Rule2022-18202
Requirements Related to Surprise Billing
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 26, 2022
Effective
October 25, 2022
Issuing agencies
Treasury DepartmentInternal Revenue ServiceLabor DepartmentEmployee Benefits Security AdministrationHealth and Human Services Department
Abstract
This document includes final rules under the No Surprises Act, which was enacted as part of the Consolidated Appropriations Act, 2021 (CAA). The document finalizes certain disclosure requirements relating to information that group health plans, and health insurance issuers offering group or individual health insurance coverage, must share about the qualifying payment amount (QPA) under the interim final rules issued in July 2021, titled Requirements Related to Surprise Billing; Part I (July 2021 interim final rules). Additionally, this document finalizes select provisions under the October 2021 interim final rules, titled Requirements Related to Surprise Billing; Part II (October 2021 interim final rules), to address certain requirements related to consideration of information when a certified independent dispute resolution (IDR) entity makes a payment determination under the Federal IDR process.
Full Text
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<title>Federal Register, Volume 87 Issue 165 (Friday, August 26, 2022)</title>
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[Federal Register Volume 87, Number 165 (Friday, August 26, 2022)]
[Rules and Regulations]
[Pages 52618-52655]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-18202]
[[Page 52617]]
Vol. 87
Friday,
No. 165
August 26, 2022
Part II
Department of The Treasury
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Internal Revenue Service
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26 CFR Part 54
Department of Labor
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Employee Benefits Security Administration
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29 CFR Part 2590
Department of Health and Human Services
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45 CFR Part 149
Requirements Related to Surprise Billing; Final Rule
Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules
and Regulations
[[Page 52618]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9965]
RIN 1545-BQ01 and 1545-BQ02
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AB99 and 1210-AC00
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 149
[CMS-9909-F and CMS-9908-F]
RIN 0938-AU62 and RIN 0938-AU63
Requirements Related to Surprise Billing
AGENCY: Internal Revenue Service, Department of the Treasury; Employee
Benefits Security Administration, Department of Labor; Centers for
Medicare & Medicaid Services, Department of Health and Human Services.
ACTION: Final rules.
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SUMMARY: This document includes final rules under the No Surprises Act,
which was enacted as part of the Consolidated Appropriations Act, 2021
(CAA). The document finalizes certain disclosure requirements relating
to information that group health plans, and health insurance issuers
offering group or individual health insurance coverage, must share
about the qualifying payment amount (QPA) under the interim final rules
issued in July 2021, titled Requirements Related to Surprise Billing;
Part I (July 2021 interim final rules). Additionally, this document
finalizes select provisions under the October 2021 interim final rules,
titled Requirements Related to Surprise Billing; Part II (October 2021
interim final rules), to address certain requirements related to
consideration of information when a certified independent dispute
resolution (IDR) entity makes a payment determination under the Federal
IDR process.
DATES: Effective date: These final rules are effective on October 25,
2022.
Applicability date: See Section III of the SUPPLEMENTARY
INFORMATION section for information on the applicability dates.
FOR FURTHER INFORMATION CONTACT: Shira McKinlay, Internal Revenue
Service, Department of the Treasury, at 202-317-5500; Elizabeth
Schumacher or David Sydlik, Employee Benefits Security Administration,
Department of Labor, at 202-693-8335; Deborah Bryant, Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
at 301-492-4293; Lindsey Murtagh, Centers for Medicare & Medicaid
Services, Department of Health and Human Services, at 301-492-4106.
Customer Service Information
Individuals interested in obtaining information from the Department
of Labor (DOL) concerning employment-based health coverage laws may
call the Employee Benefits Security Administration (EBSA) Toll-Free
Hotline at 1-866-444-EBSA (3272) or visit the DOL's website
(<a href="http://www.dol.gov/agencies/ebsa">www.dol.gov/agencies/ebsa</a>).
In addition, information from the Department of Health and Human
Services (HHS) on private health insurance coverage, coverage provided
by non-Federal governmental group health plans, and requirements that
apply to health care providers, health care facilities, and providers
of air ambulance services can be found on the Centers for Medicare &
Medicaid Services (CMS) website (<a href="http://www.cms.gov/cciio">www.cms.gov/cciio</a>), and information on
surprise medical bills can be found at <a href="http://www.cms.gov/nosurprises">www.cms.gov/nosurprises</a>.
SUPPLEMENTARY INFORMATION:
I. Background
A. Preventing Surprise Medical Bills Under the CAA
On December 27, 2020, the CAA, which includes the No Surprises Act,
was enacted.\1\ The No Surprises Act provides Federal protections
against surprise billing by limiting out-of-network cost sharing and
prohibiting ``balance billing,'' in many of the circumstances in which
surprise bills arise most frequently. Balance billing refers to the
practice of out-of-network providers billing patients for the
difference between: (1) the provider's billed charges, and (2) the
amount collected from the plan or issuer plus the amount collected from
the patient in the form of cost sharing (such as a copayment,
coinsurance, or amounts paid toward a deductible). In particular, the
No Surprises Act added new provisions applicable to group health plans
and health insurance issuers offering group or individual health
insurance coverage to Subchapter B of chapter 100 of the Internal
Revenue Code (Code), Part 7 of the Employee Retirement Income Security
Act (ERISA), and Part D of title XXVII of the Public Health Service Act
(PHS Act). Section 102 of the No Surprises Act added section 9816 of
the Code, section 716 of ERISA, and section 2799A-1 of the PHS Act,\2\
which contain limitations on cost sharing and requirements regarding
the timing of initial payments and notices of denial of payment for
emergency services furnished by nonparticipating providers and
emergency facilities, and for non-emergency services furnished by
nonparticipating providers with respect to patient visits to
participating health care facilities, defined as hospitals, hospital
outpatient departments, critical access hospitals, and ambulatory
surgical centers. Section 103 of the No Surprises Act amended section
9816 of the Code, section 716 of ERISA, and section 2799A-1 of the PHS
Act to establish a Federal IDR process that allows plans and issuers
and nonparticipating providers and facilities to resolve disputes
regarding out-of-network rates. Section 105 of the No Surprises Act
added section 9817 of the Code, section 717 of ERISA, and section
2799A-2 of the PHS Act. These sections contain limitations on cost
sharing and requirements for the timing of initial payments and notices
of denial of payment for air ambulance services furnished by
nonparticipating providers of air ambulance services, and allow plans
and issuers and nonparticipating providers of air ambulance services to
access the Federal IDR process described in section 9816 of the Code,
section 716 of ERISA, and section 2799A-1 of the PHS Act.
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\1\ Public Law 116-260 (December 27, 2020).
\2\ Section 102(d)(1) of the No Surprises Act amended the
Federal Employees Health Benefits Act, 5 U.S.C. 8901 et seq., by
adding a new subsection (p) to 5 U.S.C. 8902. Under this new
provision, each Federal Employees Health Benefits (FEHB) Program
contract must require a carrier to comply with requirements
described in sections 9816 and 9817 of the Code, sections 716 and
717 of ERISA, and sections 2799A-1 and 2799A-2 of the PHS Act (as
applicable) in the same manner as these provisions apply with
respect to a group health plan or health insurance issuer offering
group or individual health insurance coverage.
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The No Surprises Act provisions that apply to health care
providers, facilities, and providers of air ambulance services, such as
prohibitions on balance billing for certain items and services and
requirements related to disclosures about balance billing protections,
were added to title XXVII of the PHS Act in a new part E.
The Departments of the Treasury, Labor, and Health and Human
Services
[[Page 52619]]
(the Departments) previously issued interim final rules implementing
provisions of sections 9816 and 9817 of the Code, sections 716 and 717
of ERISA, and sections 2799A-1 and 2799A-2 of the PHS Act to protect
consumers from surprise medical bills for emergency services, non-
emergency services furnished by nonparticipating providers with respect
to patient visits to participating facilities in certain circumstances,
and air ambulance services furnished by nonparticipating providers of
air ambulance services.\3\ The interim final rules also implement
provisions requiring the Departments to create a Federal IDR process to
determine payment amounts when there is a dispute between payers and
providers or facilities over the out-of-network rate due for emergency
services, non-emergency services furnished by nonparticipating
providers with respect to patient visits to participating facilities in
certain circumstances, and air ambulance services furnished by
nonparticipating providers of air ambulance services.\4\ To implement
these provisions, the Departments published in the Federal Register the
July 2021 interim final rules on July 13, 2021 (86 FR 36872), and the
October 2021 interim final rules on October 7, 2021 (86 FR 55980).\5\
The July 2021 interim final rules and October 2021 interim final rules
generally apply to group health plans and health insurance issuers
offering group or individual health insurance coverage (including
grandfathered health plans) with respect to plan years (in the
individual market, policy years) beginning on or after January 1, 2022;
and to health care providers and facilities, and providers of air
ambulance services with respect to items and services provided during
plan years (in the individual market, policy years) beginning on or
after January 1, 2022.\6\
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\3\ 86 FR 36872 (July 13, 2021) and 86 FR 55980 (October 7,
2021).
\4\ The Federal IDR process does not apply if an All-Payer Model
Agreement under section 1115A of the Social Security Act or a
specified State law applies.
\5\ The interim final rules also include interim final
regulations under 5 U.S.C. 8902(p) issued by the Office of Personnel
Management that specify how certain provisions of the No Surprises
Act apply to health benefit plans offered by carriers under the
Federal Employees Health Benefits Act.
\6\ 86 FR 36872 (July 13, 2021) and 86 FR 55980 (October 7,
2021). These provisions apply to carriers in the Federal Employees
Health Benefits Program with respect to contract years beginning on
or after January 1, 2022. The disclosure requirements at 45 CFR
149.430 regarding patient protections against balance billing are
applicable as of January 1, 2022.
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B. July 2021 Interim Final Rules
The July 2021 interim final rules implement sections 9816(a)-(b)
and 9817(a) of the Code, sections 716(a)-(b) and 717(a) of ERISA, and
sections 2799A-1(a)-(b), 2799A-2(a), 2799A-7, 2799B-1, 2799B-2, 2799B-
3, and 2799B-5 of the PHS Act.
Among other requirements, the July 2021 interim final rules
generally prohibit balance billing for items and services subject to
the requirements in those interim final rules.\7\ The July 2021 interim
final rules also specify that consumer cost-sharing amounts for
emergency services furnished by nonparticipating providers or
facilities, and for non-emergency services furnished by
nonparticipating providers with respect to patient visits to certain
participating facilities, must be calculated based on the ``recognized
amount,'' which is defined as one of the following amounts: (1) an
amount determined by an applicable All-Payer Model Agreement under
section 1115A of the Social Security Act; (2) if there is no such
applicable All-Payer Model Agreement, an amount determined by a
specified State law; or (3) if there is no such applicable All-Payer
Model Agreement or specified State law, the lesser of the billed charge
or the QPA. The July 2021 interim final rules establish the methodology
for calculating the QPA, which in most circumstances will be the plan's
or issuer's median contracted rate that was in effect for the
particular item or service on January 31, 2019, increased for
inflation. Cost-sharing amounts for air ambulance services provided by
nonparticipating providers of air ambulance services must be the same
as the cost-sharing amounts that would apply if the services were
provided by a participating provider of air ambulance services, and
these cost-sharing amounts must be calculated using the lesser of the
billed charge or the QPA.
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\7\ 45 CFR 149.410(a), 149.420(a), and 149.440(a).
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The No Surprises Act directs the Departments to specify the
information that a plan or issuer must share with a nonparticipating
provider, nonparticipating emergency facility, or nonparticipating
provider of air ambulance services, as applicable, after determining
the QPA. Therefore, 26 CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and 45
CFR 149.140(d) require that plans and issuers make certain disclosures
about the QPA with each initial payment or notice of denial of payment,
and that plans and issuers provide certain additional information upon
request of the provider, facility, or provider of air ambulance
services. This information must be provided in writing, either on paper
or electronically, to a nonparticipating provider, facility, or
provider of air ambulance services, as applicable, when the QPA serves
as the recognized amount.
With an initial payment or notice of denial of payment, a plan or
issuer must provide the QPA for each item or service involved as well
as a statement certifying that, based on the determination of the plan
or issuer: (1) the QPA applies for purposes of the recognized amount
(or, in the case of air ambulance services, for calculating the
participant's, beneficiary's, or enrollee's cost sharing), and (2) each
QPA shared with the provider, facility, or provider of air ambulance
services was determined in compliance with the methodology outlined in
the July 2021 interim final rules.
A plan or issuer is also required to provide a statement that, if
the provider, facility, or provider of air ambulance services wishes to
initiate a 30-day open negotiation period for purposes of determining
the amount of total payment, the provider, facility, or provider of air
ambulance services may contact the appropriate person or office to
initiate open negotiation, and that if the 30-day open negotiation
period does not result in an agreement on the payment amount, the
provider, facility, or provider of air ambulance services typically may
initiate the Federal IDR process within 4 days after the end of the
open negotiation period. The Departments note that these time frames
are measured in business days, and plans and issuers should reflect
this in the statement. The plan or issuer must provide contact
information, including a telephone number and email address, for the
appropriate office or person for the provider, facility, or provider of
air ambulance services to contact to initiate open negotiation for
purposes of determining an amount of payment (with the amount including
cost sharing) for the item or service.
It has come to the Departments' attention that some plans and
issuers are requiring nonparticipating providers, nonparticipating
emergency facilities, and nonparticipating providers of air ambulance
services to utilize plan- or issuer-owned web systems to initiate an
open negotiation period. As discussed earlier, the July 2021 interim
final rules require plans and issuers to provide a telephone number and
email address for providers, facilities, and providers of air ambulance
services to initiate the open
[[Page 52620]]
negotiation period. When a party to a payment dispute chooses to
initiate the open negotiation period, the October 2021 interim final
rules specify that the party must use the standard notice of initiation
of open negotiation issued by the Departments and may satisfy the
requirement to provide notice to the opposing party by sending the
notice electronically if the party sending the notice has a good faith
belief that the electronic method is readily accessible to the other
party and the notice is also provided free of charge in paper form upon
request.\8\ For example, it is reasonable for a provider, facility, or
provider of air ambulance services to have a good faith belief that an
email address provided by a plan or issuer with the initial payment or
notice of denial of payment is readily accessible to the plan or
issuer. Thus, if a provider, facility, or provider of air ambulance
services sends the standard notice of initiation of open negotiation to
the email address identified by the plan or issuer in the notice of
denial of payment or initial payment, that transmission would satisfy
the regulatory requirement to provide notice to the opposing party (so
long as the provider, facility, or provider of air ambulance services
also sends the notice free of charge in paper form upon request).\9\
Although plans and issuers may encourage the use of an online portal
for nonparticipating providers, facilities, and providers of air
ambulance services to submit the information necessary to initiate the
open negotiation period, or may seek additional information to inform
good faith open negotiations, such as through use of a supplemental
open negotiation form, the July 2021 interim final rules require plans
and issuers to provide a telephone number and email address for
providers, facilities, and providers of air ambulance services to
initiate the open negotiation period, and the October 2021 interim
final rules permit a party to initiate the open negotiation period by
sending the standard notice of initiation electronically to the email
address identified in the notice of denial of payment or initial
payment. Accordingly, a plan or issuer cannot refuse to accept the
standard notice of initiation of open negotiation from a provider,
facility, or provider of air ambulance services because the provider or
facility did not utilize the plan's or issuer's online portal when the
standard notice of initiation of open negotiation is provided in a
manner consistent with the requirements of the July 2021 and October
2021 interim final rules.
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\8\ 26 CFR 54.9816-8T(b)(2)(iii)(B), 29 CFR 2590.716-
8(b)(2)(iii)(B), and 45 CFR 149.510(b)(2)(iii)(B).
\9\ 86 FR 55980, 55990 (Oct. 7, 2021).
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In addition, upon request by the provider, facility, or provider of
air ambulance services, a plan or issuer must provide, in a timely
manner, information about whether the QPA includes contracted rates
that were not set on a fee-for-service basis for the specific items and
services and whether the QPA for those items and services was
determined using underlying fee schedule rates or a derived amount.\10\
If an eligible database was used to determine the QPA, the plan or
issuer must provide information to identify which database was used.
Similarly, if a related service code was used to determine the QPA for
an item or service billed under a new service code, the plan or issuer
must provide information to identify which related service code was
used.
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\10\ 26 CFR 54.9816-6T(d)(2)(i), 29 CFR 2590.716-6(d)(2)(i), and
45 CFR 149.140(d)(2)(i). Under the July 2021 interim final rules,
plans and issuers are required to calculate the QPA using underlying
fee schedule rates or derived amounts when the plan or issuer has
sufficient information to calculate the median of its contracted
rates, but the payments under the contractual agreements are not on
a fee-for-service basis (such as bundled or capitation payments). 26
CFR 54.9816-6T(b)(2)(iii), 29 CFR 2590.716-6(b)(2)(iii), 45 CFR
149.140(b)(2)(iii). Plans and issuers are not otherwise permitted to
use underlying fee schedule rates or derived amounts to calculate
the QPA.
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Finally, upon request by the provider, facility, or provider of air
ambulance services, the plan or issuer must provide a statement, if
applicable, that the plan's or issuer's contracted rates include risk-
sharing, bonus, penalty, or other incentive-based or retrospective
payments or payment adjustments that were excluded for purposes of
calculating the QPA for the items and services involved.
C. October 2021 Interim Final Rules
The October 2021 interim final rules build on the July 2021 interim
final rules and implement the Federal IDR process under sections
9816(c) and 9817(b) of the Code, sections 716(c) and 717(b) of ERISA,
and sections 2799A-1(c) and 2799A-2(b) of the PHS Act.
The October 2021 interim final rules provide for a Federal IDR
process that group health plans and health insurance issuers offering
group or individual health insurance coverage and nonparticipating
providers, facilities, and providers of air ambulance services may use
to determine the out-of-network rate for items and services that are
emergency services, non-emergency services furnished by
nonparticipating providers with respect to patient visits to
participating facilities, and air ambulance services furnished by
nonparticipating providers of air ambulance services, where an All-
Payer Model Agreement or specified State law does not apply. The
October 2021 interim final rules generally specify rules to implement
the Federal IDR process, including the requirements governing the open
negotiation period; the initiation of the Federal IDR process; the
Federal IDR process following initiation, including the selection of a
certified IDR entity, submission of offers, payment determinations, and
written decisions; costs of the Federal IDR process; certification of
IDR entities, including the denial or revocation of certification of an
IDR entity; and the collection of information related to the Federal
IDR process from certified IDR entities to satisfy reporting
requirements under the statute.
The October 2021 interim final rules provide that, not later than
30 business days after selection of a certified IDR entity, the
certified IDR entity must select one of the offers submitted by the
plan or issuer and the provider, facility, or provider of air ambulance
services to be the out-of-network rate for the qualified IDR item or
service.\11\ For each qualified IDR item or service, the amount by
which this out-of-network rate exceeds the cost-sharing amount for the
qualified IDR item or service is the total plan or coverage payment
(with any initial payment made by the plan or issuer counted towards
the total plan or coverage payment).
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\11\ Qualified IDR item or service has the same meaning as set
forth in 26 CFR 54.9816-8T(a)(2)(xii), 29 CFR 2590.716-8(a)(2)(xii),
and 45 CFR 149.510(a)(2)(xii).
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The October 2021 interim final rules state that, in selecting the
offer, the certified IDR entity must consider the QPA for the
applicable year for the same or similar item or service, or, in the
case of batched or bundled items or services, the QPA or QPAs for the
applicable year. The preamble to the July 2021 interim final rules
provides that if multiple items and services are reimbursed under non-
fee-for-service contractual arrangements, such as a bundled or
capitated arrangement, and are billed for under a single billing code,
plans and issuers must calculate a QPA for each item or service using
the underlying fee schedule rates for the relevant items and services
if the underlying fee schedule rates are available.\12\ If there is no
underlying fee schedule rate for an item or service, the plan or issuer
must calculate the QPA
[[Page 52621]]
using a derived amount.\13\ In addition, the October 2021 interim final
rules state that the certified IDR entity must also consider
information requested by, or submitted by the parties to, the certified
IDR entity relating to the offer, to the extent a party provides
credible information that is not otherwise prohibited under 26 CFR
54.9816-8T(c)(4)(v), 29 CFR 2590.716-8(c)(4)(v), and 45 CFR
149.510(c)(4)(v).
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\12\ 86 FR 36893 (July 13, 2021).
\13\ The Departments also specify an alternative method to
calculate the QPA when there is insufficient information based on
contracted rates. See 26 CFR 54.9816-6T(c)(2)-(4), 29 CFR 2590.716-
6(c)(2)-(4), and 45 CFR 149.140(c)(2)-(4).
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The October 2021 interim final rules also require the parties to
provide certain information to the certified IDR entity, including
practice size and practice specialty or type; geographic region used to
calculate the QPA; the QPA for the applicable year for the same or
similar item or service as the qualified IDR item or service; and, if
applicable, information showing that the Federal IDR process is
inapplicable to the dispute. In addition, prior to vacatur in the
United States District Court for the Eastern District of Texas, in the
cases of Texas Medical Association, et al. v. United States Department
of Health and Human Services, et al., Case No. 6:21-cv-425 (E.D. Tex.)
(Texas Medical Association) (February 23, 2022) and LifeNet, Inc. v.
United States Department of Health and Human Services, et al., Case No.
6:22-cv-162 (E.D. Tex.) (LifeNet) (July 26, 2022), these interim final
rules specified that the certified IDR entity may request additional
information relating to the parties' offers and must consider credible
additional information submitted, as further described in the next
paragraph, that relates to the parties' offers and the qualified IDR
item or service that is the subject of a payment determination to
determine if the information submitted clearly demonstrates that the
QPA is materially different from the appropriate out-of-network rate
(unless the information relates to a factor that the certified IDR
entity is prohibited from considering). For this purpose, the October
2021 interim final rules specify that credible information is
information that upon critical analysis is worthy of belief and is
trustworthy.\14\ Prior to vacatur in Texas Medical Association, the
term ``material difference'' was defined to mean a substantial
likelihood that a reasonable person with the training and
qualifications of a certified IDR entity making a payment determination
would consider the information important in determining the out-of-
network rate and view the information as showing that the QPA is not
the appropriate out-of-network rate.\15\
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\14\ 26 CFR 54.9816-8T(a)(2)(v), 29 CFR 2590.716-8(a)(2)(v), and
45 CFR 149.510(a)(2)(v).
\15\ 26 CFR 54.9816-8T(a)(2)(viii), 29 CFR 2590.716-
8(a)(2)(viii), and 45 CFR 149.510(a)(2)(viii).
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For items and services that are not air ambulance services, in
determining which offer to select, the certified IDR entity must
consider the following additional information under certain
circumstances:
1. The level of training, experience, and quality and outcomes
measurements of the provider or facility that furnished the qualified
IDR item or service (such as those endorsed by the consensus-based
entity authorized in section 1890 of the Social Security Act).
2. The market share held by the provider or facility or that of the
plan or issuer in the geographic region in which the qualified IDR item
or service was provided.
3. The acuity of the participant, beneficiary, or enrollee who
received the qualified IDR item or service, or the complexity of
furnishing the qualified IDR item or service to the participant,
beneficiary, or enrollee.
4. The teaching status, case mix, and scope of services of the
facility that furnished the qualified IDR item or service, if
applicable.
5. Demonstration of good faith efforts (or lack thereof) made by
the provider or facility or the plan or issuer to enter into network
agreements with each other, and, if applicable, contracted rates
between the provider or facility and the plan or issuer during the
previous 4 plan years.
Under the October 2021 interim final rules, the certified IDR
entity may only consider this information submitted by the parties if
the information is credible and relates to the offer submitted by
either party.\16\ The certified IDR entity may not consider any
information submitted on the prohibited factors, including usual and
customary charges (including payment or reimbursement rates expressed
as a proportion of usual and customary charges); the amount that would
have been billed if the provider, facility, or provider of air
ambulance services were not subject to a prohibition on balance
billing; and payment or reimbursement rates payable by a public payor,
in whole or in part, for items and services furnished by the providers,
facilities, or providers of air ambulance services.\17\
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\16\ This requirement was vacated by the District Court in Texas
Medical Association.
\17\ 26 CFR 54.9816-8T(c)(4)(v), 29 CFR 2590.716-8(c)(4)(v), and
45 CFR 149.510(c)(4)(v). For this purpose, payment or reimbursement
rates payable by a public payor include payments or reimbursement
rates under the Medicare program under title XVIII of the Social
Security Act, the Medicaid program under title XIX of the Social
Security Act, the Children's Health Insurance Program under title
XXI of the Social Security Act, the TRICARE program under chapter 55
of title 10, United States Code, chapter 17 of title 38, United
States Code, and payment rates for demonstration projects under
section 1115 of the Social Security Act.
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The October 2021 interim final rules also provided, prior to
vacatur in Texas Medical Association and LifeNet, that after
considering the QPA, additional information requested by the certified
IDR entity from the parties, and all of the credible information
submitted by the parties that is consistent with the requirements and
is not prohibited information, the certified IDR entity must select the
offer closest to the QPA, unless the certified IDR entity determined
that the credible information submitted by the parties clearly
demonstrates that the QPA is materially different from the appropriate
out-of-network rate, or if the offers are equally distant from the QPA
but in opposing directions. In those cases, the October 2021 interim
final rules required the certified IDR entity to select the offer that
the certified IDR entity determines best represents the value of the
item or service, which could be either party's offer.
Not later than 30 business days after the selection of the
certified IDR entity, the certified IDR entity must notify parties to
the dispute of the selection of the offer and provide a written
decision,\18\ which must be submitted to the parties and the
Departments through the Federal IDR portal.\19\ The October 2021
interim final rules also provided that if the certified IDR entity did
not choose the offer closest to the QPA, this written decision must
include an explanation of the credible information that the certified
IDR entity determined demonstrated that the QPA was materially
different from the appropriate out-of-network rate.
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\18\ 26 CFR 54.9816-8T(c)(4)(vi)(A), 29 CFR 2590.716-
8(c)(4)(vi)(A), and 45 CFR 149.510(c)(4)(vi)(A).
\19\ The Federal IDR portal is available at <a href="https://www.nsa-idr.cms.gov">https://www.nsa-idr.cms.gov</a> and must be used throughout the Federal IDR process to
maximize efficiency and reduce burden.
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The October 2021 interim final rules also implemented the Federal
IDR process for qualified IDR services that are air ambulance services.
The process for a certified IDR entity to select an offer in a dispute
related to qualified IDR services that are air ambulance services is
essentially the same as that for other qualified IDR items or services.
As with disputes related to qualified IDR items or services that are
not air
[[Page 52622]]
ambulance services, in determining which offer to select, the No
Surprises Act and October 2021 interim final rules provide that the
certified IDR entity must consider the QPA for the applicable year for
the qualified IDR services that are air ambulance services. The No
Surprises Act and the October 2021 interim final rules likewise
specified additional circumstances, in addition to the QPA, that the
certified IDR entity must consider in making the payment determination
for air ambulance services. With respect to air ambulance services, the
certified IDR entity is required to consider, to the extent the parties
provide credible information, a different set of additional
circumstances:
1. The quality and outcomes measurements of the provider that
furnished the services.
2. The acuity of the condition of the participant, beneficiary, or
enrollee receiving the service, or the complexity of furnishing the
service to the participant, beneficiary, or enrollee.
3. The training, experience, and quality of the medical personnel
that furnished the air ambulance services.
4. Ambulance vehicle type, including the clinical capability level
of the vehicle.
5. Population density of the point of pick-up (as defined in 42 CFR
414.605) for the air ambulance (such as urban, suburban, rural, or
frontier).
6. Demonstrations of good faith efforts (or lack thereof) made by
the nonparticipating provider of air ambulance services or the plan or
issuer to enter into network agreements with each other and, if
applicable, contracted rates between the provider of air ambulance
services and the plan or issuer during the previous 4 plan years.
As with qualified IDR items or services that are not air ambulance
services, the October 2021 interim final rules provide that after
considering the QPA, additional information requested by the certified
IDR entity from the parties, and all of the credible information
submitted by the parties that is consistent with the requirements and
is not prohibited information, the certified IDR entity must select the
offer closest to the QPA, unless the certified IDR entity determined
that the credible information submitted by the parties clearly
demonstrates that the QPA is materially different from the appropriate
out-of-network rate, or if the offers are equally distant from the QPA
but in opposing directions. In those cases, the October 2021 interim
final rules require the certified IDR entity to select the offer that
the certified IDR entity determined best represents the value of the
item or service, which could be either party's offer.
D. Public Comments Received in Response to the July 2021 and October
2021 Interim Final Rules
In response to the July 2021 and October 2021 interim final rules,
the Departments received thousands of comments on many different
aspects of the rules. In particular, the Departments received many
comments related to a clarification in the preamble to the October 2021
interim final rules \20\ stating that the July 2021 interim final rules
do not require the plan or issuer to calculate the participant's,
beneficiary's, or enrollee's cost sharing using the QPA for the service
code submitted by the provider or facility, and that instead the plan
or issuer could calculate the participant's, beneficiary's, or
enrollee's cost sharing using the QPA for a downcoded service code that
the plan or issuer determined was more appropriate. Many of these
comments addressed the information required by the July 2021 interim
final rules that must be shared about the QPA, the importance of this
disclosure, and how additional disclosures related to the QPA would be
useful in the context of the Federal IDR process, particularly when the
QPA is based on a service code or modifier that is different than the
one the provider or facility billed. The Departments also received many
comments related to the payment determination standards under the
Federal IDR process, including the provisions that govern the certified
IDR entity's consideration of the enumerated factors. These final rules
address only the provisions related to these comments, and they make
changes in light of the decisions in Texas Medical Association and
LifeNet. The Departments intend to address comments related to other
provisions of the July 2021 and October 2021 interim final rules,
including comments received in response to the July 2021 interim final
rules related to the disclosure requirements that are not specifically
related to downcoded service codes, at a later date.
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\20\ See 86 FR 55997-98 n.35.
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1. QPA Disclosure Requirements
With respect to the information that must be shared about the QPA,
the Departments received comments on both the July 2021 interim final
rules and the October 2021 interim final rules supporting the
disclosure requirement and emphasizing the importance of ensuring that
the QPA and other information related to the item or service are
provided to providers, facilities, and providers of air ambulance
services at the time of the initial payment or notice of denial of
payment. Many commenters on the July 2021 interim final rules stressed
that the methodology to calculate the QPA should be transparent, and
that the Departments should expand the range of information that is
shared with providers, facilities, and providers of air ambulance
services with the QPA. Some commenters felt the degree of disclosure
was insufficient, and that it provided too much power and discretion to
plans and issuers. Others, however, questioned whether plans, in
particular, would be able to obtain the information required under the
July 2021 interim final rules, as much of the information may be in the
control of vendors or other service providers. In particular, the
Departments received comments in response to the July 2021 interim
final rules and the October 2021 interim final rules requesting that
the disclosures that must be provided with each initial payment or
notice of denial of payment include additional information about how
the QPA was determined to ensure that providers, facilities, and
providers of air ambulance services have sufficient information when
the Federal IDR process is used for a payment determination. For
example, commenters requested that plans and issuers be required,
without a request, to provide information on the number of contracts
and the geographic region used to calculate the QPA, whether the QPA is
based on downcoding \21\ of the billed claim, information about the use
of modifiers in calculating the QPA, the types of specialties and
subspecialties that have contracted rates included in the data set used
to determine the QPA, and whether bonuses and supplemental payments
were paid to in-network providers.
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\21\ Downcode is defined in these final rules at 26 CFR 54.9816-
6, 29 CFR 2590.716-6, and 45 CFR 149.30, to mean the alteration by a
plan or issuer of a 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.
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The manner in which items and services are coded, including the
concept of downcoding claims was reflected in both the July 2021
interim final rules and the October 2021 interim final rules. The
preamble to the July 2021 interim final rules noted that it is
important that the QPA methodology account for modifiers that affect
payment rates.\22\ The preamble to the
[[Page 52623]]
October 2021 interim final rules noted that the Departments are aware
that some plans and issuers review claims and alter the service code or
modifier submitted by the provider or facility to another service code
or modifier that the plan or issuer determines to be more appropriate
(a practice commonly referred to as ``downcoding'' when the adjustment
results in a lower reimbursement, as noted in the preamble to the
October 2021 interim final rules).\23\ Some commenters expressed
concern that plans and issuers may calculate the QPA for a lower level
service code (and/or modifier) instead of calculating the QPA for the
particular service code or modifier specified in the claim submitted
for reimbursement. These commenters stated that it is important for
providers and facilities to know whether the plan or issuer has
downcoded a particular claim that is subject to the balance billing
protections in the No Surprises Act to ensure that providers receive
information that may be relevant to the open negotiation process and
that could inform a provider's offer in the Federal IDR process, and
which the provider has no other means of ascertaining. Several
commenters requested that these final rules require plans and issuers
to disclose whether the claim has been downcoded for purposes of
computing the QPA and include an explanation of why the claim was
downcoded, as well as what the QPA would have been had the claim not
been downcoded.
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\22\ The preamble to the July 2021 interim final rules also
noted that modifiers affect the payment rate because, for example,
modifiers can be used to indicate that the work required to provide
a service in a particular instance was significantly greater--or
significantly less--than the service typically required. See 86 FR
36891.
\23\ See 86 FR 55997-98.
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2. Payment Determination Standards Under the Federal IDR Process
With respect to the payment determination standards under the
Federal IDR process, the Departments received numerous comments from
various stakeholders about the provisions that govern the certified IDR
entity's consideration of the statutory factors during the payment
determination process. Many commenters supported the approach set forth
in the October 2021 interim final rules that directs the certified IDR
entity to begin with the QPA as a baseline when making a payment
determination, which those commenters highlighted as an important part
of the payment determination process that would ensure that the
surprise billing provisions lead to lower health care costs for all
consumers. Furthermore, some commenters stated that the approach taken
in the October 2021 interim final rules is crucial to achieving the
budget savings the Congressional Budget Office calculated. Those
commenters stated that the approach taken would shield consumers from
surprise bills and ever higher insurance premium costs. Commenters
stated that the October 2021 interim final rules reinforce the
statutory directive that the QPA is the primary consideration for the
certified IDR entity. Commenters also stated this use of the QPA
represents a reasonable, market-based rate and would encourage greater
participation in health plan networks.
Commenters noted that there may be circumstances in which the
appropriate out-of-network rate would exceed the QPA, and that the
October 2021 interim final rules properly provide a pathway for the
certified IDR entity to reach that determination when it can be
justified. These commenters highlighted that nothing in the October
2021 interim final rules required a certified IDR entity to default to
the selection of the QPA or the offer closest to it, but rather that
the rule correctly mandated that all credible information be
considered. Commenters also stated that it was not unreasonable to
require a party to document why the QPA is not the appropriate payment
amount. Other commenters raised concerns about giving the same weight
to all factors because many of the additional circumstances outlined in
the rule, such as patient acuity and complexity of care, could already
be incorporated into the QPA calculation. Commenters also noted that
the October 2021 interim final rules provide clear guidance to
certified IDR entities, which would reduce variability in payment
determinations and better position the parties to settle disputes
before reaching the Federal IDR process, by giving the parties a better
sense of how payment determinations would be made.
Other commenters disagreed with the approach under the October 2021
interim final rules and expressed opposition to the emphasis placed on
the QPA during the Federal IDR process. Many of these commenters
criticized the rule as establishing a rebuttable presumption in favor
of the QPA as the out-of-network rate while failing to equip the
parties with the necessary information to rebut the presumption. Some
commenters stated that the Departments disregarded bipartisan
Congressional intent and tipped the scales in the Federal IDR process
in favor of health plans and issuers. Commenters expressed concern that
emphasizing the QPA ignores the complexity of billing factors, such as
modifiers and the practice of bundling multiple health care services
under a single billing code, and creates an incentive for the plan or
issuer to downcode claims in bad faith. Commenters also expressed
concern that the prominence of the QPA could drive down reimbursement
rates for providers that are currently reimbursed above the median
contracted rate, which they argued could jeopardize network adequacy
and viability of physician practices and, commenters claimed, further
drive down the QPA. A number of commenters stated that the emphasis
given to the QPA would provide an incentive for plans and issuers to
prefer out-of-network care, potentially resulting in reduced networks,
because, ultimately, plans and issuers would pay the QPA rather than a
market rate driven by the particular circumstances of the care
delivered. Commenters also asserted that showing that the QPA is
materially different from the appropriate out-of-network rate would
burden providers and facilities who lack the resources to gather and
submit this information during the Federal IDR process.
