Insights

Published January 10, 2022

No Surprises Act Implementation Guide: The Qualifying Payment Amount — Getting Your Ducks in a Row

No Surprises Act Implementation Guide

This is the fourth and final installment of PYA’s No Surprises Act Implementation Guide. 

For those emergency and non-emergency services to which the No Surprises Act’s (NSA) prohibition on surprise billing applies, the patient’s cost-sharing amount is based on the qualifying payment amount, or QPA. Furthermore, in the absence of an All-Payer Model Agreement or specified state law, the NSA provides for negotiation between the health plan or health insurance issuer and the provider to determine the amount to be paid by the plan or issuer. If the parties are unable to reach an agreement, the NSA provides for the amount payable to be determined by a certified independent dispute resolution entity (CIDRE), which takes into account the QPA for the item or service, among other specified facts and circumstances.

To navigate this new regulatory scheme, providers need to understand the way the QPA is calculated and how it is used to determine the patient’s cost-sharing amount, as well as the QPA’s impact on plans’ and issuers’ out-of-network payments to providers. Providers should be prepared to challenge the presumption that the QPA is the appropriate payment amount, especially when the QPA is significantly less than the provider’s negotiated rates for the same item or service.[1] At the end of this article, we identify six specific tasks on which providers should immediately focus related to these matters. 

How is the QPA calculated? 

The QPA for a specific item or service is the median of the contracted rates recognized by the plan or issuer on January 31, 2019, for the same or similar item or service furnished by a provider in the same or similar specialty in a specific geographic region, adjusted annually for inflation. The Internal Revenue Service recently announced that for items and services provided on or after January 1, 2022, and before January 1, 2023, the combined percentage increase to adjust the 2019 median contracted rate is 1.0648523983.

The median contracted rate is calculated by arranging in order from least to greatest the contracted rates of all plans of the plan sponsor or all coverage offered by the issuer in the same insurance market. (Any risk-sharing, bonus, penalty, or other incentive-based or retrospective payments or payment adjustments are excluded for purposes of calculating the QPA.) The amount negotiated under each contract is treated as a separate amount. If the same amount is paid under two or more separate contracts, each contract is counted separately. If there are an even number of contracted rates, the median contracted rate is the average of the middle two contracted rates.

The regulations provide an alternative methodology for a plan or issuer to determine the QPA in cases where either has insufficient information to calculate a median contracted rate for a specific item or service (i.e., fewer than three contracted rates for that item or service in the same insurance market). The regulations also provide methodologies for determining QPAs for new plans and new service codes.

How does a provider access the QPA to calculate the patient’s cost-sharing amount?  

A provider that furnishes out-of-network services subject to the NSA’s ban on surprise billing (i.e., emergency services and certain non-emergency services furnished in an in-network facility) must submit a claim for payment for those services to the patient’s plan or issuer. (New ID card requirements effective January 1, 2022, should make it easier for the provider to determine the proper way to submit such a claim.) For now, there is no code or other indicator the provider must include on the claim; it will be up to the plan or issuer to identify the claim as one for out-of-network services.

Upon receipt of a complete claim, the plan or issuer must respond to the provider within 30 business days. The response must include the QPA for the item or service to permit the provider to calculate the patient’s cost-sharing amount (along with a certification statement that the QPA applies and was calculated appropriately). Under the NSA, if the QPA is $200, and the patient is responsible for a 20% co-payment, the provider would be prohibited from charging the patient more than $40 (assuming no deductible).

Plans and issuers will be required by July 1, 2022, to disclose on a public website in-network provider rates for covered items and services and out-of-network allowed amounts and billed charges for covered items and services in machine-readable formats. Because regulations implementing this statutory requirement have not yet been published, we do not know whether these disclosures will include sufficient information from which one can calculate or verify a plan’s or issuer’s QPA for a specific item or service in a specific geographic region. For now, providers will have to rely on the information furnished by the plan or issuer.

How is the amount paid to the provider by the plan or issuer determined? 

In addition to providing the QPA, the plan or issuer also must furnish the provider with initial payment or notice of denial within 30 business days of claim submittal. The plan’s or issuer’s initial payment to the provider may or may not be based on the QPA; the plan or issuer is the sole decision-maker regarding the amount of the initial payment.

If the provider is not satisfied with the amount of the initial payment, the provider must notify the plan or issuer within 30 business days of receipt that the provider wants to initiate a 30-business-day open negotiation period. Failure to provide timely notice constitutes acceptance of the plan’s or issuer’s initial payment. The federal agencies responsible for the implementation of the No Surprises Act (the “Agencies”) have developed a standard notice providers should use to communicate with plans and issuers for this purpose.    

During the open negotiation period, the parties will go back and forth regarding the appropriate payment for the item or service. If, at the end of this period, the provider is not satisfied with the amount offered by the plan or issuer, the provider may initiate the independent dispute resolution (IDR) process by (1) providing a completed Notice of IDR Initiation to the plan or issuer (again, this is a standard notice developed by the Agencies) and (2) submitting the same notice to the Federal IDR portal.[2]

These submissions must be made no later than four business days following the end of the open negotiation period. Again, a provider’s failure to make a timely submission constitutes acceptance of the initial payment amount.  

How is the CIDRE selected?

In completing the Notice of IDR Initiation, the provider will identify the CIDRE it wants to resolve the dispute and provide details regarding the services provided and the negotiations with the plan or issuer. The list of current certified IDR entities and the fees they presently charge is available here.

If the plan or issuer fails to object within three business days of the date of initiation of the Federal IDR process (i.e., the date on which the provider submits the Notice of IDR Initiation to the Federal IDR portal), the provider’s preferred CIDRE will be selected, provided that CIDRE does not have a conflict of interest. If the plan or issuer objects, it must notify the provider of the objection and propose an alternative CIDRE.

The provider must then agree or object to the alternative CIDRE. By no later than four business days after the date of initiation of the Federal IDR process, the provider must submit through the Federal IDR portal a completed Notice of Certified IDR Selection (another standard notice developed by the Agencies). If such notice indicates the parties have not agreed to a certified IDR, the Agencies will select one for them through a random selection method. The selected CIDRE must then attest that it does not have any conflicts of interest with the parties; if it cannot do so, another CIDRE will be selected using a similar process.

Once the CIDRE is selected, both the provider and the plan or issuer will pay to the CIDRE the non-refundable administrative fee due to the Agencies for participating in the Federal IDR process. For 2022, this fee is $50.00.

What information does the CIDRE consider in determining the appropriate out-of-network payment?

Following selection of the CIDRE, each party will have 10 business days to provide its notice of offer to the CIDRE, along with payment of the CIDRE fee. Unlike the aforementioned administrative fee, which pays for the Agencies to maintain the Federal IDR process, the CIDRE fee compensates the entity for its work in resolving the parties’ dispute. For 2022, these fixed fees range from $200-$500 for single determinations and $268-$670 for batched determinations.[3] 

The Agencies require the following data elements to be included in the notice of offer submitted to the CIDRE: 

Data Element

Description

 

Offers of Payment From Each Party

Final offer of payment expressed as both a dollar amount and as a percentage of the corresponding QPA.

 

QPA for Applicable Year

QPA for the applicable year for the same or similar items or services. Where batched items and services have different QPAs, the parties should provide these different QPAs and may provide different offers for these items and services, provided that the same offer should apply for all items and services with the same QPA.

 

Size of Provider Practice/Facility

Specify whether the provider practice or organization has fewer than 20 employees, 20 to 50 employees, 51 to 100 employees, 101 to 500 employees, or more than 500 employees. Facilities must specify whether they have 50 or fewer employees, 51 to 100 employees, 101 to 500 employees, or more than 500 employees.

 

Specialty of Provider Practice/Facility

 

Specify specialty of the provider or facility named in the dispute.

 

Coverage Area

Information on the coverage area of the plan or issuer, the relevant geographic region for purposes of the QPA, and, for plans, whether coverage is fully insured or fully or partially self-insured.

 

Additional Required Information

Any information requested by the CIDRE related to the offer, as long as it does not relate to usual and customary charges, the billed amount, or payment or reimbursement rate for the items and services furnished by the provider or facility payable by a public payer.

 

Additional Optional Information

Additional information related to the offer that the CIDRE must consider in making a payment determination, to the extent credible information that clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate is submitted by a party.

 

According to the Agencies, such additional optional information may include the following: 

  • The level of training, experience, and quality and outcome measurements of the provider or facility that furnished the qualified IDR item or service.
  • The market share of the provider or the plan or issuer (including, for self-insured plans, the market share of their third-party administrator [TPA] in instances where the self-insured plan relies on the TPA’s networks) in the geographic region in which the item or service was provided.
  • Patient acuity or the complexity of furnishing the item or service to the participant, beneficiary, or enrollee.
  • If the provider is a facility, its teaching status, case mix, and scope of services.
  • Any demonstrations of good faith efforts (or lack thereof) made by the provider or the plan or issuer to enter into network agreements and, if applicable, contracted rates between the provider and the plan or issuer, as applicable during the previous four plan years.

Missing from the Agencies’ list is information demonstrating that the cost of delivering a specific item or service has increased at a higher-than-average rate since 2019. As noted above, the QPA is based on 2019 rates adjusted annually for inflation. The same annual rate of adjustment applies to all items and services, even though the costs associated with some services may increase at a significantly higher rate than others (e.g., due to a significant increase in drug prices or a localized increase in wages). In these cases, the provider should include such information to challenge the QPA as the appropriate out-of-network payment amount.     

The Agencies also did not account for changes in the values assigned to certain codes. For example, for 2021 and 2022, the American Medical Association made significant adjustments to the relative value units assigned to several evaluation and management codes, resulting in higher reimbursement for these services. Again, this provides a reasonable basis for challenging the QPA for such services. 

