Medical Revenue Recovery - Federal IDR Arbitration

The No Surprises Act (NSA) serves as the federal counterpart to state-specific Surprise Billing Laws (SBLs), designed to bridge gaps where states lack their own SBLs or for out-of-state (OOS) and federally regulated health plans. Codified under 26 U.S.C. § 9816, the NSA was enacted as part of the Consolidated Appropriations Act of 2021 and became effective on January 1, 2022.

Key Provisions

1. Prohibition of Balance Billing

   • Emergency Services: Patients are protected from balance billing for emergency services, ensuring they are only responsible for in-network (INN) cost-sharing.
   • Inadvertent OON Situations: Patients cannot be balance billed for non-emergency services at INN facilities when treated by out-of-network (OON) providers inadvertently.

2. Patient Disclosures

   • Elective Procedures: Providers must disclose OON status and associated costs to patients undergoing elective surgeries, enabling informed decision-making.

3. Dispute Resolution Process

   • Federal Independent Dispute Resolution (IDR): Establishes a standardized process to resolve payment disputes between OON medical providers and insurance carriers.

Implementation and Regulatory Bodies

The implementation of the NSA is overseen by multiple federal agencies:

• Department of Health and Human Services (HHS)

  • Center for Medicare & Medicaid Services (CMS): Leads the implementation and enforcement of the NSA, leveraging its expertise in healthcare policy to collaborate with providers, insurers, and patients.

• Department of Labor (DOL)

  • Employee Benefits Security Administration (EBSA): Administers and enforces federal laws related to health benefits under employer-sponsored plans, ensuring NSA provisions are integrated into these plans.

• Department of the Treasury

  • Internal Revenue Service (IRS): Manages aspects of the NSA related to health insurance premiums and tax credits.

• Office of Personnel Management (OPM)

  • Oversees the Federal Employees Health Benefits Program and ensures the NSA is implemented within federal employee health plans.

Federal Independent Dispute Resolution (IDR) Process

The IDR process is designed to be swift and efficient, despite initial delays due to higher-than-anticipated arbitration filings. The process involves several strict timelines:

1. 30 Calendar Days for Carrier to Pay

   • Insurers must either pay the OON service claim or issue a denial notice within 30 days of submission.

2. 30 Business Days for Medical Provider Action

   • Upon receiving payment, providers have 30 business days to object and initiate negotiations.

3. 30-Day Open Negotiation Period

   • Both parties engage in good faith negotiations to agree on a payment amount.

4. Notice of Arbitration

   • If negotiations fail, either party can initiate arbitration within 4 business days.

5. Choosing an Arbitrator

   • Parties have 3 days to agree on an arbitrator from the HHS-provided list; otherwise, HHS appoints one.

6. Submission to the Arbitrator

   • Each party submits their payment offer and supporting information within 10 days of arbitrator selection.

7. Arbitrator’s Decision

   • The arbitrator must choose one of the submitted offers within 30 days, making the decision binding.

8. Payment by Carrier

   • If the provider prevails, the carrier must pay within 30 business days following the arbitration decision.

Independent Dispute Resolution Entities (IDREs) must be impartial, with no financial ties to insurers or providers, and possess expertise in healthcare billing and OON reimbursement. HHS maintains a list of qualified IDREs for arbitration purposes.

Factors Considered in Arbitration

Arbitrators may consider:

1. Provider’s training, experience, and education.
2. Median INN rate (Qualified Payment Amount - QPA).
3. Case complexity and circumstances.
4. Relative market shares of the parties.
5. Good faith efforts to enter network agreements.
6. Prior contract rates between the parties.

Excluded Factors:

• Medicare and Medicaid rates.
• Provider’s usual and customary charges.

Legal Challenges and Developments

The NSA has faced several lawsuits challenging CMS’s interpretations and implementations:

1. Texas Medical Association (TMA) Lawsuits

   • TMA I: Challenged the QPA’s “rebuttable presumption,” arguing it favored insurers by using often low INN rates. The court vacated the rules supporting this presumption.
   • TMA II: Resulted in the dismissal of replacement rules that continued to favor the QPA improperly.
   • TMA III & IV: Addressed and overturned CMS’s increased filing and arbitrator fees, and invalidated the requirement for per-CPT-code arbitrations, favoring per-claim arbitration instead. These rulings support a functional IDR process as intended by the NSA.

2. New York State Health Insurance Plan (NYSHIP) Lawsuit

   • NYSHIP’s attempt to opt into the Federal IDR process was challenged, as it conflicts with New York’s more favorable state-specific arbitration rules. Courts have upheld NYSHIP’s decision, highlighting ongoing jurisdictional and procedural conflicts.

3. CMS’s Interpretation of Claim Denials

   • CMS treats claim denials as ineligible for the IDR process, contrary to NSA language which includes both underpayments and denials. This interpretation is expected to face further legal challenges.

4. Primary OON Surgeons in Elective Surgeries

   • Initially, primary OON surgeons performing elective surgeries at INN facilities were excluded from SBL protections. However, evolving health plan policies are likely to align OON reimbursement at the QPA, integrating these cases into the Federal IDR process.

Future Implications

The culmination of legal rulings and regulatory adjustments suggests that all OON payment disputes—whether involving emergency, inadvertent, or elective treatments, and encompassing both denials and underpayments—will increasingly be resolved through the Federal IDR process. This shift aims to streamline dispute resolution under the NSA, potentially eliminating the need for traditional health plan negotiations and related legal instruments such as Assignments of Benefits or Powers of Attorney.

Overall, the NSA represents a significant federal effort to protect patients from unexpected medical bills and establish a consistent framework for resolving OON payment disputes, complementing and extending state-level SBLs.

(Source: CMS Letter to the Governor of [State], various dates)