Comment Period Closing on Federal Surprise Billing Rule

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PATHOLOGY GROUPS AND CLINICAL LABS HAD UNTIL SEPTEMBER 7 to comment on an interim final rule that provides federal protections against surprise billing and limits out-of-network (OON) cost sharing under many of the circumstances in which surprise bills arise most frequently. 

On July 1, 2021, four federal agencies issued an interim final rule (IFR) with comment period, which will implement various provisions of the No Surprises Act, which was enacted in December 2020 and takes effect Jan. 1, 2022. The rule was published in the Federal Register on July 13, 2021. 

Designed to Protect Patients 

The No Surprises Act is designed to protect patients from surprise medical bills for non-emergency services furnished by out-of-network providers at in-network healthcare facilities, emergency services, and out-of-network air ambulance services. The act also sets the framework for procedures to determine payment amounts by the patient and health plan or insurer for OON services and will require disclosures by nonparticipating providers. 

The IFR sets forth rules under which healthcare facilities are prohibited from charging out-of-network cost-sharing for non-emergency services obtained at an in-network facility by an OON provider. This provision is intended to prevent situations where a beneficiary goes to an in-network healthcare facility, but a member of the care team is out of network. 

The IFR defines “healthcare facilities” to include hospitals, hospital outpatient departments, critical access hospital, and ambulatory surgery centers. The federal Department of Health and Human Services (HHS) specifically solicited comments on whether there are other facilities that should fall within the definition of “healthcare facilities.” 

The IFR balance billing protections cover all services provided at the in-network facility, as well as the “furnishing of equipment and devices, telemedicine services, imaging services, laboratory services, and preoperative and postoperative services” associated with the visit, regardless of whether the provider furnishing such items or services is at the facility. 

According to Lauren Moldawer, an attorney with Mintz in Washington, D.C., this statement captures items and services ordered at the in-network facility but potentially provided by OON providers. 

“For example, any lab service ordered by the in-network facility that may be sent to an off-site, out-of-network lab would be considered part of the network ‘visit’ and would be covered by the balance billing protections of the IFR,” she wrote in an advisory. 

OON Rate Paid to Facilities 

The IFR specifies that cost-sharing amounts for services furnished by nonparticipating emergency facilities and nonparticipating OON providers at participating in-network facilities must be calculated based on one of the following: 

  • The amount allowed under an applicable All-Payer Model Agreement, which some states may have entered into with HHS. 
  • If there is no such applicable All-Payer Model Agreement or specified state law, the lesser of the billed charge or the plan’s contracted rate, referred to as the qualifying payment amount (QPA). (See sidebar “The Devil Is in the Details: Labs Must Now Determine a ‘Qualifying Payment Amount,’ below.) 
  • If none of the above conditions apply, an amount is determined by an independent dispute resolution (IDR) entity. Of note, this IFR does not set forth the IDR process. Further rulemaking this year will establish the specifics of the IDR process. 

Notice and Consent 

The IFR provides an exception to the balance billing and cost-sharing protections for certain post-stabilization services and non-emergency services, so long as the facility meets the notice and consent requirements. 

To meet the requirements, the facility must provide written notice to the beneficiary in a form specified by HHS that includes a good-faith estimate of the out-of-pocket costs. The notice must clearly state that the individual is not required to consent to receive such items or services from the nonparticipating provider, or nonparticipating emergency facility. 

However, this notice and consent exception does not apply to all situations. Specifically, it does not apply to ancillary services and diagnostic services (including lab and pathology services). There are still ways, though, for patients to find out what they will pay for laboratory testing. 

Tools to Estimate Test Cost 

Kyle Fetter, Chief Operating Officer of XIFIN Inc. in San Diego, notes that there are tools available that will allow physicians to estimate what a patient will pay for a laboratory test, which benefits the patient, the physician, and the laboratory. 

“Patients get clarity on the front end while they are in the physician’s office, and it’s a unique opportunity for lab providers to reduce their bad debt,” he explained. “We believe in giving customers information up front and having things be as clean as possible on the front end.”

The Devil Is in the Details: Labs Must Now Determine a ‘Qualifying Payment Amount’

WHILE THE INTERIM FINAL RULE IMPLEMENTING THE SURPRISE BILLING ACT does set out a process for determining a qualifying payment amount (QPA) to be paid to providers, it does not actually specify a minimum payment amount, which could be a sticking point between payers and providers. 

As defined by the statute, the qualifying payment amount is the median of the contracted rates recognized by the plan or issuer for similar services in a geographic region as of 2019, updated annually by the percentage increase in the consumer price index for all urban consumers. 

In general, the median contracted rate for an item or service is calculated by arranging in order from least to greatest the contracted rates of all plans of the plan sponsor or all coverage offered by the insurer in the same insurance market for the same or similar item or service. Importantly, Medicare, Medicare Advantage, and Medicaid are not included in the QPA calculation, which is something for which the College of American Pathologists (CAP) advocated. 

Of note, the IFR uses specific CPT codes in determining the QPA calculation, rather than using a family of codes, which can have a wide range of payment rates. The surgical pathology code “family” of 88300-88309, for example, has payment rates ranging from $15.70 to $441.75. This level of specificity will help ensure that QPA amounts are accurate for a given service, said Jonathan L. Myles, MD, Chair of the CAP’s Council on Government and Professional Affairs and a pathologist at the Cleveland Clinic. 

One area of concern for laboratories and pathologists is that while the IFR sets out the methodology for calculating the QPA, it does not establish any minimum amount for the initial payment, though the rule notes that several states have set standards for minimum initial payment amounts. 

“The insurer must share with the provider the QPA amount at the time of the initial payment, but there is nothing in the rule that says the payer has to pay you the QPA,” Myles explained. “Let’s say you bill $100 for a service, and the insurance company pays $10, but you don’t know what the calculation of the QPA is for that service. The rule says the insurer must provide you with the QPA amount at the time of their initial payment, so if they pay you $10 but the QPA is $50, you will know that up front.” 

Once providers receive the initial payment or denial of payment from the insurer, they enter into a 30-day “open negotiation period” to try to agree on a payment amount. If at the end of the 30 days there is no agreement, the parties have four days to decide whether to bring the claims to the independent dispute resolution process. 

Arbitration of Cases 

Noting that one benefit of requiring a minimum initial payment amount is that it may help reduce the number of cases that go to arbitration, the rule specifically asks for comment on whether a minimum payment amount should be required, and if so, what the payment rate or methodology or methodology should be. 

“For example, a minimum payment rate could be a specific percentage of the Medicare rate, a specific percentage of the plan or issuer’s QPA for the item or service, an amount calculated in the same way the plan or issuer typically calculates payment for the specific item or service to nonparticipating providers or facilities, an amount representing the highest amount that would result from applying two or more of these or other methodologies, or any other method,” the IFR states. 

Independent Dispute Resolution Rules 

THOUGH THE RULES IMPLEMENTING THE INDEPENDENT DISPUTE REVIEW (IDR) HAVE NOT YET BEEN PUBLISHED, they will play an important role in determining how providers and insurers resolve disputes over payment. 

The IDR process will be used if providers and payers are unable to agree on a payment amount when payment amounts are not already set by state law or are covered by an All-Payer Model Agreement. 

“Because the IDR process is the backstop for determining payment to OON providers when the parties can’t otherwise come to an agreement, the mechanism has the potential to create leverage for one party—provider or payer—if the other is disadvantaged in the process,” said Elizabeth Sullivan, an attorney with McDonald Hopkins in Cleveland. “Therefore, if the IDR process creates unreasonable demands on provider resources, the heavy burden on providers and/or their billing companies could discourage full use of the IDR process.” 

For this reason, an IDR process that is balanced and fair to both the provider and payer is critical, Sullivan noted. Taking it a step further, “an IDR process that incentivizes payers to settle on a mutually agreed payment to the provider before the parties reach the IDR process would be beneficial to labs,” she said, advising labs and pathologists to review and comment on the IDR rule once it is published. 

“In the meantime, this rule does address determining OON rates before reaching IDR, so labs should focus efforts on understanding that aspect for now,” she added.

Contact Kyle Fetter at kfetter@xifin.com; Lauren Moldawer at LMMoldawer@ mintz.com; Elizabeth Sullivan at esullivan@mcdonaldhopkins.com

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