Health Headlines– August 22, 2022

Departments Issue Final No Surprises Act Dispute Resolution Rule and Other Guidance

On August 19, 2022, the Departments of Health and Human Services, Labor, and the Treasury (the Departments) issued a long-awaited final rule (the Final Rule) on the Independent Dispute Resolution (IDR) Process under the No Surprises Act (NSA). The Final Rule modifies the weight given to the information that IDR entities must consider in deciding payor-provider payment disputes under the NSA. The Final Rule also imposes new requirements for plans and issuers to supply a disclosure when they downcode claims governed by the NSA. Separately, the Departments also issued lengthy Frequently Asked Questions (FAQs) and technical guidance for IDR entities last week. 

Background

The NSA, enacted in December 2020, prohibits the practice of balance billing patients for out-of-network emergency services and non-emergency services rendered by out-of-network providers at in-network facilities. When the NSA applies, the out-of-network rate payable by the plan is determined by state law or an all-payer model, if applicable.

In the absence of a specified state law, reimbursement is determined by the IDR process when the payor and provider cannot agree on a negotiated out-of-network rate. In the IDR process, both parties must submit final offers for payment along with supporting written material to an IDR entity who is required to select between the two offers. The NSA directs the IDR entity to consider at least seven specifically enumerated factors in making the payment determination. These seven factors include: (i) the qualifying payment amount (QPA), which is defined as the plan’s median in-network rate for same or similar items or services in the applicable geographic area; (ii) the provider’s level of training, experience, and quality outcomes; (iii) the market share of the provider and plan; (iv) teaching status, case mix, and scope of services of the provider; (v) patient acuity; (vi) demonstrations of good faith efforts to enter into a network agreement with the other party; and (vii) if applicable, prior contracted rates between the parties in the previous four years. The IDR entity also can submit additional information relating to their offer or any additional information requested by the IDR entity for consideration – except the IDR entity cannot consider usual and customary charges, the billed charges, or any public payor payment or reimbursement rates. 

On July 1, 2021, the Departments issued the first set of implementing regulations (the July Rule), providing guidance on the calculation of the patient’s cost-sharing amount and the QPA, among other topics. On September 30, 2021, the Departments issued the second set of implementing regulations (the IDR Rule) which, in part, provided significant additional detail regarding the IDR process, but also made the QPA the presumptive out-of-network rate, thereby downgrading the other factors that Congress specified and permitted for consideration – which has since been vacated by court order and now eliminated by the new Final Rule. Additional information on the IDR Rule is available in a previous issue of Health Headlines. Both rules were promulgated as interim final rules.

The Final Rule responds to the two summary judgment decisions from the United States District Court for the Eastern District of Texas that overturned portions of the interim final rule implementing the IDR process. Texas Medical Association, et al. v. HHS vacated portions of the IDR rule that created a presumption in favor of the QPA for disputes initiated by providers and facilities.  LifeNet, Inc. v. HHS vacated portions of the IDR rule that created the same presumption for disputes initiated by air ambulance providers. King & Spalding reported on the Texas Medical Association and LifeNet decisions in previous issues of Health Headlines (available here and here).

The Final Rule also responds to a number of comments received in response to both the July Rule and the IDR Rule in three categories: (1) plan disclosures on the calculation of the QPA; (2) payment determinations in the IDR process; and (3) the requirement for IDR entities to issue written decisions.

QPA Disclosure Requirements

The No Surprises Act requires plans and issuers, with each initial payment or notice of denial of payment, to provide (i) the QPA for each item or service and a statement certifying whether the QPA applies to determine the patient’s cost sharing amount, and (ii) a certification that the QPA was calculated in compliance with the NSA. Providers and facilities may request additional information from plans and issuers. The Departments received many comments in response to the July Rule emphasizing that the methodology for calculating the QPA should be transparent, and that the Departments should expand the range of information that is shared with providers.

Furthermore, some commenters felt the degree of disclosures by the plans and insurers have been insufficient, and that the interim rule had provided too much power and discretion to plans and issuers.  Other commenters questioned whether plans would be able to obtain the required information, because much of the information may be in the control of vendors or other service providers. Some commenters requested that plans and issuers be required, without a request, to provide information on the number of contracts and the geographic region used to calculate the QPA, whether the QPA is based on downcoding of the billed claim, information about the use of modifiers in calculating the QPA, the types of specialties and subspecialties that have contracted rates included in the data set used to determine the QPA, and whether bonuses and supplemental payments were paid to in-network providers. Lastly, several commenters requested that these final rules require plans and issuers to disclose whether the claim has been downcoded for purposes of computing the QPA and include an explanation of why the claim was downcoded, as well as what the QPA would have been had the claim not been downcoded.  Commenters requested this additional transparency because with the previously limited disclosures that plans were permitted to make, providers could not tell whether the plans and issuers had been paying the QPA for the billed service code or for a unilaterally declared lower code.

