Biden Administration Issues Additional No Surprises Act Guidance in New Interim Final Rules – On September 30, 2021, the Biden Administration issued the second set of implementing regulations under the No Surprises Act. The interim final rules, issued by the Departments of Health and Human Services, Labor, and Treasury, along with the Office of Personnel Management (the Departments), provide significant additional detail regarding the federal independent dispute resolution (IDR) process for determining the out-of-network payment rate for certain out-of-network services, requirements for good faith estimates of charges and the associated patient-provider dispute resolution process, and external review for group health plans and health insurance issuers. The rules invite additional comments from stakeholders. Comments to the interim final rules are due no later than 5 p.m. 60 days after the rules are published in the Federal Register.
Independent Dispute Resolution Process
Initiation of IDR Process
Before initiating the federal IDR process, the provider or facility and the health plan or issuers may engage in an open negotiation period for up to 30 business days. Either party may initiate the open negotiation period after the provider or facility receives an initial payment or notice of denial of payment for a qualifying item or service covered by the No Surprises Act. The plan will provide information about who to contact if the provider or facility would like to initiate the open negotiation period and the provider or facility initiating the open negotiation period will provide the plan with a notice of intent to negotiate that includes information about the items or services subject to negotiation within 30 business days of receipt of initial payment or notice of denial of payment.
If the parties are unable to agree upon a payment rate within the 30-business day period, either party may initiate the federal IDR process within 4 business days from the end of the 30-business-day open negotiation period. The notice must be sent to the non-initiating party and submitted to the Federal IDR portal, and the IDR process begins on the date the notice is received.
Selection of Certified IDR Entity
The parties may mutually agree upon a certified IDR entity to arbitrate the dispute or if the parties are unable to agree, the Departments will select a certified IDR entity. In the notice of IDR initiation, the initiating party will select a certified IDR entity. The non-initiating party may agree or object to the certified IDR entity. If the parties are unable to agree within 3 business days following the initiation of the federal IDR process, the Departments will randomly select a certified IDR entity that charges a fee within the allowed range of fees. If no such entity is available, the Departments will randomly select a certified IDR entity that has written authorization to charge a fee outside of the acceptable range of fees. The selected, certified IDR entity may not have any conflicts with either party including being an agent or employee of a party or having a professional, familiar, or financial relationship with either party. Once selected, the certified IDR entity must attest that it meets all the requirements within 3 business days.
Offer Considerations and Selection
The offer for a payment amount for a qualified IDR item or service must be submitted no later than 10 business days after selecting the certified IDR entity. Importantly, the offer must be expressed as (1) a dollar amount and (2) the corresponding percentage of the QPA represented by that dollar amount. Where batched items and services have different QPAs, the parties should provide these different QPAs and may provide different offers for these batched items and services, provided that the same offer should apply for all items and services with the same QPA.
No later than 30 business days after selecting the certified IDR entity, the certified IDR entity must select one of the offers submitted by the plan or issuer and the provider or facility to be the OON rate for the qualified IDR item or service. Although the certified IDR entity will start with the presumption that the QPA is an appropriate payment amount, it must consider additional circumstances, and the information submitted by parties about those additional circumstance, so long as the information is credible. To the extent credible information is submitted, certified IDR entity must consider:
Whether the credible information about the level of training, experience, and quality and outcome measurements of the provider or facility that furnished the item or service clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate for the item or service;
Whether the credible information about 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) clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate for the item or service;
Whether the credible information about patient acuity or the complexity of furnishing the item or service to the participant, beneficiary, or enrollee clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate for the item or service;
Whether the credible information about the teaching status, case mix, and scope of services of the nonparticipating facility clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate for the item or service; and
Whether the credible information about (1) any demonstrations of good faith efforts (or lack thereof) made by the nonparticipating provider, nonparticipating facility, or nonparticipating provider of air ambulance services or the plan or issuer, as applicable, to enter into network agreements; and, if applicable (2) contracted rates between the provider or facility and the plan or issuer, as applicable during the previous 4 plan years clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate for the item or service.
In addition to the listed factors above, the IDR entity must also consider additional information submitted by a party, so long as the information is credible and relates to the offer at hand. The IDR entity may not, however, consider certain factors in determining which offer is the out-of-network rate:
It may not consider usual and customary charges, i.e., the amount providers in a geographic area usually charged for the same or similar medical service;
It may not consider the amount that would have been billed by a provider or facility had they not been subject to a prohibition on balance billing; and
It may not consider payment or reimbursement rates payable by a public payor, in whole or in part, for items and services furnished by providers or facilities.