Commenters who disagreed with the approach set forth in the October
2021 interim final rules stated that certain provisions created a
rebuttable presumption that the QPA is the appropriate out-of-network
rate, and these commenters requested that the Departments remove these
provisions, and instead issue rulemaking and guidance that instructs
certified IDR entities to consider all permissible and relevant
information submitted by the parties. Other commenters suggested
alternative approaches for the provisions that govern the certified IDR
entity's consideration of the enumerated factors. Some commenters
requested that equal weight be given to the QPA and the contracted
rates between the provider or facility and plan or issuer during the
previous 4 years. Other commenters requested that the Departments
replace the QPA as the baseline in the Federal IDR process with a
different amount, such as the actual amount paid to a particular out-
of-network provider for the same or similar item or service or the
median contracted rate based on the amount negotiated under each
contract the provider has with a plan or issuer.
3. Payment Determinations for Air Ambulance Services
A majority of commenters raised similar points with regard to the
Federal IDR process for both non-air ambulance items and services and
air ambulance
[[Page 52624]]
services. Some supported the emphasis on the QPA, while others
disagreed with the use of the QPA as the baseline in the Federal IDR
process. These commenters raised concerns about the transparency of the
calculation of the QPA, and questioned whether the QPA is the
appropriate out-of-network rate. Several commenters stressed that the
use of the QPA as a baseline also raises concerns that are unique to
air ambulance services. Some commenters highlighted the prevalence of
single-case agreements for air ambulance services, which the commenters
interpreted as including settlements of post-service claims. The
commenters asserted that, because of the prevalence of these
agreements, the QPA does not adequately reflect market rates for air
ambulance services and the QPA would be lower than appropriate. Other
commenters argued that hospital-based providers of air ambulance
services are subsidized by the related hospitals, so including the
rates of these providers in the QPA calculation with the rates of other
air ambulance providers would improperly lower the QPA and therefore
the use of the QPA as a baseline would not be appropriate. Another
commenter argued that the negotiated rates of the few in-network
providers for air ambulance services tend to be inflated by their
disproportionately large market power, leading to artificially high air
ambulance rates and an inflated QPA value. These commenters proposed
that the rules should direct the certified IDR entities to take into
account market concentration and prices charged by non-profit
affiliated air ambulance providers because air ambulance services owned
by private equity and publicly-traded companies receive higher payments
and subsequently generate larger and more frequent surprise bills than
their non-profit-affiliated counterparts. Other commenters disagreed
and stated that the Federal IDR process should not make such a
distinction among providers of air ambulance services. One commenter
stated that Congress clearly recognized the variation in air ambulance
services in distinguishing the six ``additional circumstances'' \24\
specific to air ambulance services that certified IDR entities should
consider.
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\24\ Under section 9817(b)(5)(C) of the Code, section
717(b)(5)(C) of ERISA, and section 2799A-2(b)(5)(C) of the PHS Act,
those six additional circumstances are: (1) the quality and outcomes
measurements of the provider that furnished such services; (2) the
acuity of the individual receiving such services or the complexity
of furnishing such services to such individual; (3) the training,
experience, and quality of the medical personnel that furnished such
services; (4) the ambulance vehicle type, including the clinical
capability level of such vehicle; (5) population density of the
point of pick-up (such as urban, suburban, rural, or frontier); and
(6) demonstrations of good faith efforts (or lack of good faith
efforts) made by the nonparticipating provider or nonparticipating
facility or the plan or issuer to enter into network agreements and,
if applicable, contracted rates between the provider and the plan or
issuer, as applicable, during the previous 4 plan years.
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4. The Certified IDR Entity's Written Decision
With respect to the certified IDR entity's written decision,
several commenters supported the requirement for the certified IDR
entity to provide a written decision, including the explanation of the
underlying rationale for the certified IDR entity's determination.
Other commenters stressed, however, that requiring the explanation of
the rationale only if the certified IDR entity determined that the QPA
was materially different from the appropriate out-of-network rate could
discourage certified IDR entities from considering additional factors.
A few commenters requested an explanation be required when the
certified IDR entity selected the amount closest to the QPA, including
how the information about the other required considerations was
assessed while others stated that a robust explanation should be
required of the certified IDR entity in all cases. Commenters also
stated that requiring an explanation in all cases would ensure that
certified IDR entities considered all information submitted by the
parties and allow the parties to fully understand the rationale behind
the certified IDR entity's determination. Commenters asserted that this
could improve the quality and efficiency of the IDR process over time,
as parties become better informed as to the types of information
certified IDR entities find credible and the circumstances in which the
parties should pursue the IDR process. Other commenters requested the
Departments either eliminate the requirement for a written decision or
require a similar analysis in all written decisions.
E. Litigation Regarding Requirements Related to Surprise Billing; Part
II
On October 28, 2021, the Texas Medical Association, a trade
association representing physicians, and a Texas physician filed a
lawsuit against the Departments and the Office of Personnel Management
(OPM), asserting that certain provisions of the October 2021 interim
final rules relating to the certified IDR entities' consideration of
the QPA, as well as additional factors related to items and services
that are not air ambulance services, should be vacated. Plaintiffs
argued that the interim final rules ignored Congress's intent that
certified IDR entities weigh the QPA and other factors without favoring
any factor, and they asserted that, as a result, the rules would skew
IDR results in favor of plans and issuers. On February 23, 2022, the
United States District Court for the Eastern District of Texas
(District Court) issued a memorandum opinion and order that vacated
portions of the October 2021 interim final rules governing aspects of
the Federal IDR process related to non-air ambulance qualified IDR
items or services including: (1) the definition of ``material
difference;'' (2) the requirement that a certified IDR entity must
select the offer closest to the QPA unless the certified IDR entity
determines that credible information submitted by either party under 26
CFR 54.9816-8T(c)(4)(i), 29 CFR 2590.716-8(c)(4)(i), and 45 CFR
149.510(c)(4)(i) clearly demonstrates that the QPA is materially
different from the appropriate out-of-network rate for non-air
ambulance qualified IDR items or services, or if the offers are equally
distant from the QPA but in opposing directions; (3) the requirement
that the certified IDR entity may only consider the additional
information submitted by either party to the extent that the credible
information related to the circumstances under 26 CFR 54.9816-
8T(c)(4)(i), 29 CFR 2590.716-8(c)(4)(i), and 45 CFR 149.510(c)(4)(i)
clearly demonstrates that the QPA is materially different from the
appropriate out-of-network rate for non-air ambulance qualified IDR
items or services; (4) the dispute resolution examples; and (5) the
requirement that, if the certified IDR entity does not choose the offer
closest to the QPA, the certified IDR entity's written decision must
include an explanation of the credible information that the certified
IDR entity determined demonstrated that the QPA was materially
different from the appropriate out-of-network rate, based on the
factors certified IDR entities are permitted to consider with respect
to the qualified IDR item or service.\25\
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\25\ Tex. Med. Ass'n, et al. v. U.S. Dept. of Health and Human
Servs., et al., Case No. 6:21-cv-425 (E.D. Tex.).
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On April 27, 2022, LifeNet, Inc., a provider of air ambulance
services, filed a lawsuit against the Departments and OPM seeking the
vacatur of additional provisions of the October 2021 interim final
rules applicable to air ambulance services. In particular, LifeNet
alleged that the requirement codified in the last sentence of 26 CFR
54.9817-2T(b)(2), 29 CFR 2590.717-2(b)(2), and 45 CFR
[[Page 52625]]
149.520(b)(2) that the certified IDR entity may consider information
submitted by a party only if the information ``clearly demonstrate[s]
that the qualifying payment amount is materially different from the
appropriate out-of-network rate'' should be vacated. On July 26, 2022,
the District Court issued a memorandum opinion and order vacating this
language.\26\
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\26\ LifeNet, Inc. v. United States Department of Health and
Human Services, et al., Case No. 6:22-cv-162 (E.D. Tex.).
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F. Scope and Purpose of This Rulemaking
As discussed in more detail later in this preamble, upon review of
the comments the Departments received on the information that must be
shared about the QPA when a service is downcoded and with respect to
the Federal IDR process, and in light of the District Court's
memorandum opinions and orders in Texas Medical Association and
LifeNet, the Departments have determined that it is appropriate to
issue these final rules to finalize parts of the July 2021 and October
2021 interim final rules related to the information that must be
disclosed about the QPA under 26 CFR 54.9816-6T(d), 29 CFR 2590.716-
6(d), and 45 CFR 149.140(d) to address downcoding; related to the
certified IDR entity's consideration of the statutory factors when
making a payment determination under the Federal IDR process at 26 CFR
54.9816-8T(c)(4)(iii)-(iv) and 54.9817T-2(b), 29 CFR 2590.716-
8(c)(4)(iii)-(iv) and 2590.717-2(b), and 45 CFR 149.510(c)(4)(iii)-(iv)
and 149.520(b); and related to the certified IDR entity's written
decision at 26 CFR 54.9816-8T(c)(4)(vi)(B), 29 CFR 2590.716-
8(c)(4)(vi)(B), and 45 CFR 149.510(c)(4)(vi)(B). These final rules also
include changes to remove from the regulations the language vacated by
the District Court.
This rulemaking is purposefully narrow in scope and is intended to
address only certain issues critical to the implementation and
effective operation of the Federal IDR process. The Departments intend
to finalize the remaining provisions of the July 2021 and October 2021
interim final rules after further consideration of comments.
II. Overview of Final Rules
A. Information To Be Shared About the Qualifying Payment Amount
As described earlier in this preamble, the July 2021 interim final
rules require plans and issuers to make certain disclosures with each
initial payment or notice of denial of payment. When the QPA serves as
the recognized amount, or as the amount upon which cost sharing is
based with respect to air ambulance services, plans and issuers must
disclose the QPA and certain information related to the QPA for the
item or service involved, as well as certain additional information,
upon request of the provider, facility, or provider of air ambulance
services for each item or service involved.\27\
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\27\ 26 CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and 45 CFR
149.140(d).
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As stated in the preamble to the July 2021 interim final rules, the
Departments seek to ensure transparent and meaningful disclosure of
information relating to the calculation of the QPA for providers,
facilities, and providers of air ambulance services, while at the same
time minimizing administrative burdens on health plans and issuers and
on the Federal IDR process. The Departments sought to balance those
competing interests by, on the one hand, requiring plans and issuers to
make certain disclosures with each initial payment or notice of denial
of payment and to provide certain additional information upon request
by the provider, facility, or provider of air ambulance services and,
on the other hand, avoiding more wide-reaching disclosure requirements
that could add to the costs and burdens of adjudicating claims subject
to the surprise billing protections in the No Surprises Act.
After review of the comments submitted on the July 2021 interim
final rules regarding downcoding and on the clarification in the
preamble to the October 2021 interim final rules stating that, under
the July 2021 interim final rules, a plan or issuer may calculate the
QPA using a downcoded service code, including the comments suggesting
how the disclosure requirements could be modified in light of this
clarification, the Departments have concluded that additional
disclosure of information about the QPA is appropriate.\28\ This
additional disclosure will ensure that providers, facilities, and
providers of air ambulance services receive information regarding the
QPA that aids in their meaningful participation in open negotiation and
the Federal IDR process in all payment disputes that involve qualified
items or services that have been subject to downcoding.
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\28\ 86 FR 55997-98 (October 7, 2021).
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Specifically, the Departments are of the view that additional
information would be helpful in cases in which the plan or issuer has
downcoded the billed claim to ensure that providers, facilities, and
providers of air ambulance services receive the relevant information
from a plan or issuer that is needed to engage in a productive open
negotiation period. Without information on what the QPA would have been
had the claim not been downcoded, the provider, facility, or provider
of air ambulance services may be at a disadvantage compared to the plan
or issuer. In cases in which the plan or issuer has downcoded the
billed claim and asserts that the QPA that corresponds with the
downcoded claim is the correct total payment amount, it is of
particular importance that the provider, facility, or provider of air
ambulance services knows that the item or service in question has been
downcoded and has information regarding both the QPA for the downcoded
claim and the amount that would have been the QPA had the service code
or modifier not been downcoded. In the Departments' view, this
information may be critical to the provider, facility, or provider of
air ambulance services in developing an offer or submitting information
if it believes that the QPA calculated by the plan or issuer does not
best represent the value of the item or service provided.
Furthermore, the requirement to disclose this additional
information will increase transparency by ensuring that the provider,
facility, or provider of air ambulance services has sufficient
information about the QPA to submit an informed offer, including how it
relates to the billed claim. This increased transparency will aid in
the open negotiation process by helping providers, facilities, and
providers of air ambulance services to understand how the plan or
issuer arrived at the relevant QPA in relation to the billed claim.
This increased transparency will inform the provider's, facility's, or
provider of air ambulance services' decision whether to initiate open
negotiation and the Federal IDR process, as well as its determination
of the amount that it submits as its offer.\29\ Further, this
requirement will help a provider, facility, or provider of air
ambulance services ascertain what information to provide the certified
IDR entity to demonstrate that the provider's, facility's, or provider
of air ambulance
[[Page 52626]]
services' offer best represents the value of the item or service. If
submitted for the certified IDR entity's consideration, this
information will also aid the certified IDR entity in selecting the
offer that best represents the value of the item or service by ensuring
that the certified IDR entity will have additional pertinent
information about the item or service. For example, in a dispute that
concerns a qualified IDR service for which the plan or issuer downcoded
the billed service code, the provider, facility, or provider of air
ambulance services may present information showing that the billed
service code was more appropriate than the downcoded service code. In
such an instance, the certified IDR entity could determine that the QPA
based on the downcoded service code does not sufficiently encompass the
complexity of furnishing the qualified IDR service because it was based
on a service code for a different service from the one furnished. If
the certified IDR entity makes such a determination, then the amount
that would have been the QPA had the service code or modifier not been
downcoded may be relevant to the certified IDR entity in determining
which offer best represents the value of the qualified IDR item or
service.
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\29\ The Departments understand that many plans and issuers make
initial payments that are equivalent to or are informed by the
corresponding QPA for the item or service at issue. As noted in in
the preamble to the July 2021 interim final rules, the initial
payment should be an amount that the plan or issuer reasonably
intends to be payment in full based on the relevant facts and
circumstances, which may be higher or lower than the QPA, as
required under the terms of the plan or coverage, prior to the
beginning of any open negotiation or initiation of the Federal IDR
process. 86 FR 36872, 36900 (July 13, 2021).
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Therefore, the Departments are issuing these final rules to add a
definition for the term ``downcode'' to 26 CFR 54.9816-6, 29 CFR
2590.716-6, and 45 CFR 149.140; and final rules under 26 CFR 54.9816-
6(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d) to require additional
information about the QPA that must be provided with an initial payment
or notice of denial of payment, without a provider, facility, or
provider of air ambulance services having to make a request for this
information, in cases in which the plan or issuer has downcoded the
billed claim. Although ``downcoding'' is being defined for the first
time in these final rules, the concept was reflected in both sets of
interim final rules. Though neither set of interim final rules
specifically defines a term for this practice, the interim final rules
described the practice and explained that it was permissible under
certain circumstances. See 86 FR 55997-98 n.35 (clarification in
October 2021 interim final rules regarding requirements of July 2021
interim final rules). Indeed, as described previously, the Departments
received several comments in response to the July 2021 interim final
rules and the October 2021 interim final rules requesting that the
disclosures that must be provided with each initial payment or notice
of denial of payment include additional information about how the QPA
was calculated to ensure that providers, facilities, and providers of
air ambulance services have sufficient information when the Federal IDR
process is used for a payment determination. For example, commenters
requested that plans and issuers be required, without a request, to
provide information on the number of contracts and the geographic
region used to calculate the QPA, whether the QPA was calculated based
on a downcoded billed claim, information about the use of modifiers in
calculating the QPA, the types of specialties and subspecialties that
have contracted rates included in the data set used to determine the
QPA, and whether bonuses and supplemental payments were paid to in-
network providers.
These final rules define the term ``downcode,'' as described in the
preamble to the October 2021 interim final rules, to mean the
alteration by a plan or issuer of a 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.
These final rules also specify that, if a QPA is based on a
downcoded service code or modifier, in addition to the information
already required to be provided with an initial payment or notice of
denial of payment, a plan or issuer must provide a statement that the
service code or modifier billed by the provider, facility, or provider
of air ambulance services was downcoded; an explanation of why the
claim was downcoded, including a description of which service codes
were altered, if any, and which modifiers were altered, added, or
removed, if any; and the amount that would have been the QPA had the
service code or modifier not been downcoded.
The Departments are continuing to consider comments on the July
2021 interim final rules about whether additional disclosures related
to the QPA calculation methodology should be required to be provided
with an initial payment or notice of denial of payment, or upon
request. The Departments note that the statute places the
responsibility for monitoring the accuracy of plans' and issuers' QPA
calculation methodologies with the Departments (and applicable state
authorities) by requiring audits of plans' and issuers' QPA calculation
methodologies,\30\ and the Departments have committed to conducting
audits. The Departments also stress that payment determinations in the
Federal IDR process should center on a determination of a total payment
amount for a particular item or service based on the facts and
circumstances of the dispute at issue, rather than an examination of a
plan's or issuer's QPA methodology.
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\30\ 86 FR 36872, 36899 (July 13, 2021).
