Understanding the No Surprises Act and Recent Changes to IDR Processes

Introduction

In response to ongoing legal developments and court decisions, notably the Texas Medical Association et al. v. United States Department of Health and Human Services et al., case (TMA III), the U.S. Departments of Labor (DOL), Health and Human Services (HHS), Treasury, and the Office of Personnel Management (OPM) have released updated FAQs regarding the implementation of the No Surprises Act. These updates are critical for healthcare providers, insurers, and patients navigating the complexities of out-of-network charges and surprise medical billing.

Background of the No Surprises Act

The No Surprises Act was enacted as part of the Consolidated Appropriations Act, 2021. It amended significant health laws, including the Internal Revenue Code, the Employee Retirement Income Security Act (ERISA), and the Public Health Service Act (PHS Act), to offer stronger protections against surprise medical bills. This legislation particularly affects:

• Emergency services provided by nonparticipating providers and facilities.
• Non-emergency services performed by nonparticipating providers at in-network facilities.
• Air ambulance services from nonparticipating providers.

The Act generally prohibits balance billing in these contexts unless the patient is informed adequately and consents to waive the protection against surprise billing.

Changes to Patient Cost-Sharing Under the Act

Under the 2021 interim final rules, the Act limits how much patients must pay out-of-network providers in these situations. Cost-sharing amounts—such as co-pays and deductibles—cannot exceed what would be charged if the services were provided by in-network providers and are calculated based on the recognized amount. This amount might be determined by:

• An All-Payer Model Agreement.
• Specific state law, or, if neither is applicable,
• The lesser of the billed charge or the qualifying payment amount (QPA).

For out-of-network air ambulance services, the cost-sharing must also be as if the services were provided in-network, calculated similarly through the lesser of the billed charge or the QPA.

The QPA typically reflects the median contracted rates as of January 31, 2019, adjusted for inflation. This rate is crucial in the calculation of payments and cost-sharing under the Act.

Impact of TMA III on the No Surprises Act

In August 2023, the U.S. District Court for the Eastern District of Texas issued a decision in TMA III, which vacated certain 2021 interim final rules related to the calculation of the QPA. The court ruled these provisions unlawful, necessitating a reevaluation of these rules. While the Department of Justice has partially appealed this decision, it remains pending before the U.S. Court of Appeals for the Fifth Circuit.

Recent FAQs and Enforcement Discretion

In October 2023, the Departments and OPM released FAQs Part 62 following TMA III. These FAQs clarify that until May 1, 2024, the departments will exercise enforcement discretion, allowing the use of QPAs calculated based on the rules that were in effect just before TMA III for items and services provided. They also announced that enforcement relief would extend until November 1, 2024, for plans and issuers recalculating QPAs in compliance with current laws and regulations. For air ambulance services, similar extensions apply.

The Departments and OPM have stated they do not foresee extending this enforcement relief past November 1, 2024, indicating that all parties involved should adjust their systems and processes accordingly by then.

Conclusion

The ongoing adjustments and legal reviews of the No Surprises Act's rules reflect the complex nature of implementing such comprehensive healthcare billing reforms. Providers, insurers, and patients must stay informed about these changes to navigate the new landscape effectively. The extended enforcement relief provides a necessary period for adjustment but highlights the importance of readiness for the eventual enforcement of revised regulations.