The Departments focused the new disclosure requirements in the Final Rule on information related to downcoding. The Final Rule specifies that if a QPA is based on a downcoded service code or modifier, in addition to the information already required to be provided with an initial payment or notice of denial of payment, a plan or issuer must provide:

• a statement that the service code or modifier billed by the provider, facility, or provider of air ambulance services was downcoded;
• an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and which modifiers were altered, added, or removed, if any; and
• the amount that would have been the QPA had the service code or modifier not been downcoded.

The Departments define downcoding as “the alteration by a plan or issuer of a service code to another service code, or the alteration, addition, or removal by a plan or issuer of a modifier, if the changed code or modifier is associated with a lower QPA than the service code or modifier billed by the provider, facility, or provider of air ambulance services.”

With respect to the other comments made to the interim final rules involving QPA disclosure requirements, the Departments stated that they are continuing to consider whether any additional disclosures related to the QPA calculation methodology should be required with an initial payment or notice of denial of payment, or upon request.

Payment Determinations Under the Federal IDR Process for Providers and Facilities

The Final Rule also modifies the IDR entities’ utilization of the statutorily defined factors used to select either the provider’s or plan’s offer during the IDR process. The Departments received comments showing disagreement about the proper amount of emphasis on the QPA and the use of the QPA as the baseline in the federal IDR process. Commenters raised concerns about the effects that the IDR process and the QPA may have on the healthcare market. Some commenters supported the QPA presumption as a method to lower overall healthcare costs while other commenters argued the QPA presumption would unnaturally drive reimbursement rates down contrary to market dynamics and legislative intent. Still other commenters argued for alternate baselines in the IDR process instead of the QPA, such as the median out-of-network reimbursement rate since the NSA is addressing out-of-network situations.

The Final Rule removes the improper presumption in favor of the QPA, but still tries to give the QPA elevated importance. This latest attempt at elevating the importance of the QPA may still run afoul of the NSA and above-referenced summary judgment orders and may be subject to additional court challenges. Of the statutorily defined factors, the IDR entity is required to consider the QPA first, and the QPA is deemed to be relevant to the payment determination in every case. The Final Rule says the IDR entity may consider additional information submitted by the parties relating to the following factors if the IDR entity deems the information to be credible: (1) the level of training, experience, and quality and outcome measurements of the provider or facility that furnished the item or service; (2) the relative market share (held by the nonparticipating provider or facility or the plan or issuer in the geographic region in which the item or service was provided); (3) the patient acuity or the complexity of furnishing the item or service to the participant, beneficiary, or enrollee; (4) the teaching status, case mix, and scope of services of the nonparticipating facility; and (5) good faith efforts to enter into a network agreement and contracted rates between the provider or facility and the plan or issuer as applicable during the previous four plan years. Additionally, if applicable, the IDR entity must consider whether a claim was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and a description of any modifiers that were altered, added, or removed, if any; and the amount that would have been the QPA had the service code or modifier not been downcoded.

The Final Rule further instructs the certified IDR entities to avoid “double counting” by not giving weight to information that is already accounted for in the QPA or in other submitted information. For example, the Final Rule theorizes that patient acuity and complexity of furnishing the items and services may already be accounted for in the QPA in certain circumstances due to the use of modifiers and service codes. By contrast, the Final Rule states that in other circumstances, the patient acuity and complexity of furnishing the items and services may not be accounted for in the QPA if, for example, the case is an outlier even beyond that accounted for through modifiers. 

IDR Determination for Air Ambulance Services

The IDR entities are directed to consider different factors in evaluating IDR disputes involving air ambulance providers. The Departments received comments specific to air ambulance services arguing that the QPA fails to adequately reflect market rates for air ambulance services due to the prevalence of single-case agreements in the air ambulance market and other unique market pressures. Commenters demonstrated disagreement about whether the rules should instruct the certified IDR entities to consider market concentration and the prices of non-profit affiliated air ambulance providers.

