Hospitals Irate, Insurers Pleased As Surprise Billing Rule Leans Into QPA

Inside Health Policy

October 1, 2021 12:18 am

The hospital industry blasted HHS on Thursday over an interim final rule laying out the new independent dispute resolution process for the surprise billing law, which hospitals say ignores congressional intent and puts the thumb on the scale in favor of insurers. But insurers and other stakeholders applaud the administration’s direction, saying that by requiring arbitrators to primarily look at the qualifying payment amount (QPA), which is generally the median in-network rate, the rule should limit the use of IDRs and prevent gaming.

The interim final rule — with a comment period – also provides guidance on a similar interim process for self-pay patients who are charged significantly more than the good faith estimate that providers must offer. It sets up a similar process for air ambulance payments. CMS also launched a website for entities interested in becoming a certified IDR entity and will take applications on a rolling basis starting Sept. 30. HHS asks entities to complete applications by Nov. 1 to start by January. Officials said during a press call that they have already been in contact with potential IDR entities and expect about 50 will be certified by next year.

The No Surprises Act, which bans surprise billing for out-of-network emergency and non-emergency services, limits cost-sharing to in-network rates, and creates the new IDR process, passed in Dec. 2020. The legislation came together following a years-long fight between providers and insurers who both wanted patients held harmless from surprise bills but had differing views on how to resolve payment disputes. Insurers wanted out-of-network pay to be based on a benchmark rate, while providers lobbied for an arbitration process. The final legislation included the IDR process and said that arbiters shall consider in their determinations the qualifying payment amount (QPA), which is generally the median in-network rate for a service. Several other factors may also be considered, the law says, including providers’ level of training, quality and patient outcomes, market share for providers and payers, patient acuity, teaching status and prior contracted rates.

After the law was signed, stakeholders began to lobby the administration on how the language should be interpreted.

On one side, insurers, large employers, and some lawmakers argued that the QPA should be the primary factor considered by an arbiter and the other factors could come into play in certain, but rare, instances. They argued that since patient cost-sharing is based on the QPA, and because the Congressional Budget Office assumed that would be used when scoring the bill as a saver, the administration should adopt that interpretation. But others, including provider groups and bipartisan groups of House and Senate lawmakers who had long worked to end surprise billing, disagreed, and urged the administration to make sure all factors included in the law were given equal weight.

The rule out Thursday largely relies on the QPA. “When making a payment determination, certified independent dispute resolution entities must begin with the presumption that the QPA is the appropriate [out-of-network] amount,” the agency explains in a fact sheet. If a party submits additional allowable information, the IDR entity must consider it if it is credible. To deviate from the QPA, the information must clearly show that the value of the item or service is materially different from the QPA. Absent that information, the IDR entity must select the offer closest to the QPA.

Brookings Institution’s Loren Adler, who has been tracking the legislative and rulemaking process, says, from his initial skim of the rule, the rule “appears to delineate a coherent framework to adjudicate out-of-network payment disputes in arbitration, starting with the presumption that the median in-network price is appropriate & deviating only when clear evidence to justify doing so is presented.”

“By setting clear expectations of outcomes through arbitration, the rule should also limit its use and the concomitant administrative costs,” he says.

The insurance lobby AHIP says the rule signals a commitment to consumer affordability that should encourage more providers to join networks. “We are particularly encouraged to see the rules conform to the intent of the No Surprises Act and direct that arbitration awards must begin with a presumption that the appropriate out-of-network reimbursement is the qualified payment amount. This is the right approach to encourage hospitals, health care providers, and health insurance providers to work together and negotiate in good faith. It will also ensure that arbitration does not result in unnecessary premium increases for businesses and hardworking American families.”

The Coalition Against Surprise Medical Billing, which includes insurers, employers, and unions, says while it is still reviewing the regulation, it appreciates that the rules “adhere to and reinforce the statute which calls for the qualifying payment amount (QPA) to be the primary and overriding consideration for final payment determinations as part of the independent dispute resolution (IDR) process.”

“For patients to be protected from abuse and misuse of IDR and to achieve the full cost-savings projected by the Congressional Budget Office, it is essential that the final rules maintain limits on arbitration, “the group adds.

And Senate health committee Chair Patty Murray (D-WA) and House Energy & Commerce Chair Frank Pallone (D-NJ) also applauded the administration for relying primarily on the QPA, which they said was congressional intent.

But the hospital industry strongly disagrees, saying the administration ignores years of work, dismisses congressional intent, and favors insurers over providers and physicians.

“The interim final regulation issued today to implement the No Surprises Act is a total miscue,” Chip Kahn, president and CEO of the Federation of American Hospitals, says. “It inserts a government standard pricing scheme arbitrarily favoring insurers. For two years, hospitals and other stakeholders stood shoulder to shoulder with lawmakers to develop legislation that would protect patients from surprise medical bills and last December, Congress passed a bill with a fair and balanced payment dispute resolution process. This regulation discards all of that hard work, misreads Congressional intent, and essentially puts a thumb on the scale benefiting insurers against providers and will over time reduce patient access.”

“Disappointingly, the Administration’s rule has moved away from Congressional intent and brought new life to harmful proposals that Congress deliberately rejected,” American Hospital Association Executive Vice President Stacey Hughes says. “Today’s rule is a windfall for insurers. The rule unfairly favors insurers to the detriment of hospitals and physicians who actually care for patients. These consumer protections need to be implemented in the right way, and this misses the mark.”

A senior HHS official says staff reviewed the legislation and looked at the results of surprise billing laws across the country and had a robust discussion over the guidance. The official notes the Congressional Budget Office determined the bill would save money, which also played into the strong assumption that QPA is the presumptive factor, and any other factors must be materially different to be considered. This design should prevent inflation and disincentive any gaming.

The official acknowledges that stakeholders were very invested in the decision, and says the department believes the IFR strikes the right balance.