Once the IDR entity makes its determination, it must provide the underlying rationale of its determination in a written decision submitted to the parties and the Departments. If the IDR entity does not choose the offer closest to the QPA, then the written decision must explain the additional consideration relied upon, whether the information was credible, and the basis by which it determined that the credible information demonstrated that the QPA was materially different from the appropriate out-of-network rate.
Certification of IDR Entities
The interim final rules also provide a process for selecting certified IDR entities that will be certified for a 5-year period subject to a petition and revocation process. The rules outline several requirements that an IDR entity seeking certification must meet including having (a) sufficient training, expertise, and staffing to make payment determinations, (b) processes to ensure that the entity does not have conflicts of interest, and (c) procedures to ensure that the confidentiality of health information is maintained. The IDR entity must also submit information about its fiscal integrity and stability including submitting three years of financial statements to the Departments. As part of the certification process, the IDR entity must also state the fees that it intends to charge for single determinations and batched determinations.
In addition to the certification procedures, the interim final rules outline the process for a provider, facility, plan, or issuer to petition for denial of a certification of an IDR entity or a revocation of certification. To petition for denial of certification, the petitioner must submit a written petition within 5 business days of the announcement that the IDR entity is seeking certification. The Departments may revoke or deny certification if there is a pattern or practice of failing to comply with requirements or if the entity routinely delays the IDR process such as failing to render decisions in a timely manner among other reasons for denial or revocation.
Publicly Available Information Related to Federal IDR Process
Each calendar quarter, the Departments will make certain information related to the Federal IDR process available to the public on its website. Each month, the certified IDR entities are required to report data within 30 business days of the end of the month. Monthly reports must include the following information: (a) the number of Notices of IDR Initiation submitted; (b) information about the size of provider and/or facility based on number of employees; (c) description of items and services in each notice for which a payment determination was made; (d) relevant QPA geographic region for items and services; (e) offers submitted by each party as a dollar amount and percentage of the QPA; (f) whether plan, issuer, provider, or facility offer was selected; (g) number of times the out-of-network rate exceeded the QPA; (h) information about parties involved including type of provider or facility and items or services at issue; (I) number of business days between selection of certified IDR entity and payment determination amount; and (j) information regarding amount of fees paid to IDR entity.
Good Faith Estimates for Uninsured or Self-Pay Individuals
Under the No Surprises Act, providers and health care facilities are required to inquire about an individual’s health insurance coverage status prior to providing non-emergency services and provide a good faith estimate of expected charges, in clear and understandable language, for furnishing items and services. The good faith estimate is to be provided upon scheduling an item or service or upon request by an individual. The expected charges must include the scheduled or requested item or service, plus any item or service that is reasonably expected to be provided in conjunction with the scheduled or requested item or service and items, including those items and services reasonably expected to be provided by another provider or facility. The good faith estimate must include the expected billing and diagnostic codes for each such item or service.
In addition to the interim final rules issued jointly by the Departments and OPM, HHS also issued interim final rules that address these good faith estimates of health care items and services required under the No Surprises Act. The good faith provisions in the interim final rules apply to items and services for uninsured or self-pay individuals. These provisions also govern the associated patient-provider dispute resolution process and apply to selected dispute resolution (SDR) entities, providers, and facilities.
Provider or Facility Required to Provide Good Faith Estimate
Under the interim final rules, the “convening provider” is responsible for providing a good faith estimate, which must include all the items and services to be provided by “co-providers” and “co-facilities” involved in the scheduled item or services. The “convening provider” is the treating facility or provider at which the self-pay or uninsured individual scheduled an item or service or requested a good faith estimate. When items or services are scheduled or a good faith estimate is requested, the convening provider or facility must request additional scheduling from “co-health providers”—other providers and facilities who are participating (or would participate) in providing care in conjunction with the scheduled item or service—and alert these other providers or facilities that good faith estimates are needed. If a self-pay or uninsured patient separately schedules an item or service with, or requests a good faith estimate from, a co-provider or co-facility, that provider or facility is considered a convening provider or facility for that item or service. In that case, the provider or facility must meet all requirements of a convening provider or facility.
Timing of Good Faith Estimate
The interim final rules require that the convening provider or facility must contact all applicable co-providers and co-facilities no later than one business day after the primary item or service is scheduled or the good faith estimate request is received. No later than one business day after the co-provider or co-facility receives the request from the convening provider, good faith estimate information submitted by co-providers or co-facilities must be received by the convening provider or facility. If any changes are expected in the scope of previously submitted good faith estimate information, the co-provider or co-facility must provide a new good faith estimate to the convening provider or facility. If such changes in the co-provider or co-facility represented in the good faith estimate occur less than one business day before the service or item is scheduled to be furnished, the replacement facility or provider must accept the previously estimated charges as its good faith estimate.
