FAQs Part 62 – Post Texas Medical Association et al. v. United States Department of Health and Human Services et al. (TMA III), and FAQs on Partial Reopening of Dispute Initiation Post TMA IV
 

Background

Protection against surprise billing was enacted as part of the No Surprises Act (“NSA”).¹ Federal regulators promulgated interim final rules in July 2021 (“July 2021 rules”) implementing some of the provisions. The NSA and July 2021 rules generally prohibit balance billing and limit cost sharing for the following:

1. emergency services provided by nonparticipating providers and nonparticipating emergency facilities,
2. non-emergency services provided by nonparticipating providers in a participating health care facility (subject to the exception below), and
3. out of network air ambulance services.

Exception: However, if patients are provided notice and given consent to waive surprise billing protections, consistent with the requirements, nonparticipating providers and nonparticipating emergency facilities may balance bill for certain post-stabilization services and for certain non-emergency services furnished in a participating health care facility, in limited circumstances.

Cost Sharing Calculations

Under the NSA and July 2021 rules, cost-sharing for out-of-network emergency services and applicable non-emergency items and services cannot be greater than that would apply if the services were provided by a participating provider or participating emergency facility and must be calculated based on the “recognized amount,” which is:

1. an amounted determined by an applicable All-Payer Model Agreement under Section 1115A of the Social Security Act;
2. If no applicable All-Payor Model Agreement, an amount determined by a specified State law; or
3. If no applicable All-Payor Model Agreement  or specified State law, the lesser of the billed charge or the qualifying payment amount (“QPA”).

QPA is generally the median of the contracted rates recognize by the plan or issuer on January 31, 2019, for the same or similar item or service that is provided by a provider in the same or similar specialty or facility of the same or similar facility type and provided in the geographic region in which the item or service is furnished,  increased for inflation. Under the July 2021 rules, the median contracted rate was determined with respect to all plans of the plan sponsor (or, if applicable, administering entity) or all coverage offered by the insurer that are offered in the same insurance market. 

TMA III District Court Decision

The U.S. District Court for the Eastern District of Texas issued an opinion on August 24, 2023, vacating certain  provisions of the July 2021 rules and other guidance issued by federal regulators. The Court upheld the July 2021 rules, except the Court vacated the following:

1. Provisions related to the QPA methodology, including:

1. Inclusion of contracted rates for items and services “regardless of the number of claims paid at that contract rate” otherwise known as “ghost rates”;
2. The use of contracted rates of all self-insured group health plans administered by the same entity;
3. Rules governing calculation of the QPA for providers “in the same or similar specialty”
4. Exclusion of bonus, incentive and risk-sharing payment, and the exclusion of single case agreements.

2. Provisions starting the 30-calendar-day timeframe to send an initial payment or notice of denial of payment for air ambulance services when the claim becomes a “clean claim”.

Federal Guidance under FAQs – Part 62

The Department of Justice has appealed the TMA decision, but is not expected to seek a stay of the order pending an appeal. Federal regulators stated that the Court ruling is in effect and plans/insurers have to comply with the decision, and federal regulators do not intend to issue additional interim guidance addressing the QPA methodology in response to TMA III.

Good faith, reasonable interpretation – Federal regulators state that plans/insurers are expected to calculate QPAs using a good faith and reasonable interpretation of the applicable statutes and regulations that remain in effect after the TMA III decision.

Enforcement discretion – Federal regulators will exercise enforcement discretion under the applicable NSA provisions for any plan or  insurer, or party to a payment dispute in the Federal IDR process, that uses a QPA calculated in accordance with the methodology under the July 2021 rules and guidance in effect immediately before the decision in TMA III for items and services furnished BEFORE May 1, 2024. If necessary, Federal regulators will reevaluate and decide whether it is necessary to provide additional time, not to exceed November 1, 2024. This enforcement discretion applies to QPAs for purposes of patient cost sharing, providing required disclosures with an initial payment or notice of denial of payment, and providing required disclosures and submissions under the Federal IDR process. Federal regulators encourage States to take a similar approach.

Emphasis on Assisting rather than Penalties – Federal regulators’ approach to implementation of the NSA that were affected by TMA III will be “marked by an emphasis on assisting (rather than imposing penalties) regulated entities that are working diligently and in good faith to recalculate QPAs and comply with applicable statutes and regulations that remain in effect after the TMA III decision.

Continue to make Disclosures about the QPA – Plans and insurers must continue to comply with requirements related to disclosure of information about the QPA.  This includes the requirement to include a statement certifying that the QPA applies for purposes of the recognized amount (or, in the case of air ambulance services, for calculating the participant’s cost share) and that each QPA was determined in compliance with applicable rules.² For items and services furnished before May 1, 2024, federal regulators will exercise enforcement discretion with respect to these disclosures where a plan or insurer certifies that a QPA was determined in compliance with applicable rules using the methodology under the July 2021 rules and guidance in effect immediately before the decision in TMA III, provided that the plan or insurer, in a timely manner upon request of the provider, facility or provider of air ambulance services, discloses that it is using a QPA calculated in such a manner.

IDR Entity Determinations – Certified IDR entities can consider the QPA submitted in light of the TMA III decision among any other factors and additional information in determining which party’s offer best represents the value of the qualified IDR item or service as the out of network rate consistent with the regulations. Certified IDR entities may request, and disputing parties may provide, additional information relevant to the submitted QPA. 

Air Ambulance Claims and Providers – Not later than 30 calendar days after a bill for air ambulance services is transmitted by a nonparticipating provider, the plan/insurer must pay or deny the claim.  Regulators encourage plans/insurers to communicate with providers to obtain the information needed to provide a full and fair review within the 30-day calendar-day timeframe.  NSA continues to prohibit balance billing for air ambulance services provided by a nonparticipating provider, even if the claim is denied for lack of sufficient information (i.e., because it is not a “clean claim”).  Nonparticipating providers of air ambulance services may not balance bill a participant if a claim for air ambulance services is denied for lack of sufficient information unless and until the services are determined to not be covered services under the plan or coverage.

FAQs on Partial Reopening of Dispute Initiation

Background

On August 3, 2023, the US. District Court for the Eastern District of Texas issued a decision in Texas Medical Association, et al, v. United States Department of Health and Human Services, et al, (“TMA IV”).  This order vacated the batching provisions of federal regulations³ and vacated the $350 per party administrative fee established by federal guidance issued on December 23, 2022. On August 24, 2023, the TMA III decision, not only vacated certain regulations related to the calculation of QPA, but it vacated the guidance issue in August 2022 that the two service codes (one representing a lift off code, or base rate and the other representing a per mileage code) for a single air ambulance transport could not be considered together in a single IDR dispute. 

FAQS

On October 6, 2023, Federal regulators issued FAQs on the partial reopening of the Federal IDR portal for the initiation of new single disputes, including single disputes involving bundled payment arrangements. Regulators previously directed certified IDR entities to resume processing all single disputes submitted on or before August 3, 2023.  However, processing and initiation of batched disputes and initiation of air ambulance disputes remain temporarily suspended, pending additional guidance and system updates for compliance with TMA IV and TMA III. Parties seeking to initiate a single dispute, including single disputes involving bundled payment arrangements, for whom the Federal IDR initiation deadline falls on a date beginning August 3, 2023, through November 3, 2023, have until November 3, 2023, to initiate a new dispute.