Tag: no surprises act

No More Surprise Medical Bills: Providers Score More Victories in First Year of No Surprises Act Arbitrations, But Claims Backlog Otherwise Complicates Implementation

In the year following the implementation of the arbitration process established under the federal No Surprises Act (NSA), more than 330,000 disputes have been submitted for resolution. This figure far outpaces the predictions of the US Departments of Health and Human Services (HHS), Labor, and the Treasury (the Departments), and complicates the implementation of the NSA.

*This is the eighth article in a series analyzing the No Surprises Act and its implementation. To view the entire series, click here.

As background, Congress passed the NSA in 2020, effective in 2022, to curb so-called “surprise” medical bills — balance bills received by patients in situations where they have no control over who is involved in their care. Frequently, patients incur these bills when they obtain emergency care from out-of-network facilities or non-emergency services at in-network facilities where at least one member of the care team is out-of-network. In these situations, the NSA forbids out-of-network providers from balance billing the patients to collect the difference between billed charges and what the patient’s health insurance actually paid. Instead, to protect patients and ensure that reasonable payments are made to providers, the NSA establishes an alternative dispute resolution process, allowing eligible parties to submit disputed claims to independent dispute resolution entities (IDREs) to determine appropriate out-of-network payment rates.

Dispute resolution was intended to be streamlined and efficient, but IDREs have been inundated with submissions in the year since the NSA became effective. The volume of claims has created a significant backlog, hindering providers’ ability to obtain timely and appropriate reimbursement for the services they rendered. In an effort to promote transparency, the Departments recently issued a “status update” on the arbitration process. The report revealed several key findings regarding the volume, eligibility, and outcomes of claims submitted under the NSA to date.

Key Findings of the Status Update Report

First, the report provided insight into the overall numbers of claims that have been filed since the NSA became effective. Since the federal claims submission portal first went live in April 2022, disputing parties have initiated more than 330,000 arbitration submissions. This figure is nearly 14 times greater than the Departments’ initial estimates. The sheer volume of claims has drastically slowed the adjudication of claims submitted under the NSA.

Second, the report states that IDREs have rendered determinations in favor of one party or the other in only a small fraction of cases, with approximately 42,000 disputes decided as of March 31, 2023. Of these, initiating parties (typically health care providers) have prevailed approximately 71% of the time.

Third, to date, IDREs have closed more cases than they have decided. Overall, more than 100,000 claims,  – more than four times the amount anticipated by the Departments, have been closed. There are various reasons for this. Some claims were closed following successful negotiations between the parties. Others were closed due to one or both parties failing to submit the required fees mandated under the NSA. A large number — nearly 40,000 — were closed for eligibility reasons. Non-initiating parties have challenged the eligibility of more than a third of claims submitted for arbitration, balking at approximately 120,000 disputes. Non-initiating parties frequently object that claims are not eligible for arbitration under the NSA for multiple reasons, including lack of timely negotiation or arbitration submission, or because the disputed claims involve insurance programs outside the scope of the NSA.

In addition to the objections lodged by non-initiating parties, the IDREs have an independent duty to confirm that all claims submitted for arbitration are eligible under the NSA. These determinations require IDREs to engage in what can be a complex and time-consuming analysis of each claim, frequently requiring the submission of additional information from the parties. The report finds that these eligibility determinations represent the primary cause for the delays in processing arbitration submissions.

Finally, in an effort to help resolve delays, the status update includes that the Departments have begun to require initiating parties to submit additional information to assist IDREs in evaluating the eligibility of claims. The Departments have also modified the arbitration portal to require the input of additional information to enable non-initiating parties to identify disputed claims. These are among the “ongoing technical and operational improvements” the report states the Departments have been making over the last year.

Looking Ahead: Additional Legislation and Ongoing Court Challenges

The report highlights a series of problems that have hampered the implementation of the NSA, including larger-than-expected dispute volume, complex eligibility determinations, and technical issues. Collectively, these problems have left many parties awaiting arbitration awards and payment.

Meanwhile, the legal challenges to the Departments’ implementing regulations under the NSA continue, and HHS Secretary Xavier Bacerra recently testified before Congress regarding the implementation of the NSA. These developments have fueled speculation that Congress may step in and pass additional legislation to streamline the arbitration process. While these events play out, providers should continue to submit timely open negotiation notices and IDR initiation forms to preserve their rights under the NSA.

A copy of CMS’s report can be found here.

© 2023 ArentFox Schiff LLP

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Surprise! The No Surprises Act Changes Again

The No Surprises Act (Act), which became effective Jan. 1, 2022, is the latest health care law passed with the best of intent: to create consumer protection from unexpected out-of-network medical bills and to create a federal independent dispute resolution (IDR) process to resolve payment disputes between payers and out-of-network providers. Unfortunately, the Act, especially the U.S. Department of Health and Human Services’ (HHS) implementation of the IDR process, also creates a new administrative burden for health care providers. Providers and medical associations filed lawsuits in multiple jurisdictions to challenge HHS’ implementation of the IDR process and the constitutionality of the Act before it was even in effect.

On Feb. 24, 2022, the United States District Court for the Eastern District of Texas granted the Texas Medical Association’s Motion for Summary Judgement to vacate select IDR requirements. The Court found that HHS’ interim final rule’s IDR process, intended to resolve payment disputes regarding reimbursement for out-of-network emergency services and out-of-network services provided at in-network facilities, was contrary to the clear language of the Act[1] (Rule).

