisor.