By: HUB’s EB Compliance Team

On September 30, 2021, the Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury (collectively, the “Departments”) released an interim final rule on the second part of their Surprise Billing rules. This rule implements part of the No Surprises Act that was enacted as part of the Consolidated Appropriations Act, 2021 at the end of last year. The No Surprises Act added new protections from surprise billing (sometimes referred to as balance billing) and excessive cost sharing for consumers receiving health care items/services.

These new rules follow the Part I rules HUB wrote about here and implement additional protections, including provisions related to the independent dispute resolution process (more commonly known as arbitration) and expanded rights to external review, among others. Arbitration is generally used as way to resolve disputes without involving a court. Both parties agree to abide by the decision of the arbitrator and the rules for arbitration are intended to make the process faster than litigation. The rules generally apply for plan or policy years beginning on or after January 1, 2022.

Negotiate, then Arbitrate

Before arbitrating, the carrier or plan and the out of network provider, facility, or air ambulance provider (we’ll use “provider” for short) must initiate a 30-day “open negotiation” period. The negotiation period begins by either party sending an open negotiation notice to the other party. As a practical matter, providers will be the ones initiating the negotiation most of the time. The intention is for the parties to come to agreement on a payment amount without arbitrating. However, if they cannot, either party may initiate the federal arbitration process. There is a separate notice to initiate the arbitration process.

The Part II rules describe the federal arbitration process. Not all items and services are eligible for the arbitration. This process applies only to those services for which balance billing was prohibited under the Part I rules, namely (1) emergency services, (2) services provided by out of network providers at in-network facilities, and (3) air ambulance services.

To start the process, the parties may jointly select a certified arbitration entity to resolve the dispute. The entity and its personnel assigned to the case must attest that they have no conflicts of interest. If the parties cannot jointly select a certified arbitration entity, or if the one they selected has a conflict of interest, the Departments will select an arbitrator for them.

The parties then submit their offers for payment along with supporting documentation. The certified arbitration entity will select one of the parties’ offers as the payment amount. Each party must pay an administrative fee ($50 for 2022), and the losing party is responsible for the certified arbitration entity fee. More information about the 2022 administrative fee and allowable arbitration entity fee ranges for 2022 was released in accompanying guidance available here.

Timeline

In an effort to make this process as prompt as possible, the rules lay out the following timeline:

Action

Timeline

Initiate 30-business-day open
negotiation period

30 business days, starting on the day of initial payment or notice of denial of payment

Initiate arbitration process

4 business days, starting the business day after the open negotiation period ends (Note: the parties cannot start early – they have to use the full 30 business days)

Mutual agreement on selected certified arbitration entity

3 business days after the arbitration initiation date

Departments select certified arbitration entity if the parties cannot agree on an arbitrator (or if the arbitrator has a conflict)

6 business days after the arbitration initiation date

Submit payment offers and additional information to the arbitrator

10 business days after the date of selection

Payment determination made

30 business days after the date of selection

Payment submitted to the applicable party

30 business days after the payment determination

The Qualified Payment Amount

When making a payment determination, the arbitrator must presume that the qualifying payment amount, or QPA, is the appropriate amount. The QPA is generally the health plan or carrier’s median contracted rate for the same or similar service in the specific geographic area. This means that the plan’s in-network contracts will be important for determining the amount paid under the arbitration process.

Because the QPA is presumed to be appropriate, the arbitrator is generally required to pick the offer that is closest to the QPA. However, if either the plan/carrier or provider submits additional credible information to argue for a different result, then the arbitrator must consider this information. For the arbitrator to deviate from the offer closest to the QPA, any information submitted must clearly demonstrate why the arbitrator should deviate from the QPA.

New Website

In addition to releasing the Part II rules, the Departments also launched a new website to provide general information about these new surprise billing protections. The website will include a federal portal for organizations to apply to become certified arbitration entities and for providers, carriers, and health plans (among others) to participate in the federal arbitration process. The Departments say that they expect to post additional information over the next several months, including information about how to initiate an arbitration process in the federal portal.

External Review

One of the more significant surprises (no pun intended) of the Part II rules was the change to external review. The Part II rules expand the scope of appeals eligible for external review. Specifically, now claims involving whether a plan or carrier is complying with the surprise billing and cost-sharing protections under the No Surprises Act are eligible for review. That was not the surprising part.

The surprise was that grandfathered plans will also be subject to external review, but only for claims as to whether the plan is complying with the No Surprises Act. The other aspects of external review do not apply to grandfathered plans. This means that grandfathered plans will need to be amended to add a discussion of external review. Additionally, employers with self-funded grandfathered plans will need to work with their TPAs to implement the external review requirements.

Other Issues

The Part II rules also address other aspects of the No Surprises Act, such as:

  • The process for arbitration entities to be certified to hear No Surprises Act disputes. Entities are approved on a rolling basis. More information on this process is available here.
  • Monthly reporting requirements for certified arbitration entities to provide quarterly public reports on payment determinations.
  • While not directly related to health plans, the rules also require providers and facilities to provide good faith estimates for uninsured (or self-pay) individuals. This is likely a precursor to the requirements for them to provide estimates that will be part of the Automatic EOB requirements we mention here.
  • Similarly, the rules address how disputes between providers and facilities, on the one hand, and uninsured (or self-pay) patients, on the other, are handled.

Takeaways

Employers should take note of these rules and consider the following actions:

  1. Review rules and/or the fact sheet to familiarize themselves with these rules.
  2. Confirm with their carrier or TPA that they are on track to implement these rules.
  3. For plans with separate plan documents, begin preparing plan amendments to reflect which appeals are eligible for arbitration.
  4. For grandfathered plans, begin preparing amendments adopting the new external review requirements.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory. 

NOTICE OF DISCLAIMER 

Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.