The Battle For Fair Reimbursement Under The No Surprises Act

The federal ban on surprise medical billing took effect on Jan. 1, 2022, following the passage of the No Surprises Act (NSA) in December 2020. The NSA resulted from years of negotiations and compromises between lawmakers, health plans, and physicians. More than two years later, the rollout of the NSA remains mired in dysfunction and delays as the Departments of Health and Human Services, Labor, and Treasury (Tri-agencies) struggle to implement its rules and regulations.

The NSA achieved its primary objective of protecting patients from unexpected medical bills, but it also disrupted the framework of in-network contract agreements and overall physician reimbursement – especially for those in emergency medicine.

Before the NSA, one of the most common examples of surprise medical billing was when an out-of-network (OON) specialist performed an emergency procedure at an in-network facility.

“In this scenario, the insurance payer would have paid for a portion of the OON care and then assigned the remaining balance to the patient,” explains Dr. Andrea Brault, President and CEO at Brault Practice Solutions. “And because OON charges are generally higher than in-network charges, patients would often be surprised by the lack of coverage.”

Now, the NSA protects patients by requiring that their OON cost-sharing amount be the same as their in-network cost-sharing amount – which typically means that either the physician must accept a lower payment, or the health plan must cover the remaining balance of the OON services.

“Ideally, payers and physicians would be able to find some middle ground during these payment disputes,” explains Dr. Brault. “But the NSA also established a process for neutral arbitration when a settlement can’t be reached.”

Independent Dispute Resolution

When an OON payment dispute happens, payers and physicians have 30 business days to complete an open negotiation period and agree to a new payment. But, if an agreement can’t be reached, the physician can submit the case for a third-party ruling under the NSA’s independent dispute resolution (IDR) process.

Once in the IDR process, each party submits a final offer with supporting information to justify their payment calculation. The arbiter then selects one of the two offers based on the information presented.

“This is where you see the criticism from the physician community,” explains Dr. Brault. “Much of the frustration around the NSA has centered on the rules for IDR, and specifically how much arbiters should rely on a metric known as the Qualifying Payment Amount.”

Qualifying Payment Amount

The Qualifying Payment Amount (QPA) is an artifact of the NSA, designed for two purposes. First, it is used to calculate the patient cost-sharing amount. Second, if the payment dispute advances to IDR, the QPA can be used as one of several factors to be considered by the arbiter.

The QPA is the median in-network allowed amount as of Jan. 31, 2019, for a specific procedure by the same or similar specialist in a particular geographic area, adjusted for inflation.

“When the QPA was developed, experts quickly recognized that its calculation method would result in an artificially low value that isn’t consistent with actual market rates,” explains Dr. Brault. “But, the purpose of the QPA was to direct the patient cost-sharing amount, so there wasn’t a big effort to challenge the methodology.”

The QPA soon became a highly contested benchmark when the Tri-agencies published its second interim final rule and comment period (IFC) in September 2021. In the second IFC the Tri-agencies specified that arbiters “must presume the QPA is the appropriate amount” when determining the final payment for an OON service disputed in IDR.

The physician community argued that this was a clear violation of the law, and leaders from the House Ways and Means Committee responded with a bi-partisan letter to reiterate that the law “directs arbiters to consider all of the factors without giving preference or priority to any one factor.”

“The law intended to provide an even playing field for insurance payers and physicians to negotiate fair payment,” explains Dr. Brault. “But health plans began using the QPA for calculating their initial payments. Then, many payers began canceling in-network contracts as a way to manipulate their QPA calculation. And all of this was aided by a steady flow of regulatory language that tips the scales in favor of the health plans has compounded the situation.”

This dramatic decrease in the allowed amount for an OON service and a large volume of newly canceled contracts has forced physicians to file an extraordinary number of payment disputes through IDR. And despite the required timelines defined in the IDR statute, many of these payment disputes have been paused or delayed because of the significant backlog in IDR cases.

“The result of all this is that emergency service providers are being starved of the funds they require to operate their emergency departments,” explains Dr. Brault. “And at the same time, insurance payers benefit from the time value of money as they continue to stall and manipulate OON physician payments.”

Texas Medical Association vs. NSA

The Texas Medical Association (TMA) has been at the forefront of this battle between physicians and insurance payers. They have filed multiple lawsuits challenging aspects of the QPA and IDR process and have now received favorable rulings in the following cases against the Tri-agencies.

TMA I (Filed October 2021)

TMA argued that the interim IDR rules favored payers because the interim final rule gave too much weight to the QPA and instructed arbiters to presume that the QPA was the appropriate payment amount. TMA argued that nothing in the law stated that arbiters should weigh any one factor more heavily than the others. In February 2022, a Texas federal judge ruled in favor of TMA and forced regulators to strike the questionable language from their forthcoming Final Rule.

TMA II (Filed September 2022)

TMA filed a second lawsuit when the Tri-agencies published the Final Rule, alleging that the Final Rule still favored insurance payers over physicians. Language in the Final Rules still called for arbiters to consider the QPA first and not “double count” elements that may have already been calculated into the QPA. The Rule also required the arbiters to provide a written explanation for including measures other than the QPA in their final determination. On Feb. 6, 2023, a federal judge ruled in favor of TMA, and all IDR determinations were temporarily paused. The Tri-agencies then resumed IDR determinations in March 2023 and issued new guidance that relieves arbiters of the obligation to apply QPA-centric rules. 

“But, now we’re left with a matrix of different guidelines that must be applied depending on the patient’s date of service or the date of the IDR determination,” explains Dr. Brault.

The Emergency Department Practice Management Association (EDPMA) recently published a summary of the applicable IDR guidance based on the service date and IDR ruling date.

Items or Services Furnished Before October 25, 2022*