The Final Rule provides that when deciding which offer to choose in a dispute about air ambulance services, the IDR entity must first consider the QPA before considering additional information provided by either party. Additional information includes credible information related to the following six factors: (1) quality and outcomes measurements of the provider that furnished the services; (2) the acuity of the condition of the participant, beneficiary, or enrollee receiving the service, or the complexity of furnishing the service to the participant, beneficiary, or enrollee; (3) training, experience, and quality of the medical personnel that furnished the air ambulance service; (4) ambulance vehicle type, including the clinical capability level of the vehicle; (5) population density of the point of pick-up; and (6) demonstrations of good faith efforts (or lack thereof) by the disputing parties to enter into network agreements with each other, as well as, if applicable, contracted rates between the parties during the previous four plan years. Additionally, if applicable, the IDR entity must consider whether a claim was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and a description of any modifiers that were altered, added, or removed, if any; and the amount that would have been the QPA had the service code or modifier not been downcoded.  As with provider and facility disputes, the Final Rule indicates that IDR entity must consider whether submitted information is credible, whether it relates to the offer for payment, and ensure that it does not “double count” information that the Final Rule theorizes could already accounted for in the QPA.

Certified IDR Entity’s Written Decision

Finally, the Final Rule addresses comments in support of requiring IDR entities to submit a written statement of its reasons for a particular determination of an out-of-network rate. The prior IDR Rule only required a written rationale if the certified IDR entity determined that the QPA was materially different from the appropriate out-of-network rate. The opinion in Texas Medical Association invalidated this requirement.  Likewise, commenters raised concerns that this requirement would have discouraged the certified IDR entities from considering additional factors. Many commenters supported a requirement that would require a robust written decision explaining the underlying rationale for the determination in all cases.

The Departments agreed with the commenters that a written decision with a comprehensive discussion of the rationale for the decision is important to ensure that the parties understand the outcome of a payment determination under the IDR process. The Final Rule requires that the IDR entity issue a written decision in all cases. The entity must explain its determination, including what information the certified IDR entity determined demonstrated that the offer selected best represents the value of the qualified IDR item or service, and how much weight was given to the QPA and the other submitted information. The Departments also said they will be issuing additional guidance about the form and content of the required written decision.

Notably, the Final Rule also says that if the certified IDR entity relies on additional information or additional circumstances when it selects an offer, then the final rule requires that the written decision must also include an explanation as to why that information was not already reflected in the QPA. This reflects the Departments’ continued attempt to continue to tilt out-of-network rates toward the QPA, despite the court decisions invalidating the prior interim rule that had done so, creating the potential for further litigation on this issue.

Other Guidance

The Departments also published two pieces of informal guidance last week. First, on August 17, 2022, the Departments issued technical guidance to IDR entities that provides details on batching and bundling claims for IDR determination, the 90-day cooling period, and dispute eligibility. The technical guidance also permits parties to submit supplemental information to prove eligibility upon initiation.

On August 19, the same day that the Final Rule was published, the Departments issued a lengthy set of FAQs. The FAQs address issues including the applicability of the NSA to no- and closed-network plans, and the calculation of the out-of-network rate for these plans. Additionally, the FAQs clarify how plans should calculate the QPA if the plan pays different rates for the same item or service based on provider specialty or if the plan offers multiple benefit package options administered by different TPAs. Other FAQs clarify the disclosure requirements, the notice and consent process, the initial payment, and open negotiation that precedes the IDR process.  The FAQs also address the applicability of the NSA to unique factual scenarios including air ambulance services picking up patients outside of the jurisdiction of the United States, and emergency services furnished in behavioral health crisis facilities.

The Final Rule is available here. The requirements of the Final Rule are applicable with respect to items or services furnished on or after 60 days after the Final Rule’s publication in the Federal Register. The technical guidance is available here, and the most recent FAQs are available here. The clarifications in the technical guidance and FAQs are effective immediately.

Reporters: Alana Broe, Atlanta, +1 404 572 2720, abroe@kslaw.com, Taylor Whitten, Sacramento, +1 916 321 4815, twhitten@kslaw.com, Sophie Munroe, Washington D.C., +1 202 626 5412, smunroe@kslaw.com, and Kasey Ashford, Washington, D.C., +1 202 826 2906, kashford@kslaw.com.

FTC Issues Policy Paper Opposing Hospital Mergers Under Certificate of Public Advantage Laws

Last week, the FTC issued a policy paper addressing certificate of public advantage (COPA) laws, which have been enacted in nineteen states to shield certain hospital mergers and acquisitions from federal antitrust review. Continuing the trend of the FTC’s increasing focus on healthcare, the FTC paper argues that COPA laws are detrimental and result in higher prices, reduced quality of care, and slow wage growth for certain hospital workers.

A total of nineteen states have enacted COPA laws, which generally provide for state officials to allow hospitals to consummate mergers and acquisitions that would otherwise violate antitrust laws if the officials determine the benefits of the combination outweigh the disadvantages from any reduction in competition. COPA laws also generally allow the states to impose conditions on the approval—including price controls, cost savings mechanisms, and commitments regarding commercial insurance contracts—to mitigate harmful effects they may anticipate. If a COPA is granted, the transaction may be shielded from federal antitrust enforcement actions under the state action doctrine. COPA laws are distinct from certificate of need (CON) laws, although COPAs may be administered under the same agency as a state’s CON program.

