In October, the Departments of Health and Human Services, Labor, and the Treasury (collectively, the "Departments") and the Office of Personnel Management jointly released rules that implement the dispute resolution provisions of the No Surprises Act (the "Act").
In general, the Act states that insured patients must be charged in-network rates for many healthcare items and services even if the provider or facility is not in their health plan's network. The Act also requires health plans, insurance issuers, healthcare providers and healthcare facilities to work out any payment disagreements among themselves. These interim final rules (the "October 7 Rules") are applicable to plan years beginning on or after January 1, 2022, and, among other things, describe the processes for resolving payment disputes between health plans or issuers and healthcare providers or facilities as well as disputes between uninsured or self-pay patients and healthcare providers or facilities.
Dispute Resolution between Health Plans and Providers
After a healthcare provider or facility receives an initial payment or a notice of denial from a health plan or insurance issuer, either party may initiate an open negotiation period to reach agreement about the appropriate out-of-network rate. If these negotiations do not result in an agreement, either party may initiate the independent dispute resolution (IDR) process by submitting notice to the other party and to the Departments. The parties then have three business days to select an IDR. If they cannot do so, then Departments will select an IDR entity for them.
Once an IDR entity is selected, each of the parties must submit an offer for payment and information supporting the offer. The supporting information may relate to, among other things, the provider's level of training, the market share of the provider or facility, the acuity of the patient, the good faith efforts (or lack thereof) made by the parties to enter into network agreements, and the contracted rates between them during the previous four years. In contrast, neither party may submit information about usual or customary charges, the amount that would have been billed by the provider or facility in the absence of the federal rules about surprise billing, or the reimbursement rate under the Medicare or Medicaid programs because the IDR entity is prohibited from considering those topics.
The IDR entity must presume that the qualifying payment amount - which is generally the health plan or insurer's historical median contracted rate for an item or service - is an appropriate payment amount and must generally select the offer closest to that amount. However, this presumption can be rebutted if the IDR entity determines that credible information submitted by a party "clearly demonstrates that the qualifying payment amount is materially different from the appropriate out-of-network rate." In that situation, the IDR entity must select the offer that it determines best represents the value of the items or services.,
Dispute Resolution for Self-Pay and Uninsured Patients
The October Rules also describe the process that uninsured or self-pay patients can use to resolve payment disputes with healthcare providers or facilities. This process is only available if the final billed charges are at least $400 in excess of the good faith estimate of charges that providers and facilities are required to provide patients under the Act.
After the dispute resolution process is initiated, the provider must submit a copy of the good faith estimate provided to the uninsured individual and a copy of the billed charges. The provider also submits any documentation demonstrating that the difference between the estimate and the billed charges reflects the cost of medically necessary items or services and is based on unforeseen circumstances that could not have reasonably been anticipated when the estimate was provided.
The IDR entity is required to review this information as well as any information submitted by the uninsured individual and make a separate determination as to whether the provider has provided credible information that justifies the difference between the bill and the estimate for each unique item or service charged.
If the billed charge is greater than the estimate and the provider has not submitted information justifying the difference, then the dispute resolution entity must determine the amount to be paid for the service is the amount in the estimate. However, if the provider has submitted information justifying the difference between the estimate and the billed charges, then the dispute resolution entity must determine that the amount to be paid is the lesser of (i) the billed charge or (ii) the median payment amount paid by a plan or insurer for the same or similar service by a same or similar provider in the geographic area where services were provided.
The Departments are accepting comments on the October Rules until December 6, 2021. In the meantime, healthcare industry participants are awaiting the publication of regulations that address other requirements in the Act, including requirements related to pharmacy benefits and prescription drug costs as well as the advanced explanation of benefits that plans and issuers are required to issue to individuals.
Nate Lykins is an Associate with Waller where he advises healthcare providers on the regulatory aspects of healthcare transactions including mergers, acquisitions, joint ventures, and divestitures.