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B. Payment Determinations Under the Federal IDR Process
The October 2021 interim final rules provide that, not later than
30 business days after the selection of the certified IDR entity, the
certified IDR entity must select one of the offers submitted by the
plan or issuer or the provider, facility, or provider of air ambulance
services as the out-of-network rate for the qualified IDR item or
service. In determining which offer to select, the October 2021 interim
final rules provided, prior to Texas Medical Association and LifeNet,
that the certified IDR entity must first look to the QPA, as it
represents a reasonable market-based payment for relevant items and
services, and then to additional information requested by the certified
IDR entity from the parties and other additional information submitted
by the parties. After considering the QPA and additional information,
the October 2021 interim final rules required the certified IDR entity
to select the offer closest to the QPA, unless the certified IDR entity
determined that the additional information requested by the certified
IDR entity and the credible information submitted by the parties
demonstrated that the QPA was materially different from the appropriate
out-of-network rate, or if the offers were equally distant from the QPA
but in opposing directions. In instances in which the certified IDR
entity determined that the credible information submitted by the
parties clearly demonstrated that the QPA was materially different from
the appropriate out-of-network rate, or when the offers were equally
distant from the QPA but in opposing directions, the October 2021
interim final rules state that the certified IDR entity must select the
offer that the certified IDR entity determined best represents the
value of the item or service, which could be either party's offer.
As stated earlier in this preamble, on February 23, 2022 and July
26, 2022, the District Court in Texas Medical Association and LifeNet
issued memorandum opinions and orders that vacated certain provisions
of the October 2021 interim final rules that govern aspects of the
Federal IDR process, including provisions that
[[Page 52627]]
provided guidance to certified IDR entities on selecting the
appropriate out-of-network rate in a payment determination. In the
October 2021 interim final rules, the Departments required certified
IDR entities to view the QPA as an appropriate payment amount, subject
to consideration of the information submitted by the parties related to
the additional circumstances outlined in the statute, as a mechanism to
ensure that certified IDR entities approached making payment
determinations in the Federal IDR process in a consistent manner. The
regulatory text required certified IDR entities to select the offer
closest to the QPA unless the certified IDR entity determined that
credible information submitted by a party clearly demonstrated that the
QPA was materially different from the appropriate out-of-network rate.
The preamble to the October 2021 interim final rules described the
relevant instructions to certified IDR entities as a ``rebuttable
presumption'' in favor of the QPA.
The District Court in Texas Medical Association and LifeNet vacated
the portions of the October 2021 interim final rules that it construed
as creating a rebuttable presumption in favor of the QPA. The
Departments note that these final rules are not intended to impose a
rebuttable presumption for payment determinations in the Federal IDR
process. The regulatory text in these final rules does not include the
provisions that the District Court reasoned would have the effect of
imposing such a presumption.
The Departments note that, in all cases, the QPA, which is
generally based on the median contracted rate for a qualified IDR item
or service, will be relevant to a payment determination, as it
represents the typical payment amount that a plan or issuer that is a
party to a payment determination will pay in-network providers,
facilities, and providers of air ambulance services for that particular
qualified IDR item or service. The Departments also note that, to the
extent the QPA is calculated in a manner that is consistent with the
detailed rules issued under the July 2021 interim final rules, and is
communicated in a way that satisfies the applicable disclosure
requirements, the QPA will meet the credibility requirement that
applies to the additional information and circumstances set forth in
these final rules.\31\ The credibility requirement is designed to
ensure that the additional information submitted by the parties to a
payment determination meet the same credibility standard that the QPA
already meets through other mechanisms, by virtue of the requirements
related to the QPA set forth in the July 2021 interim final rules. The
Departments also note that the credibility requirement is designed to
ensure that certified IDR entities have clear guidance on how to
evaluate potentially voluminous and complex information in a methodical
and consistent manner. Absent clear guidance on a process for
evaluating the different factors, there would be no guarantee of
consistency in how certified IDR entities reached determinations in
different cases. The Departments are of the view that this guidance is
also important because the QPA must be a quantitative figure, like the
offers that will be submitted in a payment determination. Generally,
these quantitative figures will be unlike the information received
related to the additional circumstances, which will often be
qualitative and open to subjective evaluation. Although the QPA is a
quantitative figure, the amount that best represents the value of the
qualified IDR items and services may be more or less than the QPA due
to additional circumstances that are not easily quantifiable such as
the care setting or the teaching status of the facility. It therefore
is reasonable to ensure that certified IDR entities consider the QPA, a
quantitative figure, and then consider the additional, likely-
qualitative factors, when determining the out-of-network rate--another
quantitative figure.
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\31\ To the extent there is a question whether a plan or issuer
has complied with the July 2021 interim final rules' requirements
for calculating the QPA, it is the Departments' (or applicable State
authorities') responsibility, not the certified IDR entity's, to
monitor the accuracy of the plan's or issuer's QPA calculation
methodology by conducting an audit of the plan's or issuer's QPA
calculation methodology. However, a provider or facility may always
assert to the certified IDR entity that additional information
points in favor of the selection of its offer as the out-of-network
payment amount, even where that offer is for a payment amount that
is different from the QPA.
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1. Requirement To Consider the QPA and Additional Information Submitted
In light of the Texas Medical Association and LifeNet decisions,
and in response to comments received on these provisions, the
Departments are finalizing rules that remove the provisions that the
District Court vacated and that adopt standards for making a payment
determination that are intended to achieve the statutory aims
articulated earlier in this preamble.
Congress granted the Departments statutory authority to ``establish
by regulation one independent dispute resolution process'' under which
certified IDR entities determine the amount of payment for an out-of-
network item or service.\32\ The Federal IDR process that the
Departments establish under this authority is to be ``in accordance
with the succeeding provisions of'' the cited statutory
subsections,\33\ including the statutory provisions describing the
factors for the certified IDR entity to consider in determining the
out-of-network payment amount. Under sections 9816(c)(5) and 9817(b)(5)
of the Code, sections 716(c)(5) and 717(b)(5) of ERISA, and sections
2799A-1(c)(5) and 2799A-2(b)(5) of the PHS Act, the statute provides
that with respect to payment determinations, the certified IDR entity
must always consider the QPA without the parties specifically bringing
it to the certified IDR entity's attention. Next, the statute provides
that the certified IDR entity must also consider ``additional
information'' or ``additional circumstances'' submitted to the
certified IDR entity.
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\32\ See section 9816(c)(2)(A) of the Code, section 716(c)(2)(A)
of ERISA, and section 2799A-1(c)(2)(A) of the PHS Act; see also
section 9817(b)(2)(A) of the Code, section 717(b)(2)(A) of ERISA,
and section 2799A-2(b)(2)(A) of the PHS Act.
\33\ Id.
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As explained later in this preamble, the Departments are of the
view that it is appropriate to exercise their authority under this
provision, and that it is in accordance with these statutory
provisions, to adopt a Federal IDR process that encourages a consistent
methodology for evaluation of information when making a payment
determination. The Departments are of the view that there is value in
ensuring that all certified IDR entities approach payment
determinations in a similar manner, which will promote consistency and
predictability in the process, thereby lowering administrative costs
and encouraging consistency in appropriate payments for out-of-network
services.\34\ The statute requires certified IDR entities to always
consider the QPA when making a payment determination, as it is the one
statutory consideration that will always be present in each payment
determination, whereas the parties may or may not choose to submit
[[Page 52628]]
information related to the additional circumstances as part of their
offer. Consideration of the QPA, which is the first-listed statutory
factor and a quantitative figure, will aid certified IDR entities in
their consideration of each of the other statutory factors, as these
entities will then be in a position to evaluate whether the
``additional'' factors present information that may not have already
been captured in the calculation of the QPA.
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\34\ See Cong. Budget Office, H.R. 5826, the Consumer
Protections Against Surprise Medical Bills Act of 2020, as
Introduced on February 10, 2020: Estimated Budgetary Effects at 1
(Feb. 11, 2020) (arbitrators ``would be instructed to look to the
health plan's median payment rate for in-network rate care,'' and as
a result ``average payment rates for both in- and out-of-network
care would move toward the median in-network rate,'' thereby
lowering health insurance premiums and budget deficits); see also
H.R. Rep. No. 116-615, pt. I, at 57-58 (2020).
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As commenters noted, there may be instances in which the QPA would
not adequately account for one or more of the additional factors. The
Departments note that these final rules do not require certified IDR
entities to default to the offer closest to the QPA or to apply a
presumption in favor of that offer. The Departments are of the view
that it will often be the case that the QPA represents an appropriate
out-of-network rate, as the QPA is largely informed by similar
information to what would be provided as information in support of the
additional statutory circumstances. Nonetheless, the Departments
acknowledge that the additional factors may be relevant in determining
the appropriate out-of-network rate, because the QPA may not account
for information specific to a particular item or service. Therefore,
these final rules do not require the certified IDR entity to select the
offer closest to the QPA. Rather, these final rules specify that
certified IDR entities should select the offer that best represents the
value of the item or service under dispute after considering the QPA
and all permissible information submitted by the parties.
Accordingly, in determining which offer to select during the
Federal IDR process under these final rules, the certified IDR entity
must consider the QPA for the applicable year for the same or similar
item or service and then must consider all additional information
submitted by a party to determine which offer best reflects the
appropriate out-of-network rate, provided that the information relates
to the party's offer for the payment amount for the qualified IDR item
or service that is the subject of the payment determination (and does
not include information that the certified IDR entity is prohibited
from considering in making the payment determination under section
9816(c)(5)(D) of the Code, section 716(c)(5)(D) of ERISA, and section
2799A-1(c)(5)(D) of the PHS Act).\35\ For this purpose, the Departments
understand that information requested by a certified IDR entity, or
submitted by a party, would be information relating to a party's offer
if it tends to show that the offer best represents the value of the
item or service under dispute. Therefore, these rules require the
certified IDR entity to evaluate whether the information relates to the
offer submitted by either party for the payment amount for the
qualified IDR item or service that is the subject of the payment
determination. In considering this additional information, the
certified IDR entity should evaluate whether information that is
offered is credible and should not give weight to information that is
not credible.\36\ The appropriate out-of-network rate must be the offer
that the certified IDR entity determines best represents the value of
the qualified IDR item or service.
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\35\ See also 26 CFR 54.9816-8T(c)(4)(v), 29 CFR 2590.716-
8(c)(4)(v), and 45 CFR 149.510(c)(4)(v).
\36\ For this purpose, credible information is information that
upon critical analysis is worthy of belief and is trustworthy. 26
CFR 54.9816-8T(a)(2)(v), 29 CFR 2590.716-8(a)(2)(v), and 45 CFR
149.510(a)(2)(v).
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For non-air ambulance items and services, the additional
information to be considered includes information related to the
following factors:
1. the level of training, experience, and quality and outcomes
measurements of the provider or facility that furnished the qualified
IDR item or service (such as those endorsed by the consensus-based
entity authorized in section 1890 of the Social Security Act);
2. the market share held by the provider or facility or that of the
plan or issuer in the geographic region in which the qualified IDR item
or service was provided;
3. the acuity of the participant, beneficiary, or enrollee
receiving the qualified IDR item or service, or the complexity of
furnishing the qualified IDR item or service to the participant,
beneficiary, or enrollee;
4. the teaching status, case mix, and scope of services of the
facility that furnished the qualified IDR item or service, if
applicable; and
5. the demonstration of good faith efforts (or lack thereof) made
by the provider or facility or the plan or issuer to enter into network
agreements with each other, and, if applicable, contracted rates
between the provider or facility, as applicable, and the plan or
issuer, as applicable, during the previous 4 plan years.
Under these final rules, the certified IDR entity must also
consider information related to the offer provided in response to a
request from the certified IDR entity under 26 CFR 54.9816-
8T(c)(4)(i)(A)(2), 29 CFR 2590.716-8(c)(4)(i)(A)(2), and 45 CFR
149.510(c)(4)(i)(A)(2).
2. Avoidance of Double-Counting Information
When considering the additional information under 26 CFR 54.9816-
8(c)(4)(iii), 29 CFR 2590.716-8(c)(4)(iii), and 45 CFR
149.510(c)(4)(iii), the certified IDR entity should evaluate the
information and should not give weight to that information if it is
already accounted for by any of the other information submitted by the
parties. The certified IDR entity should consider whether the
additional information is already accounted for in the QPA and should
not give weight to information related to a factor if the certified IDR
entity determines the information was already accounted for in the
calculation of the QPA, to avoid weighting the same information twice.
In addition, if the parties submit information related to more than one
of the additional factors, the certified IDR entity should also
consider whether the information submitted regarding those factors is
already accounted for by information submitted relating to other
credible information submitted to the certified IDR entity in relation
to another factor and, if so, should not weigh this information more
than once.
Numerous comments received on the October 2021 interim final rules
highlighted that, in many cases, certain factors, such as patient
acuity or the complexity of furnishing the qualified IDR item or
service to the participant, beneficiary, or enrollee, will already be
accounted for in the calculation of the QPA and should therefore not
receive additional weight. For example, because the plan or issuer is
required to calculate the QPA using median contracted rates for service
codes, as well as modifiers (if applicable), and because service codes
and modifiers in many cases reflect patient acuity and the complexity
of the service provided, these factors will often already be reflected
in the QPA.
Commenters also acknowledged that there could be instances in which
the QPA would not adequately account for the acuity of the patient or
complexity of the service: for example, if the complexity of a case is
an outlier such that the time or intensity of care exceeds what is
typical for a service code. A certified IDR entity may also conclude
that the QPA does not already account for patient acuity or the
complexity of furnishing the qualified IDR item or service in instances
where the parties disagree on what service code or modifier accurately
describes the qualified IDR item or service, such as when a plan or
issuer has downcoded a claim and the QPA is based on the
[[Page 52629]]
downcoded service code or modifier, rather than the billed service code
or modifier.
The Departments agree with the commenters that, in many cases, the
additional factors for the certified IDR entity to consider other than
the QPA will already be reflected in the QPA. The QPA is generally
calculated to include characteristics that affect costs, including
medical specialty, geographic region, and patient acuity and case
severity, all captured in different billing codes or the QPA
calculation methodology.\37\ Therefore, in the Departments' view,
giving additional weight to information that is already incorporated
into the calculation of the QPA would be redundant, possibly resulting
in the selection of an offer that does not best represent the value of
the qualified IDR item or service and potentially over time
contributing to higher health care costs. As noted earlier in this
preamble, the Departments are also aware that there are instances when
certain factors related to the qualified IDR item or service may not be
adequately reflected in the QPA. Under these final rules, certified IDR
entities are required to consider the QPA and then must consider all
additional information submitted by the parties relating to the offer
for the payment amount for the qualified IDR item or service that is
the subject of the payment determination, but each factor should be
weighted only once in the evaluation of each party's payment offer. To
the extent a factor is not already reflected in the QPA, the certified
IDR entity should accord that factor appropriate weight based on
information related to it provided by the parties. For example, some
providers and facilities that provide high-acuity care, such as level 1
trauma or neonatal care, may contend that additional factors such as
their case mix and the scope of services offered were not accounted for
in the QPA and could justify the selection of a higher amount as the
out-of-network payment amount.
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\37\ Plans and issuers are required to calculate separate QPAs
for the same service code by provider specialty if the plan or
issuer has contracted rates for the service code that vary based on
provider specialty. See 26 CFR 54.9816-6T(b)(3), 29 CFR 2590.716-
6(b)(3), and 45 CFR 149.140(b)(3).
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3. Examples Provided
These final rules also include examples to illustrate the
consideration of factors when making a payment determination, including
whether and how to give weight to additional information submitted by a
party. Each example assumes that the Federal IDR process applies for
purposes of determining the out-of-network rate, that both parties have
submitted the information parties are required to submit as part of the
Federal IDR process, including the applicable QPA(s), and the submitted
information does not include information on the prohibited factors.
In the first new example, a level 1 trauma center that is a
nonparticipating emergency facility submits an offer that is higher
than the QPA. Along with the offer, the nonparticipating emergency
facility submits additional written information showing that the scope
of services available at the nonparticipating emergency facility was
critical to the delivery of care for the qualified IDR item or service
provided, given the particular patient's acuity, and the information is
determined to be credible by the certified IDR entity. The
nonparticipating emergency facility also submits information showing
that the contracted rates used to calculate the QPA were based on a
level of service that is typical in cases in which the services are
delivered by a facility that is not a level 1 trauma center and that
does not have the capability to provide the scope of services provided
by a level 1 trauma center. This information is also determined to be
credible by the certified IDR entity. The issuer submits an offer equal
to the QPA. No additional information is submitted by either party. The
certified IDR entity determines that the information submitted by the
nonparticipating emergency facility relates to the offer for the
payment amount for the qualified IDR item or service that is the
subject of the payment determination. If the certified IDR entity
determines that it is appropriate to give weight to the additional
credible information submitted by the nonparticipating emergency
facility and that this information demonstrates that the facility's
offer best represents the value of the qualified IDR item or service,
the certified IDR entity should select the facility's offer.
In the second new example, a nonparticipating provider submits an
offer that is higher than the QPA. Along with the offer, the
nonparticipating provider submits additional written information
regarding the level of training and experience of the provider, and the
information is determined to be credible by the certified IDR entity,
but the certified IDR entity finds that the provider does not
demonstrate that the level of training and experience relates to the
offer for the appropriate payment amount for the qualified IDR item or
service that is the subject of the payment determination (for example,
the information does not show that the level of training and experience
was necessary to provide the qualified IDR service or that the training
or experience made an impact on the care that was provided). The
nonparticipating provider does not submit any additional information.
The issuer submits an amount equal to the QPA as its offer, with no
additional information. Even if the certified IDR entity determines
that the additional information regarding the level of training and
experience is credible, if the certified IDR entity determines that the
information does not relate to the offer for the payment amount for the
qualified IDR service that is the subject of the payment determination,
the certified IDR entity should not give weight to the additional
information. In the absence of any other credible information that
relates to a party's offer, the certified IDR entity should select the
issuer's offer as the offer that best represents the value of the
qualified IDR service.
In the third new example, in connection with an emergency
department visit for the evaluation and management of a patient, a
nonparticipating provider submits an offer that is higher than the QPA.
