HHS Issues New Rules for No Surprises Act Dispute Resolution

The Departments of Health and Human Services (HHS), Labor, and the Treasury recently issued new guidance for the dispute resolution process under the federal No Surprises Act. The Departments have made several attempts to implement regulations since the No Surprises Act was enacted in late 2020. Some have been interim rules, and some have been struck down by federal courts. This is the first final rule to implement the statute.

Under the No Surprises Act (NSA), if a healthcare provider and insurance company cannot resolve a disagreement over payment for out-of-network services through negotiation, the parties may proceed to a “baseball-style” arbitration. In this process, a third party chooses one appropriate payment from two suggestions offered by the provider and the insurer, taking into account certain considerations. Where the insurer denies or “downcodes” a claim under the No surprises Act, HHS requires the insurer to disclose the Qualified Payment Amount (QPA) for each item or service at issues. The QPA is generally the insurer’s median in-network rate and may be an approximation of what the insurer would have paid for the service if provided by an in-network provider or facility. Under the new rule, HHS has defined “downcode” to mean the alteration by a plan or issuer of the service code to another service code or the alteration, addition, or removal by a plan or issuer of a modifier, if the changed code or modifier is associated with a lower QPA than the service code or modifier billed by the provider, facility, or provider of air ambulance services. Therefore, where this occurs, insurers are required to disclose their QPA.

Further, HHS has been forced to shift course regarding the use of the QPA. Initially, HHS had required that the arbitrators that resolve these disputes defer to the QPA and give it additional weight by selecting the proposed payment amount closest to the QPA. Healthcare providers argued that this over-reliance on the insurer’s QPA was contrary to the No Surprises Act itself and that HHS skipped the notice-and-comment process when implementing it. A federal court agreed and struck down that prior version of the rule. The new rule directs arbitrators to consider the QPA and then consider all additional permissible information submitted by each party to determine which offer best reflects the appropriate out-of-network rate. The arbitrator should then select the offer that best represents the value of the item or service under dispute.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding the healthcare regulatory landscape. If you or your healthcare entity has any questions pertaining to the No Surprises Act or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.