No Surprises Act Features Some Unpleasant Surprises for Providers

OON providers in particular are troubled by certain provisions of the legislation.

The interim final rule (IFR) for the federal No Surprises Act was released on Sept. 30 by the Departments of Health and Human Services, Labor and the Treasury. Put simply, as presently drafted, the IFR is not good for out-of-network (OON) providers. The IFR focused on, among other topics:

• Good-faith estimates (for uninsured/self-pay patients); and
  • The independent dispute resolution (IDR) process (between providers/facilities and plans/issuers).

Unfortunately, the IFR not only left many questions unanswered, but apparently was written in a manner favoring the plans/carriers, to the detriment of OON providers and facilities. In particular, the Departments drafted the IFR to specify that the qualifying payment amount (QPA) would take precedent over the other factors that the independent dispute resolution entity can consider.  The QPA, which is the plan’s median in-network rate, was determined by the Departments to be presumptively fair, appropriate, and reasonable compensation for the types of services at issue.

This determination, however, contradicts congressional intent, as indicated by the letter dated Oct. 4, sent to the respective Secretaries of the Departments by the U.S. House of Representatives Committee on Ways and Means. In this letter, the Committee stated with regard to such prioritization of the QPA:

“Despite the careful balance Congress designed for the IDR process, (the IFR) with comment strays from the No Surprises Act in favor of an approach that Congress did not enact in the final law, and does so in a very concerning manner. The rule crafts a process that essentially tips the scale for the median contracted rate being the default appropriate payment amount. Such a standard affronts the provisions enacted into law, and we are concerned that this approach biases the IDR entity toward one factor (a median rate), as opposed to evaluating all factors equally as Congress intended.”

Pursuant to the IFR, in the arbitration process, the arbiter must select the offer closest to the QPA, unless the arbiter determines that credible information submitted clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate.

• Credible information means information that, upon critical analysis, is worthy of belief and is trustworthy.
  • A material difference exists where a substantial likelihood that a reasonable person with the training and qualifications of an arbiter would consider the information important in determining the OON rate, and view the information showing the inappropriateness of the QPA.

As yet another perceived example of bias in favor of plans/carriers, the IFR expressly states that it is not the role of the arbiter to determine whether the QPA has been calculated correctly. Therefore, based on the IFR, the arbiter is not only prohibited from straying from the QPA, absent significant circumstances, but cannot even question the extent of the QPA, giving the plans/carriers an undeniable advantage.

The Departments affording this advantage is even more questionable, as IFR indicates that the Departments are aware that in-network rates are lower than standard market rates, based on other advantages secured by in-network providers (e.g., security of greater patient volume based on lower cost-share). Accordingly, at present, the QPA will be a high hurdle to overcome, requiring the healthcare community to collectively have their voice heard to prevent such an injustice.

Note too that the Act applies to surprise out-of-network bills only (i.e., related to the provision of emergency care, or as otherwise rendered by an OON provider at an in-network facility). Thus, if the OON provider provides advance notice of the surprise bill, with estimate of costs (in accordance with the Act’s requirements), the No Surprises Act’s prohibition on balance billing (and availability of the dispute resolution process) would not apply.

It is also unclear whether, and to what extent, state surprise bill/balance billing prohibition laws will supersede the No Surprises Act.