Health Plan Payment and Reimbursement

Big delays could be in store for early No Surprises Act arbitration cases

May 9, 2022 1:14 am
  • The portal for payment arbitration cases taking place under the No Surprises Act is open for business but likely will face a backlog.
  • HHS is getting ready to issue a new set of regulations that will incorporate changes to the arbitration criteria as required by a February court ruling.
  • The updated criteria are expected to be more favorable for providers in the settlement of disputes over out-of-network payment.

May 4 update: This article has been updated with news that HHS has paused its appeal of a federal court ruling on the IDR criteria.

A new era for provider-payer transactions began in mid-April when the U.S. Department of Health and Human Services (HHS) opened the portal for resolving disputes over out-of-network payment under the No Surprises Act.

The portal is the mechanism for settling cases in which balance billing is prohibited by the new law and providers and payers can’t agree on payment for the outstanding amount. The arbitration process, formally known as independent dispute resolution (IDR), would not apply in a handful of states that have their own processes set up, although self-insured plans in those states would be subject to the federal process unless they have opted in to their state’s regulations.

The IDR infrastructure was supposed to be ready to go in March, but HHS postponed the launch of the portal in response to a February court ruling that affected the criteria for deciding IDR cases.

Cases could pile up

There’s concern about a substantial backlog of cases arising from the delay. During an April 27 budget hearing on Capitol Hill, Rep. Larry Bucshon, MD (R-Ind.), said the 30-business-day negotiating period has elapsed for “hundreds of payment disputes” and soon will do so for “many more.”

“That means there is going to be a flood of disputes that will inundate the federal portal as well as the federal arbiters over the next couple of weeks,” he said.

Arbitrators are supposed to render a decision within 30 business days of being selected for a case, but all stakeholders should expect that timetable to be expanded for a while. HHS has said it will grant extension requests submitted by either party or by certified IDR entities (i.e., arbitrators), as appropriate.

During the budget hearing, HHS Secretary Xavier Becerra said the delay stems from the need to make regulatory adjustments in response to the court ruling. HHS is expected to soon issue a modified rule that would codify changes. In the meantime, interim guidance has been provided to IDR entities.

Regarding the delay, Becerra said, “Lawsuits have consequences. And when we have to wait for a ruling to determine how we can move forward, it makes it difficult.”

HHS appealed the court ruling April 22 but is going ahead with drafting the new final rule, Becerra said. Several similar legal cases, including one brought by the American Hospital Association and American Medical Association, also are going through the judicial process.

On May 3, however, the court granted HHS’s request to pause the appeal while it works on the new final rule. The request was not announced by HHS but was reported in a news release issued by the American College of Emergency Physicians, which is a party to a similar lawsuit.

New guidance allows for additional criteria

In keeping with the February court ruling, the interim guidance essentially calls for deciding cases using criteria that mirror the No Surprises Act legislation more closely.

The previous guidance directed certified IDR entities to focus on the qualifying payment amount (QPA) — defined as the health plan’s median contracted rate for similar items or services in the same geographic region — when deciding the final payment obligation.

The new guidance clarifies that additional information should be considered as long as the IDR entity deems the information to be credible. Assessment of such information wasn’t prohibited by the previous guidance, but the QPA was supposed to be the overriding factor.

Language on the weight to be given to the QPA has been stricken from the new guidance. As stated in both the original and new guidance, additional factors that the IDR entity can consider are:

  • The provider’s training level, experience level and quality and outcomes measurements
  • The provider’s market share
  • The patient’s acuity or the complexity of the patient’s condition
  • The provider’s teaching status, case mix and scope of services
  • Good-faith efforts (or lack thereof) made by the parties to enter into a network agreement

Meanwhile, factors that remain prohibited from consideration include:

  • Usual and customary charges
  • Billed charges
  • Payment rates in federal healthcare programs

Congress wants the new guidance formalized

HHS’s previous regulations on criteria for IDR cases had generated criticism from both sides of the aisle in Congress.

In the recent hearing, Bucshon asked Becerra whether HHS would commit to “more closely following the will of Congress and also the courts and finalize a rule that does not include a rebuttable presumption of a benchmark [i.e., the QPA] in the independent dispute resolution process.”

The federal agencies that issued the original regulations — HHS and the Departments of Labor and Treasury — stated at the time that adhering to the QPA in the decision-making process would encourage “predictable outcomes, which will reduce the use of the federal IDR process over time and the associated administrative fees born by the parties, while providing equitable and clear standards for when payment amounts may deviate from the QPA, as appropriate.”

During a separate budget hearing at which Becerra appeared in late April, Rep. Brad Wenstrup, MD (R-Ohio), said the original criteria would give insurers an edge in payment disputes, and that, in turn, would adversely affect patients.

“If insurance companies know that they can pay a provider the median in-network rate, then there’s absolutely no incentive to get them in-network,” Wenstrup said.

“If you stray from the letter of the law, the policy will lead to narrow networks,” he added. “And we are going to have some problems. There won’t be enough doctors available to take care of patients across America, especially in emergency situations, especially in rural and underserved communities where the margins are just so very thin if you even can get over the margins.”

Rep. Richard Neal (D-Mass.), chair of the House Ways and Means Committee, said during the second hearing that he and Rep. Kevin Brady (R-Texas), the ranking member of the committee, had recently met with Becerra to advocate for giving weight to multiple factors in the IDR process.


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