Along with the offer, the nonparticipating provider submits additional
written information showing that the acuity of the patient's condition
and the complexity of the qualified IDR service required the taking of
a comprehensive history, a comprehensive examination, and medical
decision making of high complexity, and the information is determined
to be credible by the certified IDR entity. The issuer submits an offer
equal to the QPA for Current Procedural Terminology (CPT) code 99285,
which is the CPT code for an emergency department visit for the
evaluation and management of a patient requiring a comprehensive
history, a comprehensive examination, and medical decision making of
high complexity. The issuer also submits additional written information
showing that this CPT code accounts for the acuity of the patient's
condition, and the information is determined to be credible by the
certified IDR entity. The certified IDR entity determines that this
information relates to the offer for the payment amount for the
qualified IDR item or service that is the subject of the payment
determination. Neither party submits any additional information. If the
certified IDR entity determines the information on the acuity of the
patient and complexity of the service is already accounted for in the
calculation of the QPA, the certified IDR entity should not
[[Page 52630]]
give weight to the additional information provided by the
nonparticipating provider. If, after evaluating the information
submitted by the parties, the IDR entity determines that the issuer's
offer best represents the value of the qualified IDR service, then the
certified IDR entity should select the issuer's offer.
In the fourth new example, the issuer submits an offer that is
higher than the QPA and that is equal to the nonparticipating emergency
facility's prior contracted rate (adjusted for inflation) with the
issuer for the previous year for the qualified IDR service. Although
the facility is not participating in the issuer's network this year, it
was a participating facility in the issuer's network in the previous 4
plan years. Along with the offer, the issuer submits additional written
information showing that the contracted rates between the
nonparticipating facility and the issuer during the previous 4 plan
years were higher than the QPA, and that these prior contracted rates
took into account the case mix and scope of services typically
furnished at the facility. The certified IDR entity determines that the
information is credible and that it relates to the offer submitted by
the facility for the payment amount for the qualified IDR service that
is the subject of the payment determination. The nonparticipating
emergency facility submits an offer that is higher than both the QPA
and the prior contracted rate (adjusted for inflation) and submits
additional written information intending to show that the case mix and
scope of services available at the facility that furnished the
qualified IDR service were integral to the services provided. The
certified IDR entity determines this information is credible and
relates to the offer submitted by the facility for the payment amount
for the qualified IDR service that is the subject of the payment
determination. If the certified IDR entity determines that the
information submitted by the facility regarding the case mix and scope
of services available at the facility includes information that is also
accounted for in the information that the issuer submitted regarding
prior contracted rates, then that same information that has been
submitted twice should be weighted only once by the certified IDR
entity. The certified IDR entity also should not give weight to the
same information provided by the nonparticipating emergency facility in
relation to any other factor. If the certified IDR entity determines
that the issuer's offer best represents the value of the qualified IDR
service, the certified IDR entity should select the issuer's offer.
In the fifth new example, regarding a qualified IDR service for
which the issuer downcoded the service code that the provider billed,
the issuer submits an offer equal to the QPA (which was calculated
using the downcoded service code). The issuer also submits the
additional written information that it was required to disclose to the
nonparticipating provider at the time of the initial payment. The
certified IDR entity determines the additional information to be
credible and that it relates to the offer for the payment amount for
the qualified IDR service that is the subject of the payment
determination. The nonparticipating provider submits an offer equal to
the amount that would have been the QPA had the service code not been
downcoded. The nonparticipating provider submits additional written
information that includes the same documentation provided by the
issuer, as well as information that explains why the billed service
code was more appropriate than the downcoded service code, as evidence
that the provider's offer best represents the value of the service
furnished, given its complexity. Neither party submits any additional
information. The certified IDR entity determines that the information
submitted by the provider is credible and that it is related to the
offer for the payment amount for the qualified IDR service that is the
subject of the payment determination. If the certified IDR entity
determines that it is appropriate to give weight to the additional
credible information submitted by the provider and that this
information demonstrates that the provider's offer best represents the
value of the qualified IDR service, the certified IDR entity should
select the provider's offer.
The Departments note that the statute and the October 2021 interim
final rules continue to provide that when making a payment
determination, a certified IDR entity must not consider information on
the prohibited factors, such as the usual and customary charges
(including payment or reimbursement rates expressed as a proportion of
usual and customary charges); the amount that would have been billed by
the provider, facility, or provider of air ambulance services with
respect to the qualified IDR item or service had the balance billing
provisions of 45 CFR 149.410, 149.420, and 149.440 (as applicable) not
applied; or the payment or reimbursement rate for items and services
furnished by the provider, facility, or provider of air ambulance
services payable by a public payor.<SUP>38 39</SUP> In considering all
the permissible information submitted by the parties, the Departments
expect that the certified IDR entity will conduct a thorough review of
the information submitted to evaluate whether the information includes
any of the prohibited factors, so as to ensure that prohibited factors
are not considered in any payment determinations. In conducting this
review, the certified IDR entity may request additional information
from the disputing parties, including confirmation that information
submitted does not include information on the prohibited factors.
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\38\ Contracted rates are frequently based on a percentage of
rates payable by a public payor, such as Medicare. In these cases,
because contracting parties have chosen to set their rates in this
way, the contracted rates represent an independent decision by
contracting parties. Thus, if a party submits information on such
rates to a certified IDR entity, consideration of these contracted
rates does not violate the prohibition on considering the factors
described in 26 CFR 54.9816-8T(c)(4)(v), 29 CFR 2590.716-8(c)(4)(v),
and 45 CFR 149.510(c)(4)(v). In contrast, if a party submits
evidence showing that its offer was a percentage of the rates paid
by Medicare, a certified IDR entity is prohibited from considering
such information.
\39\ Under 5 U.S.C. 8904(b), in the case of a retired individual
who is over age 65 and enrolled in the Federal Employees Health
Benefits (FEHB) Program but not covered by Medicare part A or B,
fee-for-service FEHB carriers may not pay a charge imposed by a
hospital provider for inpatient services or a physician to the
extent that charge exceeds applicable Medicare limits. The
Departments, after consulting with OPM, clarify that a certified IDR
entity is not considered to violate the prohibition on considering
the payment or reimbursement rate for items and services furnished
by the provider, facility, or provider of air ambulance services
payable by a public payor to the extent the certified IDR entity's
selection of an offer is made to allow compliance with 5 U.S.C.
8904(b) and 5 CFR part 890, subpart I. That is, if 5 U.S.C. 8904(b)
applies, and either offer exceeds the applicable Medicare limit
referenced in 5 U.S.C. 8904(b), the certified IDR entity must ensure
that the payment determination does not exceed the applicable
Medicare limit. A certified IDR entity would not be considered to
violate the prohibition on considering Medicare reimbursement rates
when it selects an offer on this basis.
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The Departments are committed to establishing a fair, cost-
effective, and reasonable IDR payment determination process that does
not have an inflationary impact on health care costs. To that end, the
Departments will monitor the effects of these payment determination
requirements and make appropriate adjustments as necessary to achieve
the intended goals articulated in this preamble.
C. Payment Determinations Under the Federal IDR Process for Air
Ambulance Services
As discussed in section I.C of this preamble, the process for a
certified IDR entity to select an offer in a dispute
[[Page 52631]]
related to qualified IDR services that are air ambulance services is
generally the same as the process applicable to disputes related to
qualified IDR items or services that are not air ambulance services.
However, section 9817(b)(5)(C) of the Code, section 717(b)(5)(C) of
ERISA, section 2799A-2(b)(5)(C) of the PHS Act, and the October 2021
interim final rules specify different additional circumstances, in
addition to the QPA, that the certified IDR entity must consider in
making the payment determination for air ambulance services. Upon
review of the comments the Departments received on the Federal IDR
process, and in light of the District Court's memorandum opinions and
orders in Texas Medical Association and LifeNet, the Departments have
determined that it is appropriate to issue the final rules under the
Federal IDR process for air ambulance services.
As for non-air ambulance items and services, these final rules
provide that in determining which offer to select in a dispute related
to air ambulance services, the certified IDR entity must consider
certain additional information submitted by a party. Also, for non-air
ambulance items and services, these final rules for air ambulance
services provide that the certified IDR entity must consider the QPA
for the applicable year for the same or similar service and then
consider all additional permissible information to determine the
appropriate out-of-network rate. For air ambulance services, this
information includes information related to the following factors:
1. quality and outcomes measurements of the provider that furnished
the services;
2. the acuity of the condition of the participant, beneficiary, or
enrollee receiving the service, or the complexity of furnishing the
service to the participant, beneficiary, or enrollee;
3. training, experience, and quality of the medical personnel that
furnished the air ambulance service;
4. ambulance vehicle type, including the clinical capability level
of the vehicle;
5. population density of the point of pick-up; and
6. demonstrations of good faith efforts (or lack thereof) by the
disputing parties to enter into network agreements with each other, as
well as, if applicable, contracted rates between the parties during the
previous 4 plan years.
Additionally, as with non-air ambulance disputes, the certified IDR
entity must also consider information related to the offer provided in
a response to the certified IDR entity's request under 26 CFR 54.9816-
8T(c)(4)(i)(A)(2), 29 CFR 2590.716-8(c)(4)(i)(A)(2), and 45 CFR
149.510(c)(4)(i)(A)(2). The certified IDR entity must also consider
other information provided by the parties under 26 CFR 54.9816-
8(c)(4)(iii)(D), 29 CFR 2590.716-8(c)(4)(iii)(D), and 45 CFR
149.510(c)(4)(iii)(D).
As with non-air ambulance disputes, the certified IDR entity should
evaluate whether each piece of submitted information is credible,
relates to the offer for the payment amount for the qualified IDR
service submitted by either party, and does not include information on
factors described in 26 CFR 54.9816-8T(c)(4)(v), 29 CFR 2590.716-
8(c)(4)(v), or 45 CFR 149.510(c)(4)(v) (regarding prohibited
considerations). When considering the additional information listed
above, the certified IDR entity should not give weight to the
information to the extent it is not credible, does not relate to either
party's offer for the payment amount for the qualified IDR service, or
is included in the QPA calculation or other credible information. The
Departments note that these final rules do not require certified IDR
entities to default to the offer closest to the QPA or to apply a
presumption in favor of that offer. Rather, these final rules specify
that certified IDR entities should select the offer that best
represents the value of the air ambulance service under dispute after
considering the QPA and all permissible information submitted by the
parties.
D. The Certified IDR Entity's Written Decision
Under section 9816(c)(7) of the Code, section 716(c)(7) of ERISA,
and section 2799A-1(c)(7) of the PHS Act, the Departments are required
to publish a variety of information relating to the Federal IDR
process, including the number of times a payment amount determined or
agreed to under this process exceeds the QPA; the amount of each offer
submitted in the Federal IDR process expressed as a percentage of the
QPA; and any other information specified by the Departments. The
statute also instructs certified IDR entities to submit to the
Departments such information as the Departments determine necessary to
carry out the provisions of section 9816(c) of the Code, section 716(c)
of ERISA, and section 2799A-1(c) of the PHS Act, which include these
reporting requirements as well as the Departments' obligations to
establish and oversee the Federal IDR process. The Departments have
determined it is necessary under this provision to require certified
IDR entities to submit certain information, including a written
statement of the certified IDR entity's reasons for a particular
determination of an out-of-network rate.
Under the October 2021 interim final rules, the certified IDR
entity must explain its payment determination and the underlying
rationale in a written decision submitted to the parties and the
Departments, in a form and manner specified by the Departments. The
October 2021 interim final rules also required the certified IDR entity
to include in its written decision an explanation of the credible
information that the certified IDR entity determined demonstrated that
the QPA was materially different from the appropriate out-of-network
rate if the certified IDR entity did not choose the offer closest to
the QPA.
As stated earlier in this preamble, on February 23, 2022, the
District Court in Texas Medical Association issued a memorandum opinion
and order that invalidated the requirement to provide an explanation of
the credible information that the certified IDR entity determined
demonstrated that the QPA was materially different from the appropriate
out-of-network rate (but not the general requirement that a certified
IDR entity issue a written decision). The Departments are of the view
that, in all cases, a written decision with a comprehensive discussion
of the rationale for the decision is important to ensure that the
parties understand the outcome of a payment determination under the
Federal IDR process. The Departments note that commenters generally
supported the requirement that certified IDR entities provide a written
rationale for determinations. The Departments agree with commenters'
assertions that the certified IDR entity should be required to provide
an explanation for its decision in all cases, and not only when the
offer furthest from the QPA is determined to best represent the value
of the qualified IDR item or service. This requirement will ensure that
all parties understand the certified IDR entity's payment determination
and how the various information was considered.
The Departments are finalizing standards for the written decision
that are intended to achieve transparency and consistency in the
Federal IDR process. Accordingly, similar to the October 2021 interim
final rules these final rules require that the certified IDR entity
explain in all cases its determination in a written decision provided
to the parties and the Departments, in a form and manner specified by
the Departments in separate guidance. Additionally, these final rules
[[Page 52632]]
continue to require that the rationale be included in the written
decision. In response to comments requesting additional transparency
and explanation, these final rules also provide that the certified IDR
entity's written decision must include an explanation of its
determination, including what information the certified IDR entity
determined demonstrated that the offer selected as the out-of-network
rate is the offer that best represents the value of the qualified IDR
item or service, including the weight given to the QPA and any
additional credible information submitted in accordance with these
final rules. This requirement will help ensure that certified IDR
entities carefully evaluate all credible information and promote
transparency with respect to payment determinations. These final rules
also provide that, if the certified IDR entity relies on additional
information or additional circumstances in selecting an offer, its
written decision must include an explanation of why the certified IDR
entity concluded that this information was not already reflected in the
QPA. The Departments are of the view that, in these cases, the
certified IDR entity should provide this additional explanation so that
the Departments may fulfill their statutory functions to monitor and to
report on how often, and why, an offer that is selected exceeds the QPA
for a given qualified IDR item or service. Additionally, this
requirement will provide the Departments with valuable information to
inform future policy making, in particular, policy making related to
the QPA methodology. As stated elsewhere in this preamble, the
Departments are committed to establishing a reasonable and fair Federal
IDR process.
Finally, the Departments are also including two technical
corrections to address a regulatory cross-references in the provisions
that set forth the requirements for the certified IDR entity to include
a rationale for its written decision for both air ambulance and non-air
ambulance qualified IDR items and services in monthly reporting to the
Departments, and to clarify that the certified IDR entity should report
to the Departments the extent to which the decision relied on 26 CFR
54.9816-8(c)(4)(iii)(B)-(D), 29 CFR 2590.716-8(c)(4)(iii)(B)-(D), and
45 CFR 149.510(c)(4)(iii)(B)-(D). This requirement aligns the reporting
requirement with the requirement for the written decision, and with the
intent of the October 2021 interim final rules to gather such
information.
III. Applicability of the Final Rules
These rules finalize certain provisions of the July 2021 and
October 2021 interim final rules and address the decisions in Texas
Medical Association and LifeNet. The July 2021 and October 2021 interim
final rules apply for plan years (in the individual market, policy
years) beginning on or after January 1, 2022, except to the extent
provided below.
The final rules that implement the requirements related to the
additional information that must be provided with each initial payment
or notice of denial of payment if the QPA is based on a downcoded
service code or modifier are applicable with respect to items or
services furnished on or after October 25, 2022, for plan years (in the
individual market, policy years) beginning on or after January 1, 2022.
With respect to the additional information that must be provided
with each initial payment or notice of denial of payment if a QPA is
based on a downcoded service code or modifier, the Departments
recognize that plans and issuers often provide these notices through an
automated or other streamlined system for efficiency and that plans and
issuers may need additional time to update their operating systems to
amend the notices that are currently generated to satisfy the QPA
disclosure requirements under the July 2021 interim final rules. Plans
and issuers may use reasonable methods to provide this additional
disclosure with the initial payment or notice of denial of payment
while plan or issuer systems and procedures are updated to provide the
additional notice in a more streamlined and automated manner. Even when
using other reasonable methods, plans and issuers must provide the
required information starting on the date these final rules are
applicable to the relevant plan or policy and in accordance with the
timeframes specified in the July 2021 interim final rules. The
Departments expect that plans and issuers will work to make sure that
systems are updated in a timely fashion, and the Departments may
provide additional guidance, as warranted.
For requirements that finalize certain provisions of the October
2021 interim final rules, the final rules addressing the payment
determination standards for certified IDR entities, written decisions,
and reporting are applicable with respect to items or services provided
or furnished on or after October 25, 2022, for plan years (in the
individual market, policy years) beginning on or after January 1, 2022.
This approach will ensure uniformity and predictability in standards
for qualified IDR items and services (including between non-air
ambulance items and services and air ambulance services, to the extent
applicable), and will allow time for the Departments to provide updated
guidance to certified IDR entities and stakeholders.
If any provision in this rulemaking is held to be invalid or
unenforceable facially, or as applied to any person, plaintiff, or
circumstance, the provision shall be severable from the remainder of
this rulemaking, and shall not affect the remainder thereof, and the
invalidation of any specific application of a provision shall not
affect the application of the provision to other persons or
circumstances.
IV. Regulatory Impact Analysis
A. Summary
The Departments have examined the effects of these final rules as
required by Executive Order 12866,\40\ Executive Order 13563,\41\ the
Paperwork Reduction Act of 1995,\42\ the Regulatory Flexibility
Act,\43\ section 202 of the Unfunded Mandates Reform Act of 1995,\44\
Executive Order 13132,\45\ and the Congressional Review Act.\46\
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\40\ Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993).
\41\ Improving Regulation and Regulatory Review, 76 FR 3821
(Jan. 18, 2011).
\42\ 44 U.S.C. 3506(c)(2)(A) (1995).
\43\ 5 U.S.C. 601 et seq. (1980).
\44\ 2 U.S.C. 1501 et seq. (1995).
\45\ Federalism, 64 FR 153 (Aug. 4, 1999).
\46\ 5 U.S.C. 804(2) (1996).
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B. Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health, and safety effects; distributive impacts; and equity).
Executive Order 13563 emphasizes the importance of quantifying costs
and benefits, reducing costs, harmonizing rules, and promoting
flexibility.
