By: HUB’s EB Compliance Team

The Department of Labor (“DOL”), Department of Health and Human Services (“HHS”), and IRS have issued their latest round of FAQ guidance (Part 62). The agencies focused on calculating the qualifying payment amount (QPA) under the No Surprises Act. The agencies also issued guidance about the phased reopening of the federal independent dispute resolution (IDR, or arbitration) portal following its recurring operational suspensions, and a variety of ongoing regulatory legal challenges. It’s notably apparent that this new FAQ expresses both the government’s response to, and opposition to, the recent decision in Texas Medical Association v. HHS (known as TMA III).

Background

The QPA is, defined simply, a plan’s median contracted rate with participating providers for a particular service (or item) inside a defined geographic region.

In TMA III, the court invalidated certain portions of newly issued QPA regulations. Specifically, the plaintiffs argued that the new QPA rules problematically exceeded federal regulatory authority by imposing duties not directly contemplated in the statute. (Note: When Congress enacts legislation, enforcement agencies are usually tasked with developing implementing regulations explaining how compliance is achieved. The agencies are generally precluded from adding rules that exceed statutory objectives.)

In TMA III, the court rejected the following regulations as impermissible federal overstepping:

  1. the inclusion of “ghost rates” (rates for services that a particular provider never furnished, and rates outside a provider’s applicable specialty);
  2. the exclusion of incentive payments (e.g., “bonus compensation”) from the rate calculation; and
  3. permitting self-insured plan calculations to be based on the rates of other self-insured plans administered by the same TPA.

The court also invalidated certain provisions specific to air ambulance providers. These included:

  1. the requirement that an initial payment decision be made within 30 days following receipt of all relevant claim information;
  2. the exclusion of “single-case” agreements from the QPA calculation; and
  3. the requirement of two separate arbitrations for a single medical air transport.

In a separate case involving these same parties, the court also invalidated the 2023 arbitration fee increase, along with a rule that limited the expediency and efficiency of grouping similar claims (“batch-related” claims) for resolution in a single arbitration.

QPA Transition Period

The latest FAQs state that plans and insurers are expected to calculate QPAs using a good faith, reasonable interpretation of the law that remains in effect after the decision. However, because TMA III creates uncertainty and unexpected burdens, the agencies will not penalize plans, insurers, and parties to arbitrations that calculate QPAs using the invalidated rules for items and services furnished before May 1, 2024. However, plans and insurers are expected to disclose, if requested, that the QPA was calculated using these old rules. The agencies believe this approach should provide a helpful transition period to recalculate certain QPAs.

Air Cover

With respect to air ambulance services, plans and insurers must continue to make coverage determinations and send initial payment (or denial notification) within 30 days after receiving a bill from a nonparticipating provider. Additionally, the FAQs emphasize that nothing in TMA III allows balance billing by nonparticipating providers, as such activities remain prohibited under the No Surprises Act.

Arbitration Restart

The guidance also announced that the agencies have reopened their designated IDR portal as of October 6, 2023. The portal is available for certain new single disputes, including single disputes involving bundled payment arrangements. However, processing and initiation of batched disputes and initiation of air ambulance disputes remains suspended until additional guidance is issued, and system updates are completed. Deadline extensions specified in the guidance for dispute initiation and certified IDR entity selection will be allowed. However, fee payments, submissions, and settlement offer, remain due ten (10) business days following arbitrator selection.

Takeaways

Although most employers will rely on their carriers and third-party administrators to manage the arbitration/IDR process, the fits and starts of the rulemaking process undeniably generates notable uncertainty about out-of-network claim payments. Correspondingly, this may churn new financial uncertainty for group health plans, so employers should be aware of these developments.

Moreover, lingering uncertainty can be expected since the FAQs indicate that the government will appeal TMA III. In addition, even though the agencies are not expected to issue further direct guidance in response to TMA III, the FAQs note that regulators are working quickly to bring systems into compliance and will provide “new updates” as they do. Although most employers likely won’t need to be apprised of every forthcoming update nuance, a general awareness of the twists and turns associated with the arbitration process should help employers more clearly understand the basis for the out of network payment delays that they are likely to more frequently notice down the road, at least for some claims.

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. Later developments may result in this information becoming outdated or incorrect, and Hub International is not obliged to update it. 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.