The No Surprises Act (NSA) insulates patients from surprise medical bills from out-of-network providers and facilities (collectively, “providers”) in circumstances where an individual is not reasonably able to chose to receive services from an in-network provider. Circumstances may include:
- emergency medical treatment from out-of-network providers;
- certain treatment from out-of-network providers of ancillary services working at in network facilities; and
- air ambulance services furnished by out-of-network providers.
The NSA establishes the obligation of plans and health insurance companies (collectively, “plans”) to pay for such services according one of three formulas:
- an amount determined by an applicable All-Payer Model Agreement under Social Security Act;
- if there is no such applicable All-Payer Model Agreement, an amount determined by a specified state law;
- if there is no such applicable All-Payer Model Agreement or specified state law, the lesser of the (1) billed charge or the plan’s median contracted rate; or (2) latter referred to as the qualifying payment amount (QPA).
See our reference materials on the NSA for more information.
Regardless of which formula is used, the patient’s liability is limited to applicable plan cost-sharing amounts. Any disagreements between plans and providers over the appropriate payment amounts must be resolved between those parties without involving the patient.
The IDR process must be used for plan years beginning on or after January 1, 2022. It applies to all plans subject to the NSA, and must be used in cases where the All-Payer or specified state law methods do not apply.
The Departments of Health and Human Services, Treasury, and Labor (the Departments) have issued an interim final rule (IFR) outlining the IDR process.
IDR Process: the Parties
- In the event of a disagreement about the amount paid by a Plan, either party may initiate an open negotiation period within 30 business days beginning on the date the provider receives the initial payment or notice of denial of payment.
- The open negotiation period may continue for up to 30 business days.
- The parties may discontinue the negotiation if they agree on an out-of-network rate before the last day of the open negotiation period.
- If the parties cannot agree on an out-of-network rate, they must exhaust the 30-business-day open negotiation period before initiating the IDR process.
- Either party may initiate the IDR process during the 4-business-day period beginning on the 31st business day after the start of the open negotiation period.
- The parties may select a certified IDR entity, or if the parties do not select a certified IDR entity, the Departments will choose.
- Each party must submit to the IDR entity an offer for a payment amount for the item or service in dispute and other information related to the offer as requested by the IDR entity within 10 business days of selection of the IDR entity.
- The parties may also submit additional information for the IDR entity to consider.
- The offer must be expressed as both a dollar amount and the corresponding percentage of the QPA represented by that dollar amount.
IDR Process: Determination
- In making a determination of which payment offer to select, the IDR entity must begin with the presumption that the QPA is the appropriate out-of-network rate for the item or service under consideration.
- The IDR entity must select the offer closest to the QPA unless it determines that credible information submitted by either party clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate.
- The IFR includes a list of factors that the IDR entity may consider as well as a list of factors that it may not take into account.
Factors the IDR entity may consider include whether the:
- provider had a higher level of experience or training that was necessary to properly treat the patient that was not accounted for in the QPA and that made an impact on the treatment that was provided.
- market share held by the Provider or the Plan (including, for self-insured plans, the market share of their third-party administrator (TPA) in instances where the self-insured plan relies on the TPA’s networks) clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate for the qualified IDR item or service.
- credible information about patient acuity or the complexity of furnishing the item or service to the patient clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate for the item or service.
- case mix, teaching status or scope of services of the provider demonstrates that the QPA is materially different from the appropriate out-of-network rate for the item or service.
- credible information about any demonstrations of good faith efforts (or lack thereof) made by the out-of-network provider or the plan to enter into network agreements and, if applicable, contracted rates between the provider and the plan during the previous 4 plan years, clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate for the item or service.
Similar considerations apply in the case of air ambulance providers with the added factor of population density in the area of the pick-up.
The IFR also lists factors that the IDR entity may not consider. These include:
- the amount providers in a geographic area normally charge for a given medical service commonly known as the usual and customary charges.
- the amount that would have been billed to either a plan or patient by a provider if the provider were not subject to a prohibition on balance billing.
- the reimbursement rates that would have been paid by a public payor such Medicare or Medicaid.
IDR Process: Post-Decision
- The IDR must issue a written decision provided to the parties as well as the Departments.
- If the IDR entity does not choose the offer closest to the QPA, the written decision’s rationale must include a detailed explanation of the additional considerations relied upon, whether the information about those considerations submitted by the parties was credible, and the basis upon which the certified IDR entity determined that the credible information demonstrated that the QPA is materially different from the appropriate out-of-network rate.
- The written decision is binding on the parties and not subject to appeal or judicial review except in very limited cases involving fraud or corruption of the IDR process.
- Additional payments, if any, must be made within 30 calendar days of the decision.
- The IDR entity must post its fees through a portal established by the Departments.
- The Departments will set the range of allowable fees annually. For 2022, the allowable range is $200 to $500 for a single determination.
- In addition, the Departments will charge a $50 administrative fee. Both parties to the IDR process must submit these fees to the IDR entity when the process is initiated.
- Within 30 business days of making the determination, the IDR entity must refund to the prevailing party the amount the party submitted for the IDR entity fee and administrative fee.
- The IDR entity pays the administrative fee to the Departments.
- If the parties negotiate an out-of-network rate before the IDR entity makes a determination, the IDR entity is required to return half of each party’s payment for the IDR entity fee, unless directed otherwise by both parties to distribute the total amount of that refund in different shares.
External Review
The NSA only protects individuals from surprise bills if the providers and plans agree that a given item is subject to the NSA. Accordingly, to ensure that all claims subject to the NSA are handled properly, the law provides that a determination that a service is not subject to the NSA is eligible for external review.
As a reminder, the Affordable Care Act created an external review mechanism to resolve disputes over claim denials that turned on the exercise of medical judgement (among other things). This includes matters such as medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit. In general, the ACA’s external review requirements only apply to non-grandfathered health plans.
However, since the NSA applies to both grandfathered and non-grandfathered plans, the act requires grandfathered plans to engage in the external review process with respect to claims involving the applicability of the NSA. See our reference materials for more information on how the external review process works.
The IFR gives several examples of claims subject to external review.
These include questions about whether:
- a particular item constitutes treatment for emergency services.
- services furnished by an out-of-network provider at an in-network facility are subject to the NSA.
- an individual was in a condition to receive notice about the protections available under the NSA and waive the right to those protections.
- a provider has coded the claim correctly, consistent with the treatment a patient has actually received.
- cost-sharing was appropriately calculated for claims for ancillary services furnished by an out-of-network provider at an in-network facility.
Actions for Plan Sponsors
Sponsors for self-insured plans will want to confer with their TPAs to understand how they will handle the IDR process. Keeping in mind that the TPA will be negotiating with plan money, employers will want clarity regarding the TPA’s negotiating strategy as well as its ability to provide credible evidence in support of its offer. Employers and TPAs should have an understanding about who will be responsible for covering the cost of the IDR process in the event the IDR entity rules in favor of the provider.
Grandfathered plans will need to be prepared to submit to external review with respect to NSA-related adverse benefit decisions.
Plan sponsors will need to update plan documents and SPDs to describe how the external review process applies to the NSA.