Under Executive Order 12866, ``significant'' regulatory actions are
subject to review by the Office of Management and Budget (OMB). Section
3(f) of the Executive order defines a ``significant regulatory action''
as an action that is likely to result in a rule: (1) having an annual
effect on the economy of $100 million or more, or adversely and
materially affecting a sector of the economy, productivity,
[[Page 52633]]
competition, jobs, the environment, public health or safety, or State,
local, or tribal governments or communities (also referred to as
``economically significant''); (2) creating a serious inconsistency or
otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or (4) raising novel legal or policy issues arising
out of legal mandates, the President's priorities, or the principles
set forth in the Executive order. Based on the Departments' estimates,
OMB's Office of Information and Regulatory Affairs has determined this
rulemaking is ``economically significant'' under section 3(f)(1) of
Executive Order 12866 as measured by the $100 million threshold.\47\
Therefore, the Departments have prepared a Regulatory Impact Analysis
that presents the costs, benefits, and transfers associated with this
rulemaking. Pursuant to the Congressional Review Act, OMB has
designated these final rules as a ``major rule,'' as defined by 5
U.S.C. 804(2).
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\47\ This rulemaking builds on the July 2021 and October 2021
interim final rules described in this preamble. The interim final
rules were deemed to be economically significant. The economic
analyses for each of these interim final rules can be found in the
Federal Register at 86 FR 36872 and 86 FR 55980.
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C. Need for Regulatory Action
On December 27, 2020, the CAA, which includes the No Surprises Act,
was enacted.\48\ The No Surprises Act provides Federal protections
against surprise billing by limiting out-of-network cost sharing and
prohibiting balance billing in many of the circumstances in which
surprise bills arise most frequently.
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\48\ Pub. L. 116-260 (Dec. 27, 2020).
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On July 13, 2021, the Departments published the July 2021 interim
final rules.\49\ The July 2021 interim final rules implemented
provisions of the No Surprises Act to protect participants,
beneficiaries, and enrollees in group health plans and group and
individual health insurance coverage from surprise medical bills when
they receive emergency services, non-emergency services furnished by
nonparticipating providers with respect to patient visits to certain
participating facilities, and air ambulance services provided by
nonparticipating providers of air ambulance services.
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\49\ 86 FR 36872 (July 13, 2021).
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On October 7, 2021, the Departments published the October 2021
interim final rules.\50\ The October 2021 interim final rules build on
the July 2021 interim final rules and implement the Federal IDR
process.\51\ The October 2021 interim final rules generally apply to
group health plans and health insurance issuers offering group or
individual health insurance coverage (including grandfathered health
plans) with respect to plan years (in the individual market, policy
years) beginning on or after January 1, 2022; and to health care
providers and facilities, providers of air ambulance services, and
certified IDR entities beginning on January 1, 2022 with respect to
items and services furnished during a plan year (in the individual
market, policy year) beginning on or after January 1, 2022.
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\50\ 86 FR 55980 (October 7, 2021).
\51\ The July 2021 and October 2021 interim final rules also
include interim final regulations under 5 U.S.C. 8902(p) issued by
OPM that specify how certain provisions of the No Surprises Act
apply to health benefit plans offered by carriers under the Federal
Employees Health Benefits Act. The rules apply to carriers in the
FEHB Program with respect to contract years beginning on or after
January 1, 2022.
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On February 23, 2022, the District Court in Texas Medical
Association issued a memorandum opinion and order that vacated portions
of the October 2021 interim final rules governing aspects of the
Federal IDR process, as discussed earlier in this preamble. On July 26,
2022, the District Court in LifeNet issued a memorandum opinion and
order that vacated additional portions of the October 2021 interim
final rules, as discussed earlier in this preamble.
In response to the decisions in Texas Medical Association and
LifeNet and comments received on the October 2021 interim final rules
and July 2021 interim final rules, these final rules address certain
issues critical to the implementation and effective operation of the
Federal IDR process, including the disclosure requirements relating to
information that group health plans and health insurance issuers
offering group or individual health insurance coverage must share about
the QPA, and certain requirements related to consideration of
information when a certified IDR entity makes a payment determination
under the Federal IDR process.
i. Final Rules on Information To Be Shared About the Qualifying Payment
Amount
As described earlier in this preamble, the July 2021 interim final
rules require plans and issuers to make certain disclosures with each
initial payment or notice of denial of payment in cases in which the
recognized amount with respect to an item or service furnished by a
nonparticipating provider or nonparticipating emergency facility, or
the amount upon which cost sharing is based for air ambulance services
furnished by a nonparticipating provider of air ambulance services, is
the QPA. After review of the comments on the July 2021 interim final
rules and October 2021 interim final rules, the Departments are
finalizing parts of the July 2021 interim final rules to add a new
definition and make changes to require additional information about the
QPA that is provided by a plan or issuer with an initial payment or
notice of denial of payment in certain cases. These disclosures are
required in cases in which the recognized amount with respect to an
item or service furnished by a nonparticipating provider or
nonparticipating emergency facility, or the amount upon which cost
sharing is based for air ambulance services furnished by a
nonparticipating provider of air ambulance services, is the QPA.
Specifically, these final rules provide a definition of the term
``downcode'' to mean the alteration by a plan or issuer of a 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. These
final rules also specify that when a QPA is calculated based on a
downcoded service code or modifier, in addition to the information
already required to be provided with an initial payment or notice of
denial of payment under the July 2021 interim final rules, a plan or
issuer must provide a statement that the claim was downcoded; an
explanation of why the claim was downcoded, including a description of
which service codes were altered, if applicable, and a description of
which modifiers were altered, added, or removed, if applicable; and the
amount that would have been the QPA had the service code or modifier
not been downcoded. The Departments are of the view that this
additional disclosure of information about the QPA will be helpful to
ensure that providers, facilities, and providers of air ambulance
services receive the information regarding the QPA that may assist in
their meaningful participation in open negotiation and in the Federal
IDR process in all payment disputes that involve qualified items or
services that have been subject to downcoding. In particular, in cases
in which the plan or issuer has downcoded the billed claim, it is of
particular importance that the
[[Page 52634]]
provider, facility, or provider of air ambulance services has
information regarding both the QPA (based on the downcoded service code
or modifier) and the amount that would have been the QPA had the
service code or modifier not been downcoded in order to ascertain what
information will demonstrate that the provider's, facility's, or
provider of air ambulance services' offer best represents the value of
the item or service and aid the certified IDR entity in selecting an
offer that best represents the value of the item or service provided.
ii. Final Rules on Payment Determinations Under the Federal IDR Process
As discussed earlier in this preamble, the October 2021 interim
final rules provided that, not later than 30 business days after the
selection of the certified IDR entity, the certified IDR entity must
select one of the offers submitted by the plan or issuer or the
provider, facility, or provider of air ambulance services to be the
out-of-network rate for the qualified IDR item or service. In
determining which offer to select, the October 2021 interim final rules
provided that the certified IDR entity must select the offer closest to
the QPA unless the certified IDR entity were to determine that
additional permissible information demonstrated that the QPA is
materially different from the appropriate out-of-network rate, or if
the offers are equally distant from the QPA but in opposing directions.
A key goal in facilitating consistency in the Federal IDR process
through the October 2021 interim final rules was to ensure a level of
predictability in outcomes in the Federal IDR process. In the
Departments' view, greater predictability in the Federal IDR process
would encourage parties to settle disputes through open negotiation or
earlier through the offer and acceptance of an adequate initial
payment, which would increase efficiencies in how disputes are handled
and ultimately lead to lower administrative costs associated with
health care. As articulated earlier in this preamble, in light of the
Texas Medical Association and LifeNet decisions, and in response to
comments received on these provisions, the Departments are finalizing
standards for making payment determinations that are intended to lead
to greater predictability and regularity in the Federal IDR process.
Accordingly, these final rules require that, in determining which offer
to select during the Federal IDR process, the certified IDR entity must
consider the QPA for the applicable year for the same or similar item
or service. The certified IDR entity must then consider all additional
information submitted by a party to determine which offer best reflects
the appropriate out-of-network rate, provided that the information
relates to the offer for the payment amount for the qualified IDR item
or service that is the subject of the payment determination and does
not include information that the certified IDR entity is prohibited
from weighing in making the payment determination. In considering this
additional information, the certified IDR entity should evaluate
whether information that is offered is credible and should not give
weight to information that is not credible. The appropriate out-of-
network rate must be the offer that the certified IDR entity determines
best represents the value of the qualified IDR item or service.
For non-air ambulance items and services, this information includes
information related to the following factors: (1) the level of
training, experience, and quality and outcomes measurements of the
provider or facility that furnished the qualified IDR item or service
(such as those endorsed by the consensus-based entity authorized in
section 1890 of the Social Security Act); (2) the market share held by
the provider or facility or that of the plan or issuer in the
geographic region in which the qualified IDR item or service was
provided; (3) the acuity of the participant, beneficiary, or enrollee
receiving the qualified IDR item or service, or the complexity of
furnishing the qualified IDR item or service to the participant,
beneficiary, or enrollee; (4) the teaching status, case mix, and scope
of services of the facility that furnished the qualified IDR item or
service, if applicable; and (5) demonstration of good faith efforts (or
lack thereof) made by the provider or facility or the plan or issuer to
enter into network agreements with each other, and, if applicable,
contracted rates between the provider or facility, as applicable, and
the plan or issuer, as applicable, during the previous 4 plan years.
Under these final rules, the certified IDR entity must also
consider information related to the offer provided in a response to a
request from the certified IDR entity. The certified IDR entity must
also consider additional information submitted by a party, provided the
information relates to the offer for the payment amount for the
qualified IDR item or service that is the subject of the payment
determination and does not include information that the certified IDR
entity is prohibited from weighing in making the payment determination
under section 9816(c)(5)(D) of the Code, section 716(c)(5)(D) of ERISA,
and section 2799A-1(c)(5)(D) of the PHS Act. In considering either form
of information, the certified IDR entity should evaluate whether the
information is credible and should not give weight to information that
is not credible.
When considering the additional credible information under 26 CFR
54.9816-8(c)(4)(iii), 29 CFR 2590.716-8(c)(4)(iii), and 45 CFR
149.510(c)(4)(iii), the certified IDR entity should evaluate whether
the information is already accounted for by any of the other credible
information submitted by the parties. Because the certified IDR entity
must consider the QPA, the certified IDR entity should always consider
whether the additional credible information is already accounted for by
the QPA and should avoid giving weight to information related to a
factor if the certified IDR entity determines the information was
already accounted for in the calculation of the QPA, to avoid weighting
the same information twice. In addition, if the parties submit credible
information related to more than one of the additional factors, the
certified IDR entity should also consider whether the information
submitted regarding those factors is already accounted for by
information submitted relating to other credible information already
before the certified IDR entity in relation to another factor and, if
so, should not weigh the information more than once.
Regarding air ambulance services, these final rules state that the
certified IDR entity must consider the QPA for the applicable year for
the same or similar service and then consider all additional
permissible information to determine the appropriate out-of-network
rate. In considering this additional information, the certified IDR
entity should evaluate whether information that is offered is credible
and should not give weight to information that is not credible. For air
ambulance services, this information includes information related to
the following factors: (1) quality and outcomes measurements of the
provider that furnished the air ambulance services; (2) the acuity of
the condition of the participant or beneficiary receiving the air
ambulance service, or the complexity of furnishing the service to the
participant or beneficiary; (3) training, experience, and quality of
the medical personnel that furnished the air ambulance services; (4)
ambulance vehicle type, including the clinical capability level of the
vehicle; (5) population density of the point of pick-
[[Page 52635]]
up; and (6) demonstrations of good faith efforts (or lack thereof) by
the disputing parties to enter into network agreements with each other,
as well as, if applicable, contracted rates between the parties during
the previous 4 plan years.
After the certified IDR entity has reviewed and selected the offer
it determines best represents the value of the qualified IDR item or
service as the out-of-network rate, the certified IDR entity must
explain its determination in a written decision submitted to the
parties and the Departments, in a form and manner specified by the
Departments. These final rules require that the certified IDR entity's
written decision must include an explanation of what information the
certified IDR entity determined demonstrated that the offer selected as
the out-of-network rate is the offer that best represents the value of
the qualified IDR item or service, including the weight given to the
QPA and any additional credible information submitted in accordance
with these final rules. If the certified IDR entity relies on any
additional information in selecting an offer, the written decision must
include an explanation of why the certified IDR entity concluded that
this information was not already reflected in the QPA.
iii. Summary of Impacts
Plans, issuers, third-party administrators (TPAs), Federal
Employees Health Benefits (FEHB) Program carriers, health care
providers, facilities, providers of air ambulance services, and
certified IDR entities will incur costs to comply with the requirements
in these final rules. However, these final rules will help ensure that
the payment determination in the Federal IDR process is a more
consistent process for providers, facilities, providers of air
ambulance services, plans, and issuers. These final rules will improve
transparency in the Federal IDR process. This increased transparency
will aid in the open negotiation process, the decision whether to
initiate the Federal IDR process, and the determination of the amount a
provider, facility, or provider of air ambulance services submits as an
offer. Therefore, the Departments have determined the benefits of these
final rules justify the costs.
This regulatory action finalizes certain provisions in the July
2021 interim final rules and the October 2021 interim final rules,
including changes to remove the language vacated by the District Court
in Texas Medical Association and LifeNet. This cost-benefit analysis
focuses on the incremental costs of complying with the requirements
that are included in these final rules. One baseline assumption for
this analysis is the existence of the requirements of the July 2021 and
October 2021 interim final rules, with a second baseline assumption
being the use of a comparison with a hypothetical state of the world
absent those interim final rules. As discussed in the analysis of the
July 2021 interim final rules, the total annualized cost associated
with the July 2021 interim final rules is $2,252 million, using the 7
percent discount rate.\52\ As discussed in the analysis of the October
2021 interim final rules, the total annualized cost associated with the
October 2021 interim final rules is $517 million, using the 7 percent
discount rate.\53\ The Departments consider these cost estimates to be
reflected in the analytic baseline of these final rules and to form a
subset of total costs of these final rules for the purposes of this
cost-benefit analysis relative to the hypothetical state of the world
absent the July 2021 and October 2021 interim final rules.\54\ As noted
in Table 1 (Accounting Statement) the Departments estimate the
additional total annualized cost associated with the parts these final
rules to be $5.9 million, using the 7 percent discount rate.
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\52\ As discussed in the analysis of the July 2021 interim final
rules, the total annualized cost associated with the July 2021
interim final rules is $2,177 million, using the 3 percent discount
rate. The Departments note that these cost estimates have not been
updated.
\53\ As discussed in the analysis of the October 2021 interim
final rules, the total annualized cost associated with the October
2021 interim final rules is $491 million, using the 3 percent
discount rate. The Departments note that these cost estimates have
not been updated.
\54\ The Departments are accounting for the additional costs
associated with these final rules due to parts of the July 2021
interim final rules and October 2021 interim final rules being
finalized. For those parts being finalized, the Texas Medical
Association and LifeNet decisions do not impact the quantified
costs.
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To avoid repeating the analysis of the July 2021 and October 2021
interim final rules, only a short summary of the benefits and costs is
provided, and readers are directed to the analysis in the July 2021 and
October 2021 interim final rules for more detail. Numbers in this
analysis may not match numbers in the analysis for the July 2021 and
October 2021 interim final rules because the estimates have been
updated with the most current data. However, the methodology remains
the same, except for the calculation of the burden to prepare the
certified IDR entity's written decision for payment determinations, as
explained later in this section. The Departments also discuss the
impacts of changes made by these final rules is this section.
In accordance with OMB Circular A-4, Table 1 depicts an accounting
statement summarizing the Departments' assessment of the benefits,
costs, and transfers associated with this regulatory action. The
Departments are unable to quantify all benefits, costs, and transfers
associated with this regulatory action, but have sought, where
possible, to describe these non-quantified impacts. The effects in
Table 1 reflect non-quantified impacts and estimated direct monetary
costs resulting from the provisions of these final rules.
Table 1--Accounting Statement
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Benefits:
<bullet> These final rules will increase transparency in the Federal IDR process.
<bullet> These final rules will help a provider, facility, or provider of air ambulance services ascertain
what information will demonstrate that the provider's, facility's, or provider of air ambulance services'
offer best represents the value of the item or service and aid the certified IDR entity in selecting an
offer that best represents the value of the item or service.
<bullet> These final rules will promote more consistent payment determinations in the Federal IDR process
for providers, facilities, providers of air ambulance services, plans, and issuers.
<bullet> These final rules will promote transparency with respect to the certified IDR entity's payment
determination and will help to ensure that the determination of a total payment amount for a particular
item or service is based on the facts and circumstances of the dispute at issue in each case.
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[[Page 52636]]
Costs Estimate Year dollar Discount rate Period covered
(%)
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Annualized Monetized ($million/Year)......... $5.9 2021 7 2022-2031
5.9 2021 3 2022-2031
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Quantified Costs: The Departments estimate the total annual cost associated with these final rules to be $5.9
million, with $4.3 million annually attributable to the additional information plans and issuers will be
required to provide related to the QPAs, $1.2 million annually attributable to the preparation of IDR payment
determination notices by certified IDR entities for nonparticipating providers or emergency facility claims,
and $0.3 million annually attributable to the preparation of IDR payment determination notices by certified IDR
entities for nonparticipating air ambulance providers' claims.
Transfers: These final rules make no changes that impact the transfers as described in the July 2021 and October
2021 interim final rules.
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D. Affected Entities
These final rules will affect health care providers, health care
facilities, providers of air ambulance services, group health plans,
issuers, TPAs, FEHB carriers, and certified IDR entities.
Based on data from 2020, CMS estimated that there were 1,477
issuers in the U.S. health insurance market, of which 1,212 served the
individual market, 6 served the student health insurance market, 623
served the small group market, and 784 served the large group
market.\55\ Further, of the plans that filed a Form 5500 in 2019,
30,181 plans were self-insured.\56\ Additionally, in the October 2021
interim final rules, the Departments previously estimated that there
are 205 TPAs.\57\ The Departments also estimate that there are 44 FEHB
carriers. While there is a significant amount of research that
demonstrates the prevalence of surprise billing, the Departments do not
have data on the percentage of surprise bills covered by health
insurance issuers and self-insured plans. However, given the size of
health insurance issuers and the scope of their activities, the
Departments assume that all health insurance issuers, TPAs, and FEHB
carriers will be affected by these final rules.