In general, the Act[2] requires health insurance payers (Insurers) to reimburse providers for certain out-of-network services at a statutorily calculated “out-of-network rate.”[3] Where an All-Payer Model Agreement or specified state law does not exist, to set such a rate, an Insurer must issue an initial out-of-network rate decision and pay such amount to the providers within 30 days after the out-of-network claim is submitted.[4] If the provider disagrees with the Insurer’s proposed out-of-network reimbursement rate, the provider has a 30-day window to negotiate a different payment rate with the Insurer.[5] If these negotiations fail, the parties can proceed to the IDR process.[6]

Congress adopted a baseball-style arbitration model for the Act’s IDR process. The Insurer and provider each submit a proposed out-of-network rate with limited supporting evidence. The arbitrator picks one of the offers while taking into account specified considerations, including the “qualified payment amount,” the provider’s training, experience, quality, and outcomes measurements, the provider’s market share, the patient’s acuity, the provider’s teaching status, case mix, and scope of services, and the provider’s/Insurer’s good-faith attempts to enter into a network agreement.[7] The “qualifying payment amount” (QPA), is designed to represent the median rate the Insurer would pay for the item or service if it were provided by an in-network provider.[8]

The Rule requires the IDR arbitrator to select the proposed payment amount that is closest to the QPA unless “the certified IDR entity [arbitrator] determines that credible information submitted by either party … clearly demonstrates that the [QPA] is materially different[9] from the appropriate out-of-network rate.”[10] This is a clear departure from the analysis set forth in the Act.

The Texas Medical Association challenged the Rule under the Administrative Procedures Act (APA), arguing that the Departments exceeded their authority by giving “outsized weight” to one statutory factor over the others specified by Congress, and that the Departments failed to comply with the APA’s notice and comments requirements in promulgating the Rule. In turn, the Departments argued that the plaintiffs did not have standing to bring the claims.

After dispensing with defendant’s standing arguments, the Eastern District of Texas Court ruled in favor of the plaintiff’s Motion for Summary Judgment and determined that “the Act unambiguously establishes the framework for deciding payment disputes and concludes that the Rule conflicts with the statutory text.” Under the Act, the arbitrators (or certified IDR entities) “shall consider … the qualifying payment amounts” and the provider’s level of training, experience, and quality outcomes, the market share held by the provider, the patient’s acuity, the provider’s teaching status, case mix, and scope of services, and the demonstrated good faith efforts of both parties in entering into a network agreement.”[11] The Act did not specify that any one factor should be considered the “primary” or “most important” factor. The Rule, in contrast, requires arbitrators to “select the offer closest to the [QPA]” unless “credible” information, including information supporting the “additional factors,” “clearly demonstrates that the [QPA] is materially different from the appropriate out-of-network rate.”[12] The Departments characterized the other factors as “permissible additional factors” that may be considered only when appropriate.[13] The Court found that the Department’s Rule was inconsistent with the Act and that since Congress had spoken clearly on the factors to be considered in the arbitration process, the Department’s interpretation of the Act was not appropriate and had exceeded the Department’s authority.[14]

Following the Court’s decision, the Departments issued a memorandum on Feb. 28, 2022, clarifying the Act’s requirements for providers and Insurers. The memo specifically noted that the Court’s decision would not, in their opinion, affect the patient-provider dispute resolution process.[15] The Departments also stated they would withdraw any guidance inconsistent with the Court’s Opinion, provide additional training for interested parties, and keep the IDR process portal open to resolve disputes. The Departments also will be considering further rulemaking to address the IDR process.

The No Surprises Act continues to surprise us all with more adaptations. Enforcement of this new law remains uncertain in light of the numerous legal challenges, including at least one constitutionality challenge.

[1] Requirements Related to Surprise Billing: Part II, 86 Fed. Reg. 55,980 (Oct. 7, 2021).

[2] Consolidated Appropriations Act of 2021, Pub. L. No. 116-260, div. BB, tit. I, 134 Stat. 1182, 2758-2890 (2020).

[3] 300gg-111(a)(1)(C)(iv)(II) and (b)(1)(D).

[4] 300gg-111(a)(1)(C)(iv) and (b)(1)(C).

[5] 300gg-111(c)(1)(A).

[6] 300gg-111(c)(1)(B).

[7] 300gg-111(c)(5).

[8] 300gg-111(a)(3)(E)(i)(I)-(II).

[9] “Material difference” is defined as “a substantial likelihood that a reasonable person with the training and qualifications of a certified IDR entity making a payment determination would consider the submitted information significant in determining the out-of-network rate and would view the information as showing that the [QPA] is not the appropriate out-of-network rate. 149.510(a)(2)(viii).

[10] 45 C.F.R. 149.510(c)(4)(ii).

[11] 300gg-111(c)(5)(C)(i)-(ii).

[12] 45 C.F.R. 149.510(c)(4)(ii)(A).

[13] 86 Fed. Reg. 56,080.

[14] Because the Departments had exceeded their statutory authority, no Chevron deference was owed to their regulations. Chevron U.S.A. v. Natural Resources Defense Council, Inc., 468 U.S. 837 (1984).

[15] This is a separate dispute resolution process designed to address disputes between patients and providers when bills for uninsured and self-pay patients are inconsistent with the good faith estimate provided by the health care provider.

Article By Stacey A. Borowicz and Joseph D. Wheeler of Dinsmore & Shohl LLP

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