Enacted as Division BB of the Consolidated Appropriations Act, 2021, the No Surprises Act (NSA) provides federal protections against surprise billing with respect to:
- Emergency services (including post-stabilization services);
- Non-emergency items or services furnished by out-of-network providers at certain in-network healthcare facilities; and
- Air ambulance services furnished by out-of-network providers of air ambulance services.
Under these new rules, covered individuals are required to pay no more than in-network cost-sharing amounts for these services. Health plans, issuers and Federal Employees Health Benefits (FEHB) Carriers must pay the out-of-network provider, facility or provider of air ambulance services an amount referred to as the “Qualifying Payment Amount” (or “QPA”) unless a state consumer protection law or All-Payer Model Agreement applies. (All-Payer Model Agreements are used by Medicare among other payers for making hospital payments based on per capita amounts.) The NSA establishes a Federal IDR process to allow disputing parties to resolve disagreements about payment for qualified items and services in cases in which good faith negotiations between an out-of-network provider, facility, or provider of air ambulance services and a health plan, issuer, or FEHB Carrier are unsuccessful.
The NSA directs the US Departments of Health and Human Services (HHS), Labor and the Treasury (collectively, the Departments) to publish certain information quarterly about the Federal IDR process. The first such report, Initial Report on the Independent Dispute Resolution (IDR) Process April 15 – September 30, 2022 (the Report), is available here.
Perhaps the most stunning feature of the Report is the sheer number of disputes. According to the Report, from April 15 to September 30, 2022, 90,078 disputes were submitted to the Federal IDR portal. The Departments originally estimated that 17,333 claims would be submitted as part of the Federal IDR process each year. As the Report concedes, this is “significantly more than the number of disputes the Departments initially estimated would be submitted for a full year.”
The overwhelming majority of disputes covered in the Report involved emergency services. Some 71,513 disputes involved emergency services, which accounts for 82% of all disputes initiated for emergency or non-emergency services in this period. And over half of these disputes (70,071 disputes) involved services provided in a hospital emergency room.
INTERACTION OF FEDERAL IDR PROCESS WITH THE CLAIMS PROCEDURE RULES
Part I of the interim final rule provides detailed rules on the Federal IDR process, but it says nothing about the way the Federal IDR rules interact with the prior rules mandating claims procedures. A group health plan may deny payment because the item or service is not covered by the plan. For example, an individual covered by a preventive-services-only plan (a/k/a MEC plan) might be erroneously billed for an emergency procedure. If a covered individual seeks to have these covered, the claim should ultimately be denied. The claim in this instance would be a post-service claim, and the proper venue for the claim’s adjudication is the plan’s claims procedure, not the Federal IDR process. The Departments acknowledge the issue in the preamble to Part I of the interim final rule (86 Fed. Reg., p. 36,901), saying:
The Departments are aware that the timeframes for deciding post-service claims under the claims and appeals rules issued under section 2719 of the PHS Act and the timeframes for sending an initial payment or notice of denial of payment under these final rules may not always align. The Departments seek to minimize confusion about which types of disputes should be resolved through a plan or issuer’s internal claims and appeals process instead of the IDR process established by the No Surprises Act.
The Employee Retirement Income Security Act of 1974 (ERISA) claims procedure regulation applies to coverage determinations that are part of a claim for benefits and requires group health plans to notify a claimant of a benefit determination for post-service claims not later than 30 days after receipt of the claim. This can be extended, such that the plan may have at least 45 days to provide additional information. After that, the plan has 15 days to decide.
PROBLEMS WITH “BATCHED CLAIMS”
The NSA allows for multiple qualified IDR items or services to be submitted as a batched dispute when certain conditions are met. Batched items and services means multiple qualified IDR items or services that are considered jointly as part of a single payment determination. To qualify as such, a batched item or service must be (i) billed by the same provider or group of providers; (ii) paid by the same payer; (iii) of the same service code or a similar service code under a different procedural coding system; and (iv) furnished within the same 30-business-day period (or had open negotiation periods ending within a 90-calendar-day cooling off period).
According to the Report, many disputes were incorrectly batched. Many submissions included multiple service codes from the same patient encounter as one dispute, rather than separating these different service codes into separate disputes in the manner the regulations describe. The reference to “the same or similar items or services” is defined with reference to Current Procedural Terminology (CPT), Healthcare Common Procedure Coding System (HCPCS) or Diagnosis-Related Group (DRG) codes. If a dispute is incorrectly batched, the certified IDR is directed to select one service code to continue through the Federal IDR process and asks the moving party to resubmit the other service codes as separate disputes.
The Federal IDR process is central to the operation of the NSA. The new curbs on surprise billing insulate plan participants by strictly controlling cost-sharing and requiring the group health plan or carrier to pay the difference. Self-funded group health plans often designate a third-party administrator as the claims fiduciary. Thus, the third-party administrator will generally respond to demands by healthcare providers who resort to the Federal IDR process in the event of a disputed reimbursement. But plan sponsors should monitor their delegation of fiduciary responsibility, as they are ultimately responsible for compliance with the NSA.