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\55\ Centers for Medicare and Medicaid Services. ``Medical Loss
Ratio Data and System Resources'' (2020). <a href="https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr">https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr</a>.
\56\ Employee Benefits Security Administration. ``Group Health
Plans Report.'' (July 2021). <a href="https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/annual-report-on-self-insured-group-health-plans-2022-appendix-a.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/annual-report-on-self-insured-group-health-plans-2022-appendix-a.pdf</a>.
\57\ Non-issuer TPAs based on data derived from the 2016 Benefit
Year reinsurance program contributions.
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In 2019, 183 million individuals had employer-sponsored coverage
and 33.2 million had other private insurance, including individual
market insurance.\58\ The Departments do not expect that these final
rules will directly affect individuals with private health coverage who
visit an emergency room, visit a health care facility,\59\ or are
transported by an air ambulance, as these final rules contain only
provisions that affect the relationships among plans and issuers;
providers, facilities, and providers of air ambulance services; and
certified IDR entities. However, the Departments estimate that these
final rules will indirectly affect covered individuals, as the outcomes
of payment disputes will have implications for premiums.
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\58\ Employee Benefits Security Administration. ``Health
Insurance Coverage Bulletin.'' (March 2020). <a href="https://www.dol.gov/sites/dolgov/files/EBSA/researchers/data/health-and-welfare/health-insurance-coverage-bulletin-2020.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/researchers/data/health-and-welfare/health-insurance-coverage-bulletin-2020.pdf</a>.
\59\ Health care facility is defined in the July 2021 interim
final rules. See 26 CFR 54.9816-3T; 29 CFR 2590.716-3; and 45 CFR
149.30.
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In the October 2021 interim final rules, the Departments estimated
that there are 16,992 emergency and other health care facilities,
including 6,090 hospitals,\60\ 29,227 diagnostic and medical
laboratories,\61\ 270 independent freestanding emergency
departments,\62\ 9,280 ambulatory surgical centers,\63\ and 1,352
critical access hospitals.\64\ These entities will also be affected by
these final rules.
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\60\ American Hospital Association. ``Fast Facts on U.S.
Hospitals, 2021.'' (January 2021). <a href="https://www.aha.org/statistics/fast-facts-us-hospitals">https://www.aha.org/statistics/fast-facts-us-hospitals</a>.
\61\ IBIS World. Definitive Healthcare. ``Diagnostic & Medical
Laboratories Industry in the US--Market Research Report?'' (May
2021). <a href="https://www.ibisworld.com/industry-statistics/number-of-businesses/diagnostic-medical-laboratories-united-states/">https://www.ibisworld.com/industry-statistics/number-of-businesses/diagnostic-medical-laboratories-united-states/</a>.
\62\ Emergency Medicine Network. ``2018 National Emergency
Department Inventory.'' (2021). <a href="https://www.emnet-usa.org/research/studies/nedi/nedi2018/">https://www.emnet-usa.org/research/studies/nedi/nedi2018/</a>.
\63\ Definitive Healthcare. ``How Many Ambulatory Surgery
Centers are in the US?'' (April 2019). <a href="https://www.definitivehc.com/blog/how-many-ascs-are-in-the-us">https://www.definitivehc.com/blog/how-many-ascs-are-in-the-us</a>.
\64\ Flex Monitoring Team. ``Historical CAH Data.'' <a href="https://www.flexmonitoring.org/">https://www.flexmonitoring.org/</a>historical-cah-data-
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In the October 2021 interim final rules, the Departments also
estimated that in 2018, the current year for which data are available,
there were 1,114 air ambulance bases in the United States.\65\ The
Departments do not have data on the number of providers of air
ambulance services that submit out-of-network claims; however, given
the prevalence of out-of-network billing among providers of air
ambulance services, the Departments assume that all businesses in the
industry will be affected by these final rules.
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\65\ Assistant Secretary for Planning and Evaluation (ASPE)
Office of Health Policy. ``Air Ambulance Use and Surprise Billing''
(September 2021). <a href="https://aspe.hhs.gov/sites/default/files/2021-09/aspe-air-ambulance-ib-09-10-2021.pdf">https://aspe.hhs.gov/sites/default/files/2021-09/aspe-air-ambulance-ib-09-10-2021.pdf</a>.
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Furthermore, in the October 2021 interim final rules, the
Departments estimated that 140,270 physicians, on average, bill on an
out-of-network basis and will be affected by these final rules.\66\
These final rules are also expected to affect non-physician providers
who bill on an out-of-network basis. The Departments lack data on the
number of non-physician providers who would be impacted.
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\66\ Please see the October 2021 interim final rules for more
information on how these estimates were obtained.
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Finally, there are currently 11 certified IDR entities that will be
affected by these final rules.\67\ The number of certified IDR entities
may increase or decrease due to new IDR entities applying for
certification or the Departments revoking certification because of
noncompliance with the certification requirements or a certified IDR
entity's inability to handle its caseload.
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\67\ As of July 31, 2022, there are 11 certified IDR entities.
Center for Medicare and Medicaid Services. ``List of Certified
Independent Dispute Resolution Entities.'' <a href="https://www.cms.gov/nosurprises/Help-resolve-payment-disputes/certified-IDRE-list">https://www.cms.gov/nosurprises/Help-resolve-payment-disputes/certified-IDRE-list</a>.
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E. Benefits
These final rules will require plans and issuers to provide
additional information about the QPA with an initial payment or notice
of denial of payment in cases involving downcoding, without the
provider, facility, or provider of air ambulance services having to ask
for this information. These final rules will be helpful to the
provider, facility, or provider of air ambulance services in developing
an offer or submitting information if it believes that the QPA
[[Page 52637]]
calculated by the plan or issuer does not best represent the value of
the item or service. Furthermore, the requirement to disclose this
additional information will increase transparency in the Federal IDR
process. This increased transparency will aid in the open negotiation
process, the decision whether to initiate the Federal IDR process, and
the determination of the amount a provider, facility, or provider of
air ambulance services submits as an offer. Further, these final rules
will help a provider, facility, or provider of air ambulance services
ascertain what information will demonstrate that the provider's,
facility's, or provider of air ambulance services' offer best
represents the value of the item or service and aid the certified IDR
entity in selecting an offer that best represents the value of the item
or service.
In addition, these final rules require that certified IDR entities
must consider the QPA and then must consider all additional permissible
information submitted by a party to determine which offer best reflects
the appropriate out-of-network rate, provided the information relates
to the offer for the payment amount for the qualified IDR item or
service that is the subject of the payment determination and does not
include information that the certified IDR entity is prohibited from
weighing in making the payment determination under section
9816(c)(5)(D) of the Code, section 716(c)(5)(D) of ERISA, and section
2799A-1(c)(5)(D) of the PHS Act. In considering this additional
information, the certified IDR entity should evaluate whether
information that is offered is credible and should not give weight to
information that is not credible. The appropriate out-of-network rate
must be the offer that the certified IDR entity determines best
represents the value of the qualified IDR item or service.
Because the certified IDR entity must consider the QPA, the
certified IDR entity should always consider whether the additional
credible information is already accounted for by the QPA and should not
give weight to information related to a factor if the certified IDR
entity determines the information was already accounted for in the
calculation of the QPA, to avoid weighting the same information twice.
In addition, if the parties submit credible information related to more
than one of the additional factors, the certified IDR entity should
also consider whether the information submitted regarding each of those
factors is already accounted for by information submitted relating to
other credible information already before the certified IDR entity in
relation to another factor and, if so, should not weigh such
information more than once. These final rules will help ensure that the
payment determination in the Federal IDR process is a consistent
process for providers, facilities, providers of air ambulance services,
plans, and issuers.
The certified IDR entity's written decision must include an
explanation of what information the certified IDR entity determined
demonstrated that the offer selected as the out-of-network rate is the
offer that best represents the value of the qualified IDR item or
service, including the weight given to the QPA and any additional
credible information submitted in accordance with these final rules. If
the certified IDR entity relies on any additional information in
selecting an offer, the written decision must include an explanation of
why the certified IDR entity concluded that this information was not
already reflected in the qualifying payment amount. These final rules
will help ensure that certified IDR entities carefully evaluate all
credible non-duplicative information. These final rules will also
promote transparency with respect to the certified IDR entity's payment
determination.
F. Costs
This regulatory action seeks to minimize costs to providers,
facilities, providers of air ambulance services, plans, issuers, TPAs,
and certified IDR entities.
i. Federal IDR Process for Nonparticipating Providers or
Nonparticipating Emergency Facilities
As explained in the analysis provided in the October 2021 interim
final rules, the Departments estimate that there will be approximately
17,435 claims submitted to the Federal IDR process each year.\68\
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\68\ For more details, please refer to the Paperwork Reduction
Act analysis, found in section V of this preamble.
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After the selected certified IDR entity has reviewed the offers,
the certified IDR entity must notify the provider or facility and the
plan, issuer, or FEHB carrier and the Departments of the payment
determination and the reason for such determination, in a form and
manner specified by the Departments.\69\ The Departments estimate that
the annual cost to prepare the notice of the certified IDR entity's
determination is $1.2 million. For more information on this
calculation, please refer to the Paperwork Reduction Act analysis,
found in section V of this preamble.
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\69\ IDR Payment Determination Notification (section
716(c)(5)(A) of ERISA).
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In addition to the information already required to be provided with
an initial payment or notice of denial of payment under the July 2021
interim final rules, including the QPA, these final rules require that
a plan or issuer must provide, if applicable, an acknowledgement if all
or any portion of the claim was downcoded; an explanation of why the
claim was downcoded, including a description of which service codes
were altered, if any, and a description of any modifiers that were
altered, added, or removed, if any; and the amount that would have been
the QPA had the service code or modifier not been downcoded. In the
July 2021 interim final rules, the Departments estimated that plans and
issuers will be required to provide documents related to the QPA along
with the initial payment or notice of denial of payment for
approximately 5,068,512 claims annually from nonparticipating providers
or facilities.\70\ The Departments assume that approximately 10 percent
of those claims will involve downcoding and estimate that the annual
cost to prepare the required documentation and attach it to each
initial payment or notice of denial of payment sent to the
nonparticipating provider or facility is $4.3 million. For more
information on this calculation, please refer to the Paperwork
Reduction Act analysis, found in section V of this preamble.
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\70\ See 86 FR 36872 for more information on this estimate.
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In total, the Departments estimate that certified IDR entities,
TPAs, and issuers will incur costs of approximately $5.5 million
annually to provide, as applicable, payment determination notifications
and the additional QPA information required under these rules.
ii. Federal IDR Process for Nonparticipating Providers of Air Ambulance
Services
As explained in the October 2021 interim final rules, the
Departments assume that 10 percent of out-of-network claims for air
ambulance services will be submitted to the Federal IDR process,\71\
which would result in nearly 5,000 annual air ambulance payment
determinations via the Federal IDR process.\72\
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\71\ The Departments utilize 10 percent as an assumption to
estimate the overall number of providers of air ambulance services
billing out-of-network at least once in a year.
\72\ The Departments estimate that of the 216.2 million
individuals with employer-sponsored and other private health
coverage (183 million individuals with employer-sponsored health
coverage and 33.2 million individuals with other private coverage),
there are 33.3 air transports per 100,000 individuals, of which 69
percent result in out-of-network bills. The Departments assume that
10 percent of the out-of-network bills will end up in the Federal
IDR process. This is calculated as: 216,200,000 individuals x
0.000333 air transports per individual x 69% x 10%= 4,968.
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[[Page 52638]]
After the certified IDR entity has reviewed and selected the offer,
the certified IDR entity must notify the provider of air ambulance
services and the plan, issuer, or FEHB carrier and the Departments of
the payment determination and include the written decision explaining
such determination.\73\ The Departments estimate that the annual cost
to prepare this notice of the certified IDR entity's determination for
air ambulance claims is $0.3 million. For more details, please refer to
the Paperwork Reduction Act analysis, found in section V of this
document.
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\73\ IDR Payment Determination Notification (section
716(c)(5)(A) of ERISA).
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Similar to these final rules' provisions related to the disclosure
of downcoded claims for nonparticipating providers and nonparticipating
emergency facilities, these final rules require that a plan or issuer
must provide, if applicable, an acknowledgement if all or any portion
of the claim pertaining to air ambulance services was downcoded; an
explanation of why the claim was downcoded, including a description of
which service codes were altered, if any, and a description of any
modifiers that were altered, added, or removed, if any; and the amount
that would have been the QPA had the service code or modifier not been
downcoded. The Departments estimate that plans and issuers will be
required to provide these documents for approximately 49,676 claims
annually from providers of air ambulance services.\74\ The Departments
assume that approximately 10 percent of those claims will involve
downcoding and estimate that the annual cost to prepare the required
documentation and attach it to each initial payment or notice of denial
of payment sent to the providers of air ambulance service is
approximately $42,000. For more details, please refer to the Paperwork
Reduction Act analysis, found in section V of this preamble.
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\74\ The Departments estimate that of the 216.2 million
individuals with employer-sponsored and other private health
coverage, there are 33.3 air transports per 100,000 individuals, of
which 69 percent result in an out-of-network bill. The number of air
ambulance claims is estimated as: 216,200,000 individuals x 0.000333
air transports per individual x 69% = 49,676.
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In total, the Departments estimate that certified IDR entities,
TPAs, and issuers will incur costs of approximately $0.4 million
annually to provide payment determination notifications and the
additional QPA information required under these final rules.
iii. Summary
The Departments estimate the total annual cost associated with
these final rules to be $5.9 million with $4.3 million annually
attributable to the additional information related to the QPAs, $1.2
million annually attributable to the certified IDR entity's payment
determination for nonparticipating provider and emergency facility
claims, and $0.3 million annually attributable to the certified IDR
entity's payment determination notification for nonparticipating
provider of air ambulance service claims.
G. Transfers
These final rules make no changes that impact the transfers as
described in the July 2021 and October 2021 interim final rules.
H. Uncertainty
These final rules make no changes that impact the uncertainties as
described in the July 2021 and October 2021 interim final rules.
I. Regulatory Alternatives
Section 6(a)(3)(C)(iii) of Executive Order 12866 requires an
economically significant regulation, and encourages other regulations,
to include an assessment of the costs and benefits of potentially
effective and reasonable alternatives to the planned regulation. A
discussion of the regulatory alternatives is included in this section.
As described in Section I.E. of this preamble, the District Court
in Texas Medical Association and LifeNet vacated provisions in the
October 2021 interim final rules addressing how certified IDR entities
were to weigh the QPA and the additional factors. The Departments
considered the possibility of not replacing the provisions vacated by
the District Court. However, in the Departments' view, this would have
resulted in uncertainty regarding the Federal IDR process, because
certain aspects of the process would be governed by the October 2021
interim final rules as published in the Federal Register, while others
would not. This approach could result in confusion on the part of the
public and certified IDR entities, likely making the decisions of
certified IDR entities less predictable, adding to the uncertainty and
the costs of the Federal IDR process. Therefore, the Departments are of
the view that it is more appropriate to make changes to the Federal IDR
process for both non-air ambulance and air ambulance items and services
in these final rules.
The Departments considered finalizing the additional factors other
than the QPA that a certified IDR entity may consider when submitted by
one of the disputing parties without addressing the possibility that
these factors may already have been accounted for in the QPA. Numerous
comments received on the October 2021 interim final rules highlighted
that in many cases, certain factors, such as patient acuity or the
complexity of furnishing the qualified IDR item or service to the
participant, beneficiary, or enrollee, will already be accounted for in
the calculation of the QPA. Commenters acknowledged, however, that
there could be instances in which the QPA would not adequately account
for the acuity of the patient or complexity of the service: for
example, if the complexity of a case is an outlier such that the time
or intensity of care exceeds what is typical for the service code. The
Departments are of the view that, in many cases, factors that a
certified IDR entity may consider other than the QPA will already be
reflected in the QPA. The QPA is generally calculated to include
characteristics that can affect costs, including medical specialty,
geographic region, and patient acuity and case severity, all captured
in different billing codes or aspects of the methodology that plans and
issuers are required to follow in calculating the QPA. Therefore,
weighting additional information that is already taken into account in
the calculation of the QPA would be redundant and in the Departments'
view, would result in increased administrative burden to the certified
IDR entity, potentially resulting in the selection of an offer that
does not best reflect the most appropriate value insofar as additional
weight would be given to information related to a factor that is
already accounted for in the QPA, effectively weighting that
information twice. Under these final rules, certified IDR entities must
consider the QPA and then must consider all additional information
submitted by the parties. To help ensure that the Federal IDR process
results in determinations that accurately reflect the fair value of a
given item or service, the certified IDR entity should consider all
additional information submitted by the parties but should not give
weight to information if it is already accounted for by any of the
other information submitted by the parties.
J. Conclusion and Summary of Economic Impacts
The Departments are of the view that these final rules will promote
[[Page 52639]]
transparency, consistency, and predictability in the Federal IDR
process. These final rules provide a market-based approach that will
help encourage plans and issuers, and providers, facilities, and
providers of air ambulance services to arrive at reasonable payment
rates.
The Departments estimate that these final rules will impose
incremental annual costs of approximately $5.9 million. Over 10 years,
the associated costs will be approximately $44.1 million with an
annualized cost of $5.9 million, using a 7 percent discount rate.\75\
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\75\ The costs would be $51.5 million over 10-year period with
an annualized cost of $5.9 million, applying a 3 percent discount
rate.
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V. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44
U.S.C. 3506(c)(2)(A)), the Departments solicited comments concerning
the information collection requirements (ICRs) included in the July
2021 and October 2021 interim final rules. At the same time, the
Departments also submitted ICRs to OMB, in accordance with 44 U.S.C.
3507(d).
The Departments received comments that specifically addressed the
paperwork burden analysis of the information collection requirements
contained in the July 2021 and October 2021 interim final rules. The
Departments reviewed these public comments in developing the paperwork
burden analysis discussed here.
