We previously noted that the regulations implementing the No Surprises Act (“NSA”) appeared to be inconsistent with the NSA because they seemed to establish the qualifying payment amount (“QPA”) as the appropriate payment amount to be used in arbitrations by certified IDR entities (viz. the regulation-established independent dispute resolution (“IDR”) process) between plans and providers, and that the United States District Court for the Eastern District of Texas (“Texas District Court”) vacated portions of the NSA regulations relating to the QPA for purposes of the IDR process.  The Federal government recently responded to the Texas District Court—by removing such portions of the NSA regulations.

Regulatory and Case Law Framework

On July 1, 2021, the Departments of Health and Human Services (“HHS”), Labor, and Treasury (collectively, “Departments”) and the Office of Personnel Management (“OPM”) issued interim final rules relating to the NSA, which, in part, required plans to disclose the QPA to out-of-network (“OON”) providers, facilities, and air ambulance service providers when the QPA serves as the baseline for cost-sharing and with each initial payment or notice of denial of payment for items and services.

On October 7, 2021, the Departments and OPM issued additional interim final rules relating to the NSA, which, in part, established the IDR process to determine the OON rate for services if negotiated settlements between parties cannot be agreed upon.  These interim final rules also established the information that a certified IDR entity—as the neutral arbiter of the IDR process—must consider when making a payment determination.

Notwithstanding the implementation of the foregoing requirements and processes, these regulations appeared to create the presumption that the QPA was the appropriate OON rate.  This presumption had been successfully challenged by two plaintiffs in the Texas District Court in February and July 2022.  And it is currently being challenged for this and other reasons by additional plaintiffs in at least five other Federal lawsuits in the District of Columbia, Georgia, Illinois, and New York.

In response to the Texas District Court’s ruling in February 2022, HHS published revised guidance in May 2022, requiring certified IDR entities to consider the QPA and information that providers and plans submit during the IDR process—without leaning towards the QPA as the presumptive appropriate amount.  At that time, HHS also promised to publish final rules superseding the portions of the implementing regulations relating to the QPA that were challenged in the Texas District Court.

August 2022 Final Rules

HHS (and the other Departments) made good on that promise.  Based on the Texas District Court’s rulings, and using HHS’s revised guidance as a baseline, the Departments recently released their Final Rules—removing the provisions relating to the QPA vacated by the Texas District Court.  In essence, the Final Rules “specify that certified IDR entities should select the offer that best represents the value of the item or service under dispute,” i.e., the appropriate OON rate, “after considering the QPA and all permissible information submitted by the parties.”  See U.S. Department of Labor, “Fact Sheet: Requirements Related to Surprise Billing: Final Rules” at 4 (Aug. 19, 2022).

The Final Rules provide certified IDR entities with, specifically, the following recommendations:

  • Review the QPA;
  • Evaluate whether and how the additional information submitted by each party to the IDR process relates to the payment amount that is offered by such party;
  • Evaluate the credibility of such information;
  • Avoid considering prohibited factors; and
  • Ensure that any additional information is not already accounted for by the QPA.

See id.  After “weighing these considerations, certified IDR entities should then select the offer that best represents the value of the item or service under dispute.”  See id.  When the certified IDR entity makes its determination, the Final Rules also require a written explanation of the underlying rationale that includes the information considered and the weight given to such information and to the QPA, if any, to be submitted to the Departments and to the parties to the IDR process.

The Departments noted, however, that the QPA is deemed “credible” (while other submitted information must also be determined by the certified IDR entity) and is to be considered in every case.  The Departments also noted the QPA is determined by the plan, and that plans are not required to disclose their QPA methodology, as “the responsibility for monitoring the accuracy of plans’ … QPA calculations [rests] with the Departments.”  See Final Rules at 32.  Instead, “the Federal IDR process should center on a determination of a total payment amount for a particular item or service based on the facts and circumstances of the dispute at issue, rather than an examination of a plan’s … QPA methodology.”  See id.  Unfortunately, given the central role of the QPA in the IDR determination, it is difficult to understand how the accuracy of the QPA can be ignored in the IDR determination if it is intended to result in fair compensation.

Lastly, the Final Rules specifically require plans to advise providers if any claim has been downcoded, to explain why such claim has been downcoded, and to clarify how the service codes have been altered as a result, along with stating the QPA for the submitted DRG.

Takeaways

The presumption that the QPA is the appropriate payment amount may be reduced, or even eliminated, by the Departments’ issuance of these Final Rules.  However, the QPA remains a continuing challenge for providers—who must still be prepared (as must plans) to navigate the complex and ever-changing regulatory requirements of the NSA, and who are not provided with insight into how the QPA was determined.  The Firm is available to assist if you have questions.

Photo of Matthew J. Westbrook Matthew J. Westbrook

Matt is an associate in the Corporate Department and a member of the Health Care Group.  His practice focuses on providing regulatory compliance advice for the Firm’s health care clients, including service providers, health plans, operators, investors, and lenders, among others.  Matt specifically…

Matt is an associate in the Corporate Department and a member of the Health Care Group.  His practice focuses on providing regulatory compliance advice for the Firm’s health care clients, including service providers, health plans, operators, investors, and lenders, among others.  Matt specifically provides advice on fraud and abuse matters arising under the Federal False Claims Act (FCA), Civil Monetary Penalties Law (CMPL), Federal Anti-Kickback Statute (AKS), and Physician Self-Referral Law (Stark Law), as well as on the regulations promulgated by the Drug Enforcement Administration (DEA) and the Department of Health and Human Services, including the Office of Inspector General (OIG), Centers for Medicare & Medicaid Services (CMS), and Food and Drug Administration (FDA).

Angela Gichinga

Angela Gichinga is a law clerk in the Corporate Department and a member of the Health Care Group.

Photo of Edward S. Kornreich Edward S. Kornreich

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied…

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied providers (both for-profit and not-for-profit), vendors, GPOs, distributors and entrepreneurs. His approach combines sensitivity to meeting regulatory business goals with a comprehensive and realistic assessment of the health care environment, and he is particularly experienced in dealing with the complex issues related to integrated health care systems.

After working for the Legal Aid Society, Ed entered private practice, where he helped represent a major public hospital corporation in a series of reimbursement disputes with the state and federal governments, and counseled New York area hospitals and nursing homes on reimbursement and operational issues. Thereafter, Ed served as General Counsel of St. Luke’s-Roosevelt Hospital Center, one of the largest teaching hospitals in New York. After leaving St. Luke’s-Roosevelt Hospital Center, Ed joined Proskauer as a Partner in 1990.

Ed frequently writes and lectures on Medicare and Medicaid reimbursement, health care integration, not-for-profit law and corporate governance issues, and the application of federal and state anti-kickback and “Stark” laws to health care transactions.