The ban on balance billing goes into effect January 1, 2022, and the IFC is the first of several sets of regulations expected before the end of the year to implement the No Surprises Act. In addition to the prohibitions on balance billing, the No Surprises Act also outlines a framework for payers and OON providers to settle disputes over payment rates through an independent dispute resolution (IDR) process. The IFC does not address the IDR process, and the Departments indicated they will issue IDR regulations later this year. In the meantime, the Departments are accepting comments on the IFC, due by 5 p.m. on September 7, 2021.

Below is a summary of key provisions in the IFC and implications for health care providers.

Overview of Ban on Balance Billing and Payer Requirements

The IFC codifies in regulation the No Surprises Act's ban on balanced billing for emergency services, non-emergency services furnished by a nonparticipating provider at a participating health care facility, and OON air ambulance services. The IFC also codifies a prohibition on patient cost-sharing that exceeds in-network levels.

Under the IFC, cost-sharing amounts must generally be calculated based on the "recognized amount" for such services, which is:

1. An amount determined by an all-payer model agreement in place in a given state, if applicable;
2. If no all-payer model agreement in place, an amount determined under state law; or
3. If no applicable state law, the lesser amount of either the billed charge or the qualifying payment amount (QPA), which is generally the plan's or issuer's median contracted rate.

The IFC also outlines coverage requirements applicable to payers, including group health plans, health insurance issuers offering group or individual health insurance coverage, and carriers in the Federal Employees Health Benefits (FEHB) Program. Of note, the IFC addresses recent concerns expressed by providers related to payer coverage denials for certain emergency services. The Departments specify that denials based solely on a final diagnosis code, and not based on the "prudent layperson standard," are "inconsistent with the emergency services requirements of the No Surprises Act." Payers must evaluate whether a prudent layperson would deem the situation to warrant emergency services when considering coverage. The IFC indicates that payers that cover benefits for emergency services must cover such services without prior authorization, regardless of whether a provider is in the payer's network. Payers may not impose limits on coverage based solely on a diagnosis code. In the case of OON providers, payers may not limit coverage of emergency services by imposing requirements more restrictive than those imposed on in-network providers.

Notice and Consent Exception

The IFC outlines an exception to the ban on balanced billing with respect to certain non-emergency services or certain post-stabilization services related to emergency care. Under this exception, a provider can charge a patient an amount higher than the in-network rate upon notifying the patient and obtaining consent to be subject to higher costs. Providers must make the notice available to patients using a standard notice document to be provided by HHS in guidance. Providers must also alert payers to such notice and consent so payers will know if the balance billing protections apply.

The exception does not apply in the case of certain ancillary services furnished by OON providers at an in-network facility where, according to the IFC, surprise medical bills are likely to occur. The excluded ancillary services are:

• Items and services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology, whether provided by a physician or non-physician practitioner;
• Items and services provided by assistant surgeons, hospitalists, and intensivists;
• Diagnostic services, including radiology and laboratory services; and
• Items and services provided by a nonparticipating provider, only if there is no participating provider who can furnish such item or service at such facility.

The exception also does not apply in the case of items or services resulting from unforeseen, urgent medical needs that arise during the provision of care, even if a patient has consented to waive balance billing protections.

HHS requests comments on other ancillary services that HHS should consider for exclusion from the notice and consent exception.

Payment to OON Providers

The No Surprises Act outlined a framework for the determination of OON rates to providers. Under the IFC, the total amount to be paid to an OON provider, including any cost sharing, is based on:

1. An amount determined by an all-payer model agreement in place in a given state, if applicable;
2. If no all-payer model agreement in place, an amount determined under state law; or
3. If no applicable state law, an amount agreed upon by the plan or issuer and the provider or facility; or
4. If no agreed upon rate, an amount determined by an IDR entity.

The IFC outlines the payment process, including the timeframes for: 1) a payer to send a notice of denial of payment or make an initial payment; 2) the length of any open negotiation period regarding payment; and 3) initiating the IDR process following an open negotiation period. Below are key aspects of the payment process and comments from the Departments:

• A payer must send an initial payment or notice of denial of payment within 30 calendar days after the bill is submitted. The 30-day period generally begins on the date the payer receives the information needed to decide how to respond to a claim, often referred to as a "clean claim."
• The Departments encourage providers to indicate on the claim form if a claim is for an item or service to which the surprise billing protections apply.
• The Departments indicate their expectation that payers will "act reasonably and in good faith when requesting additional information" to accompany a claim by specifying for providers what is needed to ensure a clean claim. The Departments may issue additional standards if they become aware of "instances of abuse and gaming where plans and issuers are unduly delaying making initial payment or sending a notice of denial to providers on the basis that the provider has not submitted a clean claim." The Departments request feedback from commenters on whether other requirements are necessary to prevent abusive payment practices.
• If a provider is willing to accept a payer's reimbursement as payment in full, the payment amount will be treated as the OON rate. The Departments note that determining the OON amount in this manner will reduce administrative costs by avoiding an open negotiation period and the IDR process.
• The IFC does not require payers to issue a minimum initial payment amount, although the Departments recognize that several state balance billing laws require minimum payment amounts. The Departments also recognize that a minimum payment amount could reduce the number of cases under the IDR process, and they request comments on whether to require a minimum initial payment in future rulemaking and, if so, at what rate.

Negotiation Period and IDR Process

Under the No Surprises Act, if an OON provider receives payment that the provider considers inadequate, or if the payer denies payment, either the provider or the payer may initiate negotiations for a 30-day period, referred to as an "open negotiation period," to determinate the payment amount for the item or service, including any cost-sharing. If the negotiations fail, the No Surprises Act called for a binding IDR process that the parties may use to determine the payment amount. The IFC does not address the IDR process in detail, and the Departments indicate that they will issue regulations regarding the IDR process and IDR entities later this year.

Leading up to the release of the IFC, stakeholders were eagerly awaiting more details on the factors that IDR entities would use to determine payment amounts. The No Surprises Act specified that, once the IDR process is initiated, the parties will submit to an IDR entity an offer for a payment amount. The IDR entity will select one of the offers submitted by the parties to be the amount of payment. The law directed the IDR entity to consider the QPA when determining which offer to accept and specified that the IDR entity may not consider usual and customary charges, billed charges, or the reimbursement rate under public payers.

However, the law also indicated that the IDR entity will consider other factors that could warrant higher payment rates to certain providers, such as a provider's level of training or experience; a provider's market share; the acuity of an individual receiving services; a facility's teaching status, case mix, and scope of services; and good faith efforts by OON providers to enter into network agreements and contracted rates during the prior four years, if applicable. Stakeholders were looking for indications from the Departments as to whether an IDR entity will give equal weight to these factors as to the QPA. The Departments did not address this question in the IFC, but it may be addressed in future rulemaking.

Calculation of Qualifying Payment Amount

The No Surprises Act required the Departments to issue regulations on how payers should determine the QPA, which has two purposes under the No Surprises Act. The QPA will be used to determine cost-sharing amounts for patients when treated OON, and it will also be a factor used in the IDR process to determine payment amounts to OON providers.

The No Surprises Act defined the QPA as the median of the contracted rates recognized by the plan, across all plans of the sponsor that are offered in the same insurance market, as of January 31, 2019, for the same or a similar item or service that is provided by a provider in the same or similar specialty and provided in the geographic region in which the item or service is furnished.

The IFR defines several key terms related to the methodology through which payers must calculate the QPA, including "contracted rate," "insurance market," "same or similar item or service," "provider in the same or similar specialty," "facility of the same or similar facility type," "geographic region," and "non-fee-for-service contractual arrangements."

Of relevance for hospitals, although the Departments direct payers to calculate the QPA separately for different facility types when contracted rates for emergency services vary based on the type of facility, the IFR does not allow payers to calculate separate QPAs for different facility types based on certain facility characteristics, such as whether a hospital is an academic medical center or teaching hospital. The Departments indicate that, because patients are likely to seek emergency care from the nearest or most convenient emergency department, patients should not have to pay higher copays based on a higher QPA when the facility characteristics may impact contracted rates, but do not have any bearing on the facility's provision of emergency services.

With respect to the QPA for different geographic regions, the IFR indicates a preference that QPAs account for access to services in rural and underserved areas, including health professional shortage areas. The IFR defines a geographic region, generally, as including one region for each metropolitan statistical area (MSA) in a state and a separate region consisting of all other areas of the state.

The IFC also outlines how QPAs will increase each year based on inflation, as measured by the percentage increase in the consumer price index for all urban consumers (U.S. city average) (CPI-U). The IFC outlines special rules for calculating the annual increase in the QPA in cases, such as anesthesia services, where a payer generally determines reimbursement for a service by multiplying the contracted rate by another unit (e.g., time, mileage).