Under the No Surprises Act, good faith estimates must be provided to individuals or authorized representatives within certain timeframes. Specifically, the Act requires that the good faith estimate must be provided no later than one business day after the item or service is scheduled, so long as the item or service is scheduled at least 3 business days before it is furnished. For an item or service scheduled at least 10 business days before it is furnished, the notification must be provided no later than 3 business days after the date of scheduling or request for an estimate.
Key Content of Good Faith Estimate
The interim final rules require that a provider or facility must include an itemized list of the expected charges for each item or service, grouped and displayed by the provider or facility that will be providing the item or service, in the good faith estimate. For each item or service, the applicable service and diagnosis code must be provided. Service codes include CPT, HCPCS, DRG, or National Drug Code (NDC) sets, as well as ICD codes. The coding that best describes the item or service should be used. The expected charge should not be just the gross charge or chargemaster amount, because providers and facilities often adjust their gross charge or chargemaster rates to set the self-pay rate for self-pay or uninsured individuals. Rather, the expected charge must reflect the anticipated billed charges, inclusive of any expected discounts or relevant adjustment that the provider or facility expects to apply to the self-pay or uninsured individual’s charges.
Recipient(s) of Good Faith Estimate
The good faith estimate may be provided to the self-pay or uninsured individual or to an “authorized representative.” The authorized representative must be authorized under state law to provide consent on behalf of the individual, but may not be a provider affiliated with, or an employee of, the facility providing the item or the service. HHS allows an exception for providers and employees who are family members of the uninsured or self-pay individual. Authorized representatives may include individuals from state Consumer Assistance Programs or Legal Aid organizations, who may be resources for assisting individuals with good faith estimates. The interim final rules require that good faith estimates must be provided in written form, either on paper or electronically, in accordance with the individual’s preference as to paper or electronic form. However, HHS has not yet set a required or standardized format for the good faith estimate.
Patient-Provider Dispute Resolution
An uninsured (or self-pay) individual can seek a determination from an SDR entity if the total billed charge from a provider or facility is substantially in excess of the expected charges listed in the good faith estimate for the provider or facility. In the interim final rule, HHS has defined “substantially in excess” as billed charges that exceed the total expected charges in the good faith estimate by $400 or more. However, HHS is seeking comments on that threshold.
Initiation of Patient-Provider Dispute Resolution Process
To begin the process, the individual or authorized representative must submit an initiation notice to the HHS Secretary through the federal IDR portal, electronically or on paper. The initiation notice must be postmarked within 120 calendar days of receiving the initial bill containing charges for the item or service that is substantially in excess of the expected charges in the good faith estimate, for the provider or facility. The initiation process will also require the submission of an administrative fee, the amount of which HHS has not yet set. Once the patient-provider dispute resolution process has been initiated, a provider or facility must halt collections. If the bill has already moved into collections, the provider or facility must cease collection efforts. The provider or facility must also suspend the accrual of any late fees on unpaid bill amounts until after the dispute resolution process has concluded.
Dispute Resolution Process
Once the initiation notice has been received, HHS will select a Select Dispute Resolution (SDR) entity. If information is missing, the SDR entity will notify the individual and the individual will have 21 calendar days to cure the deficiency. The SDR will then determine whether the item or service is eligible for dispute resolution. The health care provider or health care facility must submit information to the SDR entity no later than ten business days after the receipt of the notice from the SDR entity initiating the patient-provider dispute resolution process. This information must include the good faith estimate, a copy of the billed charges, and documentation demonstrating that the difference between the good faith estimate and billed charges is due to unforeseen circumstances and reflects medically necessary care. The uninsured or self-pay individual may, but is not required to, submit additional documentation beyond the information included in the initiation notice (the good faith estimate and the billed charges). Not later than 30 business days after receipt of the information from the provider, the SDR entity must determine the amount to be paid by the uninsured or self-pay individual. These time frames may be extended for good cause on a case-by-case basis at HHS’s discretion.
Settlement and Determination
If the billed charge is higher than the good faith estimate, and the SDR entity determines the provider or facility has not provided credible information regarding the difference between the billed and expected charges, the SDR entity must determine the amount to be paid by the individual is equal to the expected charge. If the SDR entity determines the facility or provider has provided credible information, however, the SDR entity must select as the amount to be paid by the uninsured (or self-pay) individual to be the lesser of: (1) the billed charge; or (2) the median payment amount for the same or similar service in the geographic area.
