No Surprises, But Much Uncertainty: The Status of CAA Billing Rules
The rules in the Consolidated Appropriations Act that aim to eliminate much of the surprise from billings by out-of-network providers in particular situations are the subject of continued controversy.
- Health care providers have successfully challenged a number of regulatory provisions that affect how much patients and plans need to pay out-of-network providers for emergency room care and in certain other situations.
- Regulators are appealing those decisions and issuing interim guidance, providing some relief.
- Claims administrators and insurers will need to adjust their practices appropriately to comply with applicable rules, even as those rules may continue to change.
The Bottom Line
If upheld, the district court’s decisions will likely result in higher costs for plans and patients, but there remains much to be resolved.
The forecast for the “no surprise” billing rules under the Consolidated Appropriations Act, 2021, continues to be foggy at best, as regulators seek to chart a course through court decisions that have vacated key provisions in regulatory guidance. Consider the path followed to date:
- Twice the Departments of Labor, Health and Human Services, and the Treasury, along with the Office of Personnel Management (collectively, the Departments) have issued regulations addressing the prominence of the “qualifying payment amount” (see below) in determining how much a health plan must pay for medical expenses when a no surprise billing claim is in dispute. Twice the U.S. District Court for the Eastern District of Texas (District Court) has found those rules contrary to the statute and ruled them invalid. The Departments have appealed the district court’s findings to the Fifth Circuit Court of Appeals.
- The Departments sought to increase the fee for submitting a no surprise billing claim for independent dispute resolution from $50 to $350. The District Court rejected that increase on administrative process grounds, and the Departments have since announced an increase to $150.
- In August, the District Court issued a ruling that invalidated a number of other provisions in the Departments’ regulations, and the Departments responded in a recent set of FAQs addressing the impact of the new court decision.
This alert addresses the last of these developments.
A Refresher on the No Surprise Billing Rules
The no surprise billing rules prohibit out-of-network providers from billing patients more than a network level of cost-sharing in specified circumstances, when patients have little or no choice with respect to their providers. They apply, for example, when a patient receives emergency care in an out-of-network hospital. The rules also establish a process and guidelines for determining how much group health plans (and insurers) will pay in these circumstances.
The Departments have issued extensive guidance on these rules. Much of the guidance pertains to the qualifying payment amount (QPA). For any service furnished by an out-of-network provider subject to the no surprise billing rules, the QPA is the median amount that a plan has negotiated with similar in-network providers for the same service in the same geographic area. The QPA is used in determining the amount that a patient is required to pay for out-of-network services and factors into how much a group health plan must pay for those services. The regulations address other subjects, such as the timing of payment and the process for resolving disputes over the amount of a plan’s payment.
The August Decision
The most recent court decision takes issue with certain regulatory provisions that address how the QPA will be calculated. For example, the court:
- Narrowed the similar in-network providers who may be taken into account in calculating the QPA;
- Required that the QPA include bonus and incentive payments made to network providers; and
- Required that the QPA calculation be based on the plans of the plan sponsor, eliminating the option of basing the QPA on the plans administered by the applicable claims administrator.
The court also vacated certain rules pertaining specifically to air ambulance claims.
The FAQs make it clear that the Departments intend to appeal certain of the court’s rulings, but recognize that the District Court’s decision is now in effect. For that reason, the FAQs advise plans to determine the QPA in accordance with a current, good-faith interpretation of the statute. At the same time, observing that it may take time for plans to adjust to the District Court’s decision, the Departments announce a non-enforcement policy for plans that follow the regulations as published until May 1, 2024 (with a possible extension until November 1, 2024).
The FAQs also address several issues relating to air ambulance services, for example, advising that plans may deny claims based on a failure to submit timely information and confirming that out-of-network air ambulance services may not balance bill patients on account of such denial.
The State of Things
The impact of the latest court decision will be felt most immediately by third-party administrators and insurers that must process claims in accordance with applicable no surprise billing rules. The FAQs provide relief with regard to enforcement by regulatory agencies, but that relief does not extend to challenges by out-of-network providers and the factors that an independent reviewer may consider in reviewing a disputed claim.
For plan sponsors, these developments could ultimately result in increased benefit costs and administrative fees. Plan sponsors may wish to confer with their administrators and insurers to see how they are responding to the court’s rulings and the FAQs. Plan sponsors should continue to watch as the courts and regulators work their way through the mist.
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