What’s the process for issuance of a CIDRE’s decision?

Following receipt of the parties’ offers, the CIDRE must issue a written decision within 30 business days in a standard format developed by the Agencies. Such decision must identify which of the parties’ offers the CIDRE selected to be the appropriate out-of-network rate for the item or service. (The CIDRE does not have the authority to impose a payment amount other than the offers made by the provider and the plan or issuer). 

If the CIDRE selects the offer other than the one that is closest to the QPA, the CIDRE must identify the credible information on which it relied to determine that the QPA was materially different from the appropriate out-of-network rate based on permitted considerations (i.e., other than usual and customary charges, the billed amount, or payment or reimbursement rate for the items and services furnished by the provider or facility payable by a public payer). Within 30 business days following issuance of its decision, the CIDRE must return the fee paid by the prevailing party, while retaining the full amount of the fee paid by the other party. 

If, after initiating the Federal IDR process, but before the CIDRE has made its decision, the parties resolve the matter, they may withdraw the matter from consideration by submitting a notice of agreement (yet another standard notice developed by the Agencies) through the Federal IDR portal. If the parties paid the CIDRE fees prior to reaching an agreement, the CIDRE will refund each party one-half of the amount it paid, unless instructed otherwise by the parties.    

What should providers do now? 

  1. Establish a process to identify and track claims subject to the NSA’s prohibition on surprise billing.

A provider that bills a patient more than the QPA-based cost-sharing amount for a service for which surprise billing is prohibited violates the NSA. Thus, a provider needs to identify those claims for which it requires the plan or issuer to provide the QPA to determine the patient’s cost-sharing amount. At present, there is no uniform requirement to identify these claims upon submission to the plan or issuer. The plan or issuer will provide the QPA and the required certification in response to those claims the plan or issuer identifies as subject to the NSA’s prohibition on surprise billing. A provider should be able to compare the information received from plans and issuers to the provider’s internal list of such claims and resolve any differences.

  1. Review policies regarding collection of payment at time of service.

As explained earlier, a provider cannot charge a patient for those services for which the NSA prohibits surprise billing more than the cost-sharing amount based on the QPA. Thus, a provider should review its policies regarding the collection of payment at the time of service to determine if there is any risk of “over-charging” in violation of the NSA and make any necessary modifications to mitigate any identified risk.

  1. Establish a process to review plans’ or issuers’ initial payment on NSA claims.

As described above, a plan or issuer is not required to pay the provider the QPA for the item or service, or any other specified amount. It would not be surprising if plans or issuers routinely made initial payments below the QPA on the assumption some providers will not challenge these payments, and then offer the QPA as a “compromise” when the provider initiates the open negotiation period. Thus, a provider will need a process for reviewing the amount of such payments, including a comparison to the payment the provider receives from other plans or issuers for the same or similar services. This comparison will inform the decision whether to pursue an open negotiation period with the plan or issuer in pursuit of additional payment. 

  1. Assign responsibility for management of IDR timelines.

If, at any time in the process, a provider misses an established deadline for challenging a plan’s or issuer’s initial payment amount, the provider, in effect, accepts that amount. Thus, providers will need to assign responsibility for management of the IDR timelines in compliance with regulatory requirements. Such individual(s) should be familiar with the processes and forms established by the Agencies for the IDR process.    

  1. Prepare to challenge the QPA as the appropriate out-of-network rate.

For those providers that have successfully negotiated favorable contract rates, the presumption that the QPA is the appropriate out-of-network rate could have significant negative impacts over time, as plans and issuers become less willing to contract with these providers. Thus, providers should prepare now to defend their higher contract rates by compiling and organizing relevant information. For example, an academic medical center should be prepared to explain to a CIDRE its higher cost structure necessitating higher reimbursement rates. Similarly, rural providers should develop their case that lower patient volumes require higher per-case reimbursement to cover overhead expenses.   

  1. Create a process of remitting administrative and CIDRE fees.

As necessary, a provider will need to make modifications to its accounts payable process to ensure timely payment of these fees to avoid missing deadlines (and thus waiving any challenge to the initial payment amount). Also, a provider should establish a tracking mechanism to ensure refunds of CIDRE fees are received. 

For assistance with NSA compliance, or with any matter involving compliance, valuation, or strategy and integration, one of our executive contacts would be happy to assist. You may email them below, or call (800) 270-9629. 

 

[1] While a lawsuit has been filed challenging the presumption that the QPA is the appropriate out-of-network payment rate in all cases, that presumption presently remains in place. 

[2] If an All-Payer Model Agreement or specified state law applies, the item(s) and/or service(s) will not be eligible for the Federal IDR process.

[3] The NSA regulations permit multiple items or services to be considered jointly as part of one payment determination (i.e., batched) only if those items or services (1) are billed by the same provider (under the same National Provider Identifier or Tax Identification Number), (2) would be paid by the same plan or issuer, (3) are billed under the same service code (or comparable code under a different procedural code system), and (4) must have been furnished within the same time period.

Executive Contacts

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