While the SDR entity payment determination is pending, the parties may settle the payment amount themselves. At any point after the dispute resolution process has been initiated but before the date on which a determination is made by the SDR entity, the parties can settle the payment amount through: (1) an offer of financial assistance, (2) an offer to accept a lower amount, or (3) an agreement by the uninsured (or self-pay) individual to pay the billed charges in full.
Errors and Omissions in Good Faith Estimate
If a provider or facility makes an error or omission in the good faith estimate, even when acting in good faith and with due diligence, the provider or facility may correct the information as soon as possible. Such error or omission will not be considered a failure to comply. If, however, the services are furnished before the error made in the good faith estimate is addressed and the billed charges are substantially in excess of the good faith estimate, the provider or facility may be subject to the patient-provider dispute resolution process. The same is true if a provider or facility must obtain information from another individual or entity to supply its good faith estimate and relies in good faith on that information, but the information is incomplete or inaccurate.
The No Surprises Act provides that an external review process will be available to group health plans and health insurance issuers offering group or individual health insurance coverage with respect to adverse determinations by the plan or issuer. The interim final rules amend the scope of claims eligible for external review to include adverse benefit determinations related to compliance with the surprise billing and cost-sharing provisions. To that end, the interim final rules add examples of the types of adverse benefits determinations that will be eligible for external review. The interim final rules also extend the external review requirement to grandfathered health plans and health insurance issuers for adverse benefit determinations involving items and services covered by the No Surprises Acts requirements. The interim final rules amend the regulations to require grandfathered plans and coverage to provide for external review of claims covered by the protections of the No Surprises Act for plan years (or, in the individual market, policy years) beginning on or after January 1, 2022.
These regulations are generally applicable to group health plans and health insurance issuers for plan and policy years beginning on or after January 1, 2022. Written comments to the interim final rule must be received by 5 p.m. 60 days after publication in the Federal Register.
A copy of the final rule is available here.
Reporters, Ahsin Azim, Washington, D.C., +1 202 626 9262, firstname.lastname@example.org, Rebecca Gittelson, Atlanta, +1 404 572 4679, email@example.com, and Taylor Whitten, Sacramento, +916 321 4815, firstname.lastname@example.org.
HHS Provider Relief Fund Updates – Last week, HHS launched the application for both Provider Relief Fund (PRF) Phase 4 and American Rescue Plan (ARP) Rural payments. As described in the September 13, 2021 Health Headlines, HHS made $25.5 billion in new funding available for healthcare providers affected by the COVID-19 pandemic—$8.5 billion is available for select rural providers, and the remaining $17 billion is set aside for PRF Phase 4 payments. Additionally, HHS released additional information on the PRF Phase 4 payment methodology and launched the PRF Phase 3 reconsideration process.
PRF Phase 4 and the ARP Rural Payments Application
HHS announced $25.5 billion in new funding for healthcare providers on the frontlines of the pandemic. This funding includes $8.5 billion in ARP resources for providers that serve rural Medicaid, CHIP, or Medicare patients, and an additional $17 billion for PRF Phase 4 for a broad range of providers that can document revenue loss and expenses associated with the pandemic.
Providers can apply for both programs in a single application, and the application closes on October 26, 2021 at 11:59 p.m. ET. Applications must undergo a number of validation checks before financial information is submitted so providers are encouraged to begin their application as soon as possible to ensure they are able to meet the deadline. Application information is available here.
HRSA published detailed payment methodology for PRF Phase 4 and ARP Rural payments.
PRF Phase 4
Phase 4 consists of two components:
Base Payments: Approximately 75% of the funding will be allocated to providers based on their reported changes in revenues and expenses for the period from July 1, 2020 to March 31, 2021. Smaller and medium-sized providers (based on annual net patient care revenues) will receive relatively higher percentages of their changes in revenues and expenses from this period.
Bonus Payments: Approximately 25% of the funding will be used to make bonus payments to providers based on the provider’s level of participation in Medicaid, CHIP, and Medicare.
Once the application cycle closes, HRSA will begin pre-payment risk mitigation and cost containment activities. HRSA will first calculate an initial loss ratio as follows:
Quarterly Losses = Sum of Operating Revenues from Patient Care (see Applicant Instructions Fields 13.1-13.6) MINUS Sum of Operating Expenses from Patient Care (see Applicant Instructions Fields 14.1-14.6)
Loss Ratio = Quarterly Losses DIVIDED BY Annual Net Patient Care Revenues (see Applicant Instructions Field 12)
Next, HRSA will employ several pre-payment risk mitigation and cost containment safeguards to ensure that information is accurate and legitimate and that HRSA is making payments equitably. These may include:
New providers in 2019 or 2020 that began delivering patient care between January 1, 2019 and December 31, 2020.