Information to be Shared with Providers About the QPA

The Departments are directing payers to share with providers certain information about the QPA as part of the initial payment or notice of denial of payment to a provider. The Departments acknowledge that information about the QPA will be helpful during the negotiation process between payers and providers. In particular, because IDR entities must consider the QPA when determining the payment amount to providers under the IDR process, a provider must know the value of the QPA and how it was calculated to determine whether to initiate the IDR process and what offer to submit.

Importantly, payers must notify providers that, if they want to initiate a 30-day open negotiation period to determine the payment amount, the provider may contact the payer to initiate open negotiation, and that if the 30-day open negotiation period does not result in a payment amount determination, the provider may initiate the IDR process within four days after the end of the open negotiation period.

Comments Requested on QPA Methodology

The Departments seek comments on the methodology payers will use to calculate the QPA, including:

• Whether there are any considerations or factors not sufficiently accounted for in the IFR;
   
• The impact of the methodology on cost sharing, payment amounts, and provider network participation; and
   
• Whether there are areas where commenters believe additional rulemaking or guidance is necessary.

The Departments also indicate an interest in feedback on how large consolidated health care systems could impact contracted rates as well as the impact of such contracted rates on prices and the QPA. The Departments note a concern that the QPA could be inflated by the contracting practices of large health care systems, and the Departments seek comments on whether to adjust the QPA methodology to account for such concerns.

Consumer Notification Requirements

The IFC includes a consumer notification requirement under which certain providers and facilities must make available to consumers the following:

1. The requirements and prohibitions applicable to providers/facilities under the No Surprises Act;
2. Any applicable state limitations or prohibitions on surprise medical billing; and
3. How consumers may contact state or federal agencies if there is a belief that a provider/facility has violated the requirements included in the notice.

The notice must be made publicly available and be posted on a public website of the provider/facility, if applicable. Providers/facilities must also provide a one-page notice to individuals with the notifications. HHS has created a model notice that providers and facilities could use to ensure compliance with the notification requirements.

The IFC also includes similar notification requirements for plans and issuers, which must make certain information about compliance obligations under the No Surprises Act publicly available and posted on a public website, as well as on each explanation of benefits. The notification requirements will apply for plan years beginning on or after January 1, 2022.

Complaint Process

The No Surprises Act directed the Departments to create a process for stakeholders to file complaints regarding violations by payers of the QPA requirements. The Departments specify a belief that the complaints process should extend to all consumer protection and balance billing provisions under the IFR that apply to group health plans and health insurance issuers offering group or individual health coverage, not just the QPA requirements. However, the Departments seek comments on whether the complaints process should be limited to the QPA requirements or apply more broadly to other payer requirements. The No Surprises Act also calls for a process whereby stakeholders can submit complaints against providers, and HHS includes provisions in the IFC to create such a process.

Under the process created through the IFC, the Departments will consider complaints submitted through an oral or written statement with information sufficient to identify the parties and the action or inaction involved. Other information may be included, such as the state where the conduct occurred and the timing. The Departments seek comment on the information needed in a complaint. The IFC does not require complaints to be submitted within a certain period of time, although the Departments seek comment on whether there should be a time limit for complaints to be submitted and, if so, what the time period should be.

The Departments will respond to complaints within 60 business days of receiving a complaint. The Departments may request additional information, and other steps may include referring the complaint to another state or federal resolution process, referring a complaint to a state or federal regulatory authority with enforcement jurisdiction, or initiating an investigation for enforcement action. The Departments will create one system to receive all complaints, and the Departments will release guidance outlining how complaints can be filed.

Audits of Payers

The No Surprises Act requires the Departments to establish an auditing process via regulations to ensure payers comply with their obligation under the No Surprises Act to calculate a QPA for all items and services. Under the IFR, the Departments will generally use existing processes to ensure payer compliance, although the IFR includes an audit provision indicating that HHS's existing enforcement procedures will apply to ensure that plans are complying with the requirements related to the QPA. HHS also plans to issue further rulemaking to amend its enforcement regulations.

Submitting Comments

Stakeholders have until 5 p.m. on September 7, 2021, to submit comments. Commenters should reference file code CMS-9909-IFC. Instructions on how to submit comments are available in the IFC.

Baker Donelson will continue to monitor implementation of the No Surprises Act.