The policy paper notes that the FTC is aware of nine states that have approved hospital transactions under COPA laws and includes case studies analyzing the changes in prices and wage growth following the transactions. In some of the case studies, the COPA laws were repealed after the transactions were consummated, resulting in the removal of regulatory oversight and restrictions. Based on these examples, the FTC argues COPAs “can be difficult to implement and monitor over time, and are often unsuccessful in mitigating merger-related price and quality harms.” Consequently, FTC staff recommends state legislatures to consider either repealing COPA laws or, in states that have already issued COPAs, ending the issuance of new COPAs while leaving the existing laws in place in order to continue regulating hospitals that have already combined.

The Commissioners voted 5-0 in favor of issuing the policy paper.

A copy of the policy paper is available here and the accompanying fact sheet is available here. The FTC’s press release announcing the policy paper is available here.

Reporter, J. Gardner Armsby, Atlanta, +1 404 572 2760, garmsby@kslaw.com.

CMS Releases Fact Sheets to Advise Regarding Eventual End of Medicare COVID-19 Waivers

In response to the COVID-19 Public Health Emergency (PHE), CMS temporarily waived a significant number of Medicare, Medicaid and Children’s Health Insurance Program (CHIP) requirements and conditions of participation pursuant to Section 1135 of the Social Security Act.  These waivers afforded healthcare providers enhanced flexibility to address the unique concerns posed by the novel coronavirus and to ensure access to sufficient healthcare items and services.

With the PHE currently set to expire in October, CMS is incrementally issuing guidance to assist the healthcare sector transition to pre-PHE operations. To this end, on August 18, 2022, CMS released provider-specific fact sheets summarizing the current status of COVID-19 waivers.

The fact sheets provide specific guidance to each of the following provider types and Medicare programs and waivers:

• Physicians and Other Clinicians
• Hospitals and CAHs (including Swing Beds, DPUs), ASCs and CMHCs
• Teaching Hospitals, Teaching Physicians and Medical Residents
• Long Term Care Facilities (Skilled Nursing Facilities and/or Nursing Facilities)
• Home Health Agencies 
• Hospice
• Inpatient Rehabilitation Facilities
• Long Term Care Hospitals & Extended Neoplastic Disease Care Hospitals
• Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs)
• Laboratories
• Medicare Shared Savings Program
• Durable Medical Equipment, Prosthetics, Orthotics and Supplies
• Medicare Advantage and Part D Plans
• Ambulances
• End Stage Renal Disease (ESRD) Facilities
• Participants in the Medicare Diabetes Prevention Program

Importantly, the fact sheets outline which waivers are set to return to pre-PHE rules at the end of the calendar year the PHE ends. They also identify which waivers have been made permanent through rulemaking, congressional action, or otherwise.

HHS has promised to provide 60 days’ notice before ending the PHE.  Because there are fewer than 60 days left before the end of the current PHE and HHS has not provided notice it is ending, it is expected that the PHE will be renewed again.

Regardless of when the PHE expires, healthcare providers can take steps now to prepare to resume normal operations. CMS accordingly advises that providers should periodically review CMS fact sheets to track the status of COVID-19 waivers in the coming months. Guidance related to Medicaid programs is also available here.

Reporter, Elizabeth Key, Sacramento, +1 916 321 4821, ekey@kslaw.com.

ALSO IN THE NEWS

King & Spalding Webinar - Medicare Payment Update: What You Need to Know About the Medicare Payment Rulemakings for 2023

On Tuesday, August 30, 2022, at 1:00 P.M. E.T., King & Spalding will host a roundtable to discuss the highlights of the recent rulemakings CMS has issued affecting Medicare payments to providers, including the Inpatient Prospective Payment System (IPPS) Final Rule for FY 2023, the Outpatient Prospective Payment System (OPPS) Proposed Rule for CY 2023, and CMS’s proposed rule to revise the distance requirements for Critical Access Hospitals (CAHs).  Topics of discussion will include:

• significant revisions to wage index rules;
• repeal of the “fellow penalty” and other Graduate Medical Education reimbursement changes;
• empirical Disproportionate Share Hospital (DSH) and Section 1115 uncompensated care pool days after Bethesda Health v. Azar;
• significant updates for claiming uncompensated care on S-10;
• OPPS payment cut for 340B drugs, retroactive relief and the fallout of Becerra v. American Hospital Association;
• Rural Emergency Hospitals; and
• proposed changes to the CAH distance requirements. 

You can register for the webinar here.