Medicare Compliance & Reimbursement

The latest IDR changes provide clarity on the process.

With a third rule in circulation, the feds are modifying the No Surprises Act (NSA) … again. But this time, it looks like a critical court decision may have helped clarify some points in the balance billing opus.

Background: When the feds first drafted their NSA plans in the Consolidated Appropriations Act, 2021 (CAA) in December 2020, hopes were high to alleviate surprise billing woes with patient-centered policies — especially in the midst of a pandemic. But the NSA rollout hasn’t been easy, with myriad changes and a long, winding timeline that has brought provider consternation and confusion as well as legal challenges aplenty (see Medicare Compliance & Reimbursement, Vol. 47, Nos. 14 & 21 and Vol. 48, Nos. 5 & 9).

Now: On Aug. 26, the Departments of the Treasury, Labor, and Health and Human Services in coordination with the Centers for Medicare & Medicaid Services (CMS) collaboratively published “Requirements Related to Surprise Billing: Final Rules” in the Federal Register. This latest rule is a follow-up to prior rulemaking, Parts I and II, published as interim final rules in July and October of 2021, respectively.

Here’s What Impacted the NSA Changes

CMS’ guidance on the NSA has evolved since the release of the first two rules. Fact sheets, provider letters on standards and requirements, and more have abounded, but that hasn’t stopped the feds from being inundated with legal battles over the NSA.

Court decisions by the U.S. District Court for the Eastern District of Texas on Feb. 23, and July 26, 2022, vacated certain parts of the October 2021 interim final rule related to the independent dispute resolution (IDR) process and qualifying payment amount (QPA) decisions, CMS indicates in a fact sheet on the final rules.

Under the October 2021 interim final rule, “the Departments promulgated rules regarding the Federal IDR process, specifically with respect to the factors that an IDR entity must consider and directing it to select the offer that was closest to the QPA,” note attorneys Lynsey Mitchel, Carmen Jule, and Jarrod Brodsky with law firm Sheppard Mullin in online legal analysis. “These interim final rules were challenged in court and subsequently vacated,” Mitchel, Jule, and Brodsky explain.

In fact, the legal challenges and public commentary on Part II caused the agency to release this third reform, CMS says. “These final rules specify that certified IDR entities should select the offer that best represents the value of the item or service under dispute after considering the QPA and all permissible information submitted by the parties,” the fact sheet clarifies.

“The Final Rules provide some certainty for providers and facilities (collectively, Providers) who were left wondering how the IDR process would move forward given the pushback it had received from the courts,” point out attorneys Kirk Davis and Danielle Gordet with law firm Akerman LLP in online legal analysis. “The qualifying payment amount (QPA) is no longer the presumptive factor in payment determinations,” note Davis and Gordet.

Instead, the certified IDR entity must factor in the QPA and “all additional permissible information submitted by each party to determine which offer best reflects the appropriate out-of-network rate,” the fact sheet mentions. This extra information can’t include data “prohibited by the statute” either, warns the agency.

Certified IDR entities are also advised to evaluate information to verify credibility and “avoid double counting information that is already accounted for by the QPA or by any of the other information submitted by the parties,” CMS requires. Only after these assessments should the certified IDR entity make a decision on the offer pertaining to the value of the disputed item or service.

QPA: The final rules also beef up information disclosure requirements for group health plans and health insurance issuers about QPAs discussed in the July 2021 interim final rule. And CMS defines “downcoding” in the final rules and offers an update to circumvent this practice.

“Downcoding occurs when payers change, add, or remove service codes from processed claims, which may result in payment of lower amounts,” note attorneys Alison Lima

Andersen, Carolina Turner English, and D. Austin Rettew with law firm ArentFox Schiff LLP. “Under the new rule, payers must provide additional information related to ‘downcoded’ claims, including a rationale or explanation justifying the downcode, and the amount that would have been the QPA had downcoding not been applied,” Lima Anderson, Turner English, and Rettew add in online legal analysis.