Biden Administration Issues Final Rule on No Surprises Act

Last Friday, the U.S. Departments of Health and Human Services, Labor and Treasury issued a joint final rule that rectifies issues with the implementation of the No Surprises Act, a law that aims to curb surprise billing practices.

The rule defines the processes for payers and providers to settle payment for services provided that fall out of an insurance network. It smooths out a prior issue in which the government-selected arbiter for the mediation between the payer and provider would choose the rate closest to the regional median in-network payment for the same services, called the qualifying payment amount (QPA). Providers have taken issue with the QPA, alleging that the process favors insurers, according to RevCycle Intelligence.

The new rule fixes this issue by specifying that the QPA should be considered but the arbiter “must consider all additional information submitted by a party to determine which offer best reflects the appropriate out-of-network rate.”

The rule also requires insurers to provide information about the median contracted rate with each initial payment or denial of payment when the rate is drawn from the same amount that determines cost-sharing. If insurers change a code or a modifier, they are required to disclose and explain the downcoding.

Modern Healthcare reports that a federal court ruled last February that arbiters are not to place more weight on prior payment arrangements between a provider and insurer than other factors, which motivated the update to the guidance outlining the arbitration process. The new rule is expected to draw even more litigation.

The rule was met with mixed reviews, as patient advocates applauded the Biden administration for sticking with the QPA as a key component in payment determinations, but the employer-provided insurance lobby took issue. According to Inside Health Policy, the lobby now believes that providers have the upper hand in negotiations and this will require businesses to pay inflated rates to out-of-network providers. From the ERISA Industry Committee (ERIC), which represents self-insured employers, via CEO Annet Guarisco Fildes:

Unfortunately, the Final Rule falls short of lowering healthcare costs for employer plan sponsors, and ultimately patients. Instead of adhering to Congress’s original intent, the administration back-tracked on limiting out-of-network payments to reasonable market-driven rates. The administration’s actions will not lower healthcare costs. To the contrary, plan sponsors and the employees they provide health coverage will continue to be forced to line the pockets of medical providers that choose to remain out-of-network.

The fact sheet for Requirements Relates to Surprise Billing: Final Rules can be found at the U.S. Department of Labor website.