The changes made by these final rules affect the existing OMB
control number, 1210-0169. A copy of the ICR for OMB Control Number
1210-0169 may be obtained by contacting the PRA addressee listed in the
following sentence or at <a href="http://www.RegInfo.gov">www.RegInfo.gov</a>. For additional information,
contact James Butikofer, Office of Research and Analysis, U.S.
Department of Labor, Employee Benefits Security Administration, 200
Constitution Avenue NW, Room N-5718, Washington, DC 20210; or sent to
<a href="/cdn-cgi/l/email-protection#22474051430c4d525062464d4e0c454d54"><span class="__cf_email__" data-cfemail="88edeafbe9a6e7f8fac8ece7e4a6efe7fe">[email protected]</span></a>.
The OMB will consider all written comments that they receive on or
before September 26, 2022. Written comments and recommendations for the
proposed information collection should be sent within 30 days of
publication of this notice to <a href="http://www.reginfo.gov/public/do/PRAMain">www.reginfo.gov/public/do/PRAMain</a>. Find
this particular information collection by selecting ``Currently under
30-day Review--Open for Public Comments'' or by using the search
function.
Comments are invited on: (1) whether the collection of information
is necessary for the proper performance of the functions of the
Departments, including whether the information will have practical
utility; (2) if the information will be processed and used in a timely
manner; (3) the accuracy of the Departments' estimates of the burden
and cost of the collection of information, including the validity of
the methodology and assumptions used; (4) ways to enhance the quality,
utility, and clarity of the information collection; and (5) ways to
minimize the burden of the collection of information on those who are
to respond, including the use of automated collection techniques or
other forms of information technology.
Group health plans, health insurance issuers, FEHB carriers, and
certified IDR entities are responsible for ensuring compliance with
these final rules. Accordingly, the Departments refer to costs incurred
by plans, issuers, FEHB carriers, and certified IDR entities. However,
it is expected that most self-insured group health plans will work with
a TPA to meet the requirements of these final rules. The Departments
recognize the potential that some of the largest self-insured plans may
seek to meet the requirements of these final rules in-house and not use
a TPA or other third party. In these cases, those plans will incur the
estimated hour burden and cost directly.
These final rules add additional burdens to the ICR presented in
the October 2021 interim final rules. The following discussion covers
the changes being made to the ICR and the additional burden these
changes impose, followed by a summary of the ICR. Copies of the ICR may
be obtained by contacting the PRA addressee.
A. ICRs Regarding Additional Information To Be Shared With the Initial
Payment or Notice of Denial of Payment (26 CFR 54.9816-6(d), 29 CFR
2590.716-6(d), and 45 CFR 149.140(d); OMB Control Number: 1210-0169)
These final rules specify that where a QPA is calculated based on a
downcoded service code, in addition to the information already required
to be provided with an initial payment or notice of denial of payment
under the July 2021 interim final rules, a plan or issuer must provide,
if applicable, a statement that all or a portion of the claim was
downcoded; an explanation of why the claim was downcoded, including a
description of which service codes were altered, if any, and a
description of any modifiers that were altered or added, if any; and
the amount that would have been the QPA had the service codes or
modifiers not been downcoded.
The Departments assume that TPAs will provide this information on
behalf of self-insured plans. In addition, the Departments assume that
issuers and TPAs will automate the process of preparing and providing
this information in a format similar to an explanation of benefits as
part of the system to calculate the QPA. The Departments estimate that
a total of 1,477 issuers and 205 TPAs will incur a burden to comply
with this provision.
In the July 2021 interim final rules, the Departments estimated
that plans and issuers will be required to provide documents related to
QPAs along with the initial payment or notice of denial of payment for
approximately 5,068,512 claims annually from nonparticipating providers
or facilities.\76\ Additionally, the Departments estimated that plans
and issuers will be required to provide these documents for
approximately 49,676 claims annually from nonparticipating providers of
air ambulance services.\77\ In the absence of data, the Departments
assume that approximately 10 percent, or 511,819, of claims from
nonparticipating providers, facilities, and nonparticipating providers
of air ambulance services will involve downcoding and that it will take
a medical secretary 10 minutes (at an hourly rate of $50.76 \78\) to
prepare the required documentation and include it with each initial
payment or notice of denial of payment sent to the nonparticipating
provider, facility, or provider of air ambulance services.
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\76\ See 86 FR 36872 for more information on this estimate.
\77\ The Departments estimate that of the 216.2 million
individuals with employer-sponsored and other private health
coverage, there are 33.3 air transports per 100,000 individuals, of
which 69 percent result in an out-of-network bill. The number of air
ambulance claims is estimated as: 216,200,000 individuals x 0.000333
air transports per individual x 0.69% = 49,676 claims.
\78\ Internal DOL calculation based on 2021 labor cost data. For
a description of DOL's methodology for calculating wage rates, see
<a href="https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf</a>
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The Departments estimate the additional QPA information will be
provided for approximately 506,851 claims from nonparticipating
providers or facilities. The annual burden to prepare the required
documentation and attach it to each initial payment or notice of denial
of payment sent to the nonparticipating providers or facilities will be
approximately 84,475 hours annually, with an associated equivalent
[[Page 52640]]
cost of $4.3 million.\79\ The Departments estimate that the additional
QPA information will be provided for approximately 4,968 claims from
providers of air ambulance services. The annual burden to prepare the
required documentation and attach it to each initial payment or notice
of denial of payment sent to providers of air ambulance services will
be approximately 828 hours annually, with an associated equivalent cost
of $42,029.\80\ Thus, the total estimated burden to provide the
additional QPA information with initial payments or notices of denial
of payment sent to the nonparticipating providers, facilities, and
providers of air ambulance services, for all issuers and TPAs, will be
approximately 85,303 hours annually, with an associated equivalent cost
of approximately $4.3 million.\81\ As shown in Table 2, the Departments
share jurisdiction, and it is estimated that 50 percent of the burden
will be accounted for by HHS, 25 percent of the burden will be
accounted for by DOL, and 25 percent will be accounted for by
Department of the Treasury. Thus, HHS will account for approximately
42,652 hours with an equivalent cost of approximately $2,164,990. DOL
and the Department of the Treasury will each account for approximately
21,326 hours with an equivalent cost of approximately $1,082,495.
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\79\ This is calculated as: (5,068,512 documents for
nonparticipating providers or facilities) x (10%) x (10 minutes) =
84,475 hours. 84,475 hours x $50.76 = $4,287,951.
\80\ This is calculated as: (49,676 documents for
nonparticipating providers of air ambulance services) x (10%) x (10
minutes) = 828 hours. 828 hours x $50.76 = $42,029.
\81\ This is calculated as: (5,068,512 documents for
nonparticipating providers or facilities + 49,676 documents for
nonparticipating providers of air ambulance services) x (10%) x (10
minutes) = 85,303 hours. 85,303 hours x $50.76 = $4,329,980.
Table 2--Summary Annual Cost and Burden Regarding Information To Be Shared About QPA Starting in 2022
----------------------------------------------------------------------------------------------------------------
Estimated Estimated
Department number of Total annual dollar value
responses burden (hours) of labor hours
----------------------------------------------------------------------------------------------------------------
HHS............................................................. 255,910 42,652 $2,164,990
DOL............................................................. 127,955 21,326 1,082,495
Treasury........................................................ 127,955 21,326 1,082,495
----------------------------------------------------------------------------------------------------------------
B. ICRs Regarding the Certified IDR Entity's Payment Determination
Written Decision in the Federal IDR Process for Nonparticipating
Providers or Nonparticipating Emergency Facilities (26 CFR 54.9816-8T,
26 CFR 54.9816-8, 29 CFR 2590.716-8, and 45 CFR 149.510; OMB Control
Number: 1210-0169)
The Departments estimate that 17,435 claims will be submitted as
part of the Federal IDR process each year.\82\ After the certified IDR
entity has reviewed the offers and credible information submitted by
the parties and selected an offer, the certified IDR entity must notify
the provider, facility, or provider of air ambulance services and the
plan, issuer, or FEHB carrier and the Departments of the payment
determination and the reason for such determination, in a form and
manner specified by the Departments.\83\ The certified IDR entity's
written decision must include an explanation of the additional non-
prohibited information that the certified IDR entity determined
demonstrated that the offer selected is the out-of-network rate that
best represents the value of the qualified IDR item or service,
including the weight given to the QPA and any additional credible
information submitted in accordance with these final rules. If the
certified IDR entity relies on any additional information in selecting
an offer, the written decision must include an explanation of why the
certified IDR entity concluded that this information was not already
reflected in the qualifying payment amount.
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\82\ In 2020, 10.7 million individuals had employer-sponsored
coverage and 1.7 million individuals had other private coverage in
New York State, while 183 million individuals had employer-sponsored
coverage and 33.2 million individuals had other private coverage
nationally. The Departments estimate that New York accounts for 5.7
percent of the private insurance market ((10.7 + 1.7)/(183 + 33.2) =
5.7 percent). (See Employee Benefits Security Administration.
``Health Insurance Coverage Bulletin.'' (March 2020).) In 2018, New
York State had 1,014 IDR decisions, up from 650 in 2017 and 396 in
2016. (See Adler, Loren. ``Experience with New York's Arbitration
Process for Surprise Out-of-Network Bills.'' U.S.C.-Brookings
Schaeffer on Health Policy. (October 2019).) For purposes of this
analysis, the Departments assume that, going forward, New York State
will continue to see 1,000 IDR cases each year and that the number
of Federal IDR cases will be proportional to that in New York State
by share of covered individuals in the private health coverage
market. The number of claims in the Federal IDR process is
calculated in the following manner: 1,000/0.057= 17,435.
\83\ IDR Payment Determination Notification (section
716(c)(5)(A) of ERISA).
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The Departments estimate that, on average, it will take a physician
and medical billing specialist 0.5 hours to prepare the notice at a
composite hourly wage rate of $136.81.\84\ The burden for each
certified IDR entity will be 0.5 hours, with an equivalent cost of
approximately $69.24. Thus, the total cost burden for all certified IDR
entities to prepare this notice for Federal IDR claims will be $1.2
million.\85\
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\84\ The Departments use a composite wage rate because different
professionals will review different types of claims and groups of
individuals. The wage rate of a physician is $192.37, and the wage
rate of a medical billing specialist is $109.03. (Internal DOL
calculation based on 2021 labor cost data. For a description of
DOL's methodology for calculating wage rates, see <a href="https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf</a>.) The composite wage
rate is estimated in the following manner: ($192.37 x (\1/3\) +
$109.03 x (\2/3\) = $136.81).
\85\ 17,453 claims x 0.5 hours x $136.81 as the composite wage
rate for a physician and medical billing specialist = $1,192,641.
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The total annual cost burden for certified IDR entities to provide
the payment determination notices regarding Federal IDR claims will be
$1,192,641. As shown in Table 3, the Departments and OPM share
jurisdiction, and it is estimated that 45 percent of the burden will be
accounted for by HHS, 25 percent will be accounted for by DOL, 25
percent of the burden will be accounted for by the Department of the
Treasury, and 5 percent will be accounted for by OPM. Thus, HHS will
account for a cost burden of $536,689. DOL and the Department of the
Treasury will each account for a cost burden of $298,160. OPM will
account for a cost burden of $59,632.
[[Page 52641]]
Table 3--Summary Annual Cost and Burden Starting in 2022 Regarding
Certified IDR Entity's Payment Determination Written Decision in the
Federal IDR Process for Nonparticipating Providers or Nonparticipating
Emergency Facilities Claims
------------------------------------------------------------------------
------------------------------------------------------------------------
Department
------------------------------------------------------------------------
HHS......................................................... $536,689
DOL......................................................... 298,160
Treasury.................................................... 298,160
OPM......................................................... 59,632
------------------------------------------------------------------------
C. ICRs Regarding the Certified IDR Entity's Payment Determination
Written Decision in the Federal IDR Process for Nonparticipating
Providers of Air Ambulance Services (26 CFR 54.9817-2T, 26 CFR 54.9817-
2, 29 CFR 2590.717-2, and 45 CFR 149.520; OMB Control Number: 1210-
0169)
The Departments estimate there will be 4,968 claims for air
ambulance services submitted to the Federal IDR process each year.\86\
After the certified IDR entity has reviewed the offers and any
submitted credible information, and selected an offer, the certified
IDR entity must notify the provider of air ambulance services and the
plan, issuer, or FEHB carrier and the Departments of the payment
determination and include the written decision explaining such
determination.\87\ The certified IDR entity's written decision must
include an explanation of what information that the certified IDR
entity determined demonstrated that the offer selected is the out-of-
network rate that best represents the value of the qualified IDR
service. This explanation must include the weight given to the QPA and
any additional non-prohibited, credible information submitted in
accordance with these final rules. If the certified IDR entity relies
on any additional information in selecting an offer, the written
decision must include an explanation of why the certified IDR entity
concluded that this information was not already reflected in the
qualifying payment amount.
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\86\ The Departments estimate that of the 183 million
individuals with employment-related health insurance and 33.2
million individuals with other private coverage, there are 33.3 air
transports per 100,000 individuals, of which 69 percent result in an
out-of-network bill. The Departments assume that 10 percent of the
out-of-network bills will end up in the Federal IDR process. The
number of air ambulance service claims is calculated in the
following manner: (183,000,000 individuals + 33,200,000 individuals)
x 0.000333 air transports per individual x 69% x 10%= 4,968 claims.
\87\ IDR Payment Determination Notification (section
716(c)(5)(A) of ERISA).
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The Departments estimate that, on average, it will take a physician
and medical billing specialist working for the certified IDR entity 0.5
hour to prepare the notice of the certified IDR entity's determination
at a composite hourly wage rate of $136.81.\88\ The burden for each
certified IDR entity will be 0.5 hours, with an equivalent cost of
approximately $69.24. Thus, the total cost burden for certified IDR
entities to provide this notice for air ambulance claims will be $0.3
million.\89\
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\88\ The Departments use a composite wage rate because different
professionals will review different types of claims and groups of
individuals. The wage rate of a physician is $192.37, and the wage
rate of a medical billing specialist is $109.03. (Internal DOL
calculation based on 2021 labor cost data. For a description of
DOL's methodology for calculating wage rates, see <a href="https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf</a>.) The composite wage
rate is estimated in the following manner: ($192.37 x (\1/3\) +
$109.03 x (\2/3\) = $136.81).
\89\ 4,968 air ambulance claims x 0.5 hours x $136.81 as the
composite wage rate for a physician and medical billing specialist =
$339,836.
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The total annual cost burden for the certified IDR entities to
provide the payment determination notices regarding air ambulance
claims will be $339,836. As shown in Table 4, the Departments and OPM
share jurisdiction, and it is estimated that 45 percent of the burden
will be accounted for by HHS, 25 percent will be accounted for by DOL,
25 percent of the burden will be accounted for by the Department of the
Treasury, and 5 percent will be accounted for by OPM. Thus, HHS will
account for a cost burden of $152,926. DOL and the Department of the
Treasury will each account for a cost burden of $84,959. OPM will
account for a cost burden of $16,992.
Table 4--Summary Annual Cost and Burden Starting in 2022 Regarding
Certified IDR Entity's Payment Determination Written Decision in the
Federal IDR Process for Air Ambulance Claims
------------------------------------------------------------------------
Estimated Total
Department number of estimated
responses cost
------------------------------------------------------------------------
HHS............................................. 2,235 $152,926
DOL............................................. 1,242 84,959
Treasury........................................ 1,242 84,959
OPM............................................. 248 16,992
------------------------------------------------------------------------
Summary
The total annual cost burden for certified IDR entities to provide
payment determination notices regarding non-air ambulance and air
ambulance claims will be $1,532,477. As shown in Table 5, HHS will
account for a cost burden of approximately $689,615. DOL and the
Department of the Treasury will each account for a cost burden of
approximately $383,119. OPM will account for a cost burden of
approximately $76,624.
Table 5--Summary Annual Cost and Burden Starting in 2022 Regarding
Certified IDR Entity's Payment Determination Written Decision in the
Federal IDR Process for Non-air Ambulance and Air Ambulance Claims
------------------------------------------------------------------------
Estimated Total
Department number of estimated
responses cost
------------------------------------------------------------------------
HHS............................................. 10,145 $689,615
DOL............................................. 5,636 383,119
Treasury........................................ 5,636 383,119
OPM............................................. 1,127 76,624
------------------------------------------------------------------------
These paperwork burden estimates are summarized as follows:
Agency: Employee Benefits Security Administration, Department of
Labor.
Type of Review: Revision of existing collection.
Title: Requirements Related to Surprise Billing: Payment
Determination.
OMB Control Number: 1210-0169.
Affected Public: Private Sector--Businesses or other for-profits;
not-for-profit institutions.
Estimated Number of Respondents: 22,828
Estimated Number of Annual Responses: 163,542
Frequency of Response: Occasionally.
Estimated Total Annual Burden Hours: 89,521
Estimated Total Annual Burden Cost: $555,427
VI. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \90\ imposes certain
requirements with respect to Federal rules that are subject to the
notice and comment requirements of section 553(b) of the Administrative
Procedure Act (APA) and are not likely to have a significant economic
impact on a substantial number of small entities. Unless the head of an
agency determines that a final rule is not likely to have a significant
economic impact on a substantial number of small entities, section 604
\91\ of the RFA requires the agency to present a final regulatory
flexibility analysis of these final rules.
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\90\ 5 U.S.C. 601 et seq. (1980).
\91\ 5 U.S.C. 604 (1980).
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The Departments certify that these final rules would not have a
significant
[[Page 52642]]
impact on a substantial number of small entities during the first year.
The Departments have prepared a justification for this determination
below.
A. Affected Small Entities
The Small Business Administration (SBA), pursuant to the Small
Business Act,\92\ defines small businesses and issues size standards by
industry. These final rules will affect all health insurance issuers,
TPAs, and certified IDR entities.
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\92\ 15 U.S.C. 631 et seq.
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For purposes of analysis under the RFA, the Departments consider an
employee benefit plan with fewer than 100 participants to be a small
entity.\93\ The basis of this definition is fou
[…truncated; see source link]Indexed from Federal Register on August 26, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.