Pharmacies and Durable Medical Equipment (DME) suppliers.
Anomalous financial information.
HRSA will make payment adjustment determinations based on the provider applications that have been received and associated flags. The payments adjustments and caps methodology is available here.
ARP Rural Payment
Payments will be based on Medicare, Medicaid, and CHIP administrative claims data from January 1, 2019 through September 30, 2020. To reduce administrative burden and streamline application processing, providers will not provide claims data in the application. HRSA will use data to which it already has access.
Step 1: HRSA will price Medicaid and CHIP claims data at national Medicare rates, to eliminate any impact from the disparities between Medicare and Medicaid/CHIP reimbursement rates with limited exceptions.
Step 2: HRSA will calculate the number and type of Medicare, Medicaid, and CHIP claims per billing/subsidiary TIN from January 1, 2019 through September 30, 2020 and multiply them by the relevant prices from Step 1.
Step 3: HRSA will adjust the claims-based payments to the amount of funding available for ARP Rural (approximately $8.5 billion).
Step 4: HRSA will then aggregate billing TINs' payments to the filing TIN.
The methodology is available here.
Phase 3 Reconsideration Process
HHS opened its Phase 3 Payment Reconsideration program. The deadline to submit the reconsideration request form is November 12, 2021, but HRSA encourages providers to apply early. More information on reconsideration is available here.
Reporter, Ariana Fuller, Los Angeles, +1 213 443 4342, email@example.com.
OIG Principal Deputy Inspector General Speaks at AHLA Fraud and Compliance Forum – On September 22, 2021, OIG Principal Deputy Inspector General Christi Grimm delivered a keynote speech to the American Health Law Association (AHLA) Fraud and Compliance Forum. Consistent with her remarks this spring at the Health Care Compliance Association Compliance Institute, Principal Deputy Inspector General Grimm discussed OIG’s multi-year initiative to modernize OIG’s guidance, data, and other resources. Additionally, she emphasized OIG’s enforcement focus on improving nursing home performance and pandemic response oversight.
Principal Deputy Inspector General Grimm previewed a forthcoming Request for Information (RFI) on OIG’s Modernization Initiative to Improve Its Publicly Available Resources. When released, the RFI will be published on OIG’s website and published in the Federal Register. The RFI will seek feedback on how to improve OIG’s industry resources. During the pandemic, OIG created a frequently asked questions (FAQ) process to provide time-sensitive information to industry stakeholders and, in the RFI, will be seeking feedback on that process. OIG will also seek input on “reimagining” the advisory opinion process, which OIG recognizes that some stakeholders view as slow and cumbersome. OIG also wants to modernize the List of Excluded Individuals and Entities (LEIE) and is considering how best to adopt modern data sharing practices for the LEIE, such as application programming interfaces. In addition to the RFI, OIG also plans to gather input through roundtables and is considering other ways to collect feedback, such as user surveys.
Principal Deputy Inspector General Grimm described OIG as being “laser focused” on spurring significant improvements for the safety, health, and welfare of nursing home residents. She emphasized the devastating impact that COVID-19 has had on Medicare beneficiaries in nursing homes, particularly beneficiaries of color and dual-eligible Medicare and Medicaid beneficiaries. OIG is currently conducting work to further understand the impact of COVID-19 on nursing homes, reviewing infection prevention and control deficiencies and nursing homes’ reporting of required COVID-19 information.
She also reiterated OIG’s efforts related to COVID-19 oversight and enforcement, noting that since 2020, Congress has passed more than $5 trillion in COVID-19-related relief spending, which is more than all federal spending in 2019. OIG is conducting several audits of the Provider Relief and Uninsured Funds. OIG is also working with the Pandemic Response Accountability Committee, which includes Inspectors General from multiple federal departments and is evaluating duplicate payments across programs.
Reporter, Isabella E. Wood, Atlanta, + 1 404 572 3527, firstname.lastname@example.org.
King & Spalding Client Alert: Study Shows Hospital M&A Deals Linked to Improved Quality of Care – A research study published on September 20, 2021 in JAMA Network Open found a “significantly greater” reduction in inpatient mortality for certain conditions among patients admitted to merged and acquired rural hospitals as compared to rural hospitals that remained independent. This study is important evidence that M&A deals for rural hospitals lead to quality of care benefits for patients beyond saving these hospitals from potentially closing their doors. A new King & Spalding Client Alert available here provides a summary and discussion of the published study.
Monthly Editors: Ahsin Azim and Dennis Mkrtchian