The U.S. Departments of Labor (DOL), Health and Human Services (HHS), and Treasury, along with the Office of Personnel Management (OPM), released FAQs about the implementation of Title I of Division BB of the Consolidated Appropriations Act, 2021 or the No Surprises Act (“the Act”). Questions have arisen about implementing the Act due to the decision of the U.S. District Court for the Eastern District of Texas in Texas Medical Association et al. v. United States Department of Health and Human Services et al., Case No. 6:22-cv-450-JDK (TMA III).

Background of the No Surprises Act

The No Surprises Act amended the Internal Revenue Code (IRC), ERISA, and the Public Health Service Act (PHS Act) to protect against surprise medical bills for participants and beneficiaries of group health plans or individual or group health insurance coverage concerning out-of-network services.

In July 2021, DOL, HHS, Treasury, and OPM issued interim final rules implementing various provisions of the No Surprises Act. These Departments also issued previous guidance, including FAQs, on different No Surprises Act implementation issues. Together, the Act, interim final rules, and guidance prohibit balance billing and limit cost-sharing for:

• Emergency services by nonparticipating providers and emergency facilities;
• Non-emergency services by nonparticipating providers at participating healthcare facilities; and
• Air ambulance services provided by nonparticipating providers.

Nonetheless, in some situations, the Act provides for balance billing if patients are provided notice and consent to waive surprise billing protections.

Patient Cost Sharing

The No Surprises Act and the 2021 interim final rules limit patient cost-sharing. Cost-sharing requirements for out-of-network emergency services and applicable emergency items and services cannot be more than the cost-sharing requirements for the same items and services provided by participating providers. Furthermore, the cost-sharing is calculated based on the “recognized amount,” which is:

• An amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act;
• If there is no such applicable All-Payer Model Agreement, an amount determined by a specified State law; or
• If there is no such applicable All-Payer Model Agreement or specified State law, the lesser of the billed charge or the qualifying payment amount (QPA).

The cost-sharing requirement for out-of-network air ambulance services must be as if a participating provider provided the services. The calculation for this cost-sharing is the lesser of the billed charge or the QPA.

According to the FAQs, “[t]he QPA is generally the median of the contracted rates recognized by the plan or issuer on January 31, 2019, for the same or similar item or service that is provided by a provider in the same or similar specialty or facility of the same or similar facility type and provided in the geographic region in which the item or service is furnished, increased for inflation.” Under the 2021 interim final rules, the median contracted rate is based on all plans of the plan sponsor, or all coverage offered by the issuer in the same insurance market. The rules also contain a methodology if the plan or issuer lacks sufficient information to calculate the median contracted rate properly.

TMA III

On August 24, 2023, the District Court issued the opinion known as TMA III. In its opinion, the court vacated certain portions of the 2021 interim final rules, as well as the Departments’ previously issued guidance and FAQs. One of the vacated provisions concerns the methodology for computing the QPA. The court found those provisions unlawful, vacated them, and remanded them for further consideration.

In response, the Department of Justice partially appealed the District Court’s decision. That appeal remains pending before the U.S. Court of Appeals for the Fifth Circuit.

FAQs Part 62

The Departments and OPM issued FAQs Part 62 in October 2023 in response to TMA III and its impact on calculating QPAs. Those FAQs state that the Departments and OPM stated that they would exercise their enforcement discretion under the No Surprises Act that uses a QPA calculated as per the 2021 interim final rules in effect immediately before TMA III for items and services furnished before May 1, 2024.

Furthermore, the FAQs stated that the Departments and OPM would timely reevaluate whether additional time for enforcement relief is necessary. At the time, the Departments did not anticipate any additional time extending beyond November 1, 2024.

As of the date of the issuance of these updated facts, the Departments and OPM have determined plans and issuers need additional time to recalculate QPAs in a manner consistent with the statutes and regulations that remain in place after TMA III. Therefore, the Departments and OPM will extend the enforcement relief for any plan, issuer, or party to a payment dispute in the federal IDR process that uses a QPA calculated under the 2021 interim rules and guidance in effect just before TMA III up until November 1, 2024. Similar enforcement relief will continue for QPA calculations for air ambulance services until the same date. Nonetheless, the Departments and OPM do not expect to extend this enforcement relief for items and services furnished on or after November 1, 2024.