Before the enactment of the NSA, plan members could face unexpected out-of-pocket costs beyond cost-sharing requirements when receiving services from out-of-network providers in all covered situations. Plans could agree to pay a price for these services based on UCR or RBP, but if the provider’s charge exceeded that amount, the provider could bill the plan member for the difference (a practice commonly referred to as “balance billing”). In such cases, plans, often with the assistance of their stop loss carrier, were prepared to defend what they paid and worked to negotiate a reasonable resolution to ensure that the plan member would not bear the full brunt of discrepancies between the provider’s charges and the plan’s reimbursement rate. However, there were no legal protections that prevented the provider from balance billing the plan member if negotiations failed to reach a mutually agreed upon solution.
With the enactment of the NSA, providers' ability to balance bill plan members is restricted, preventing them from charging plan members more than the in-network cost-sharing amount for (i) emergency services, regardless of the provider’s network status;[5] (ii) non-emergency services by out-of-network providers at in-network facilities (with limited exceptions);[6] and (iii) air ambulance services from out-of-network providers.[7] In all three cases, the plan is solely responsible for paying the remainder of the provider’s bill, mirroring how the situation would have been handled in-network from the plan member’s perspective.
Under the NSA, the qualifying payment amount (“QPA”) serves as a key, mandatory metric for determining the base payment amount for out-of-network providers in many situations within scope. The QPA is calculated as the median of the contract rates recognized by a plan for the same or a similar item or service that is provided by a provider with the same or similar specialty within a specific geographic area.[8] For situations in scope, plan member cost-sharing requirements are often based upon the QPA for the service provided.[9] Additionally, the QPA is one of the key factors that guides the federal Independent Dispute Resolution arbitration process (described in more detail in the next section).[10]
The NSA requires the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury (the “Tri-Agencies”) to enact regulations to determine the methodology for plans to utilize when determining the QPA.[11] While the Tri-Agencies promulgated regulations in response, the federal district court for the Eastern District of Texas invalidated key aspects of their QPA calculation methodology, which the health care provider plaintiffs believed to be unfair.[12] Notably, the provider plaintiffs objected to the fact that the rules permitted plans to consider contracted rates for services that, in practice, the provider will never actually provide to any plan member (called “ghost rates”), which they alleged artificially lowered the QPA.[13] The Tri-Agencies appealed this ruling, and the Fifth Circuit partially reversed the decision in a panel ruling, concluding that the Tri-Agencies’ methodology, including allowing so called “ghost rates” to factor into the QPA, is consistent with statutory intent.[14] However, the Fifth Circuit’s reversal remains uncertain at this time because the plaintiff providers filed a petition seeking an en banc review of the panel’s ruling.[15] For the time being, the ongoing uncertainty leaves the future of QPA payment methodologies in a state of limbo.
As this situation plays itself out, stakeholders should pay especially close attention to how the QPA ultimately compares to the amount a network provider would have been paid for providing the same service. If the QPA is significantly higher, this could incentivize providers to leave plans’ networks, which will likely lead to plans raising compensation for providers to encourage them to stay in-network. This could result in plans more frequently reaching their stop loss policy’s attachment points, which could cause stop loss carriers to raise their attachment points or their rates. All of this places stress upon the self-funded employer group market and could ultimately result in higher premiums for plan members.
Open Negotiations and Independent Dispute Resolution
The Open Negotiations and Independent Dispute Resolution (IDR) processes under the NSA are designed to protect plan members from surprise medical bills by offering a mechanism for resolving billing disputes between out-of-network providers and plans, leaving plan members out of the dispute. Initially, under the Open Negotiations process, providers and plans must attempt to reach a settlement within a 30-day period.[16] If no agreement is reached, the dispute proceeds to the IDR process, where an independent arbitrator makes a binding determination on the appropriate payment amount.[17] During the IDR process, both the plan and the provider must present an offer to the arbitrator.[18] The arbitrator then decides which offer to accept, typically considering the QPA (discussed above) as well as other factors listed in the NSA, including the provider’s training and experience, the acuity of the patient, and the complexity of the situation.[19]
Congress empowers the Tri-Agencies to issue regulations to govern the IDR process.[20] While the Tri-Agencies promulgated regulations, several have been struck down by the courts. Most notably, the Fifth Circuit struck down rules that gave greater prominence to the QPA than other factors during the IDR process, holding that the NSA does not authorize the Tri-Agencies to require arbitrators to give special prominence to any one statutorily listed factor.[21]
It is imperative for stakeholders to carefully review further developments impacting the NSA’s IDR process, as this has the potential to upset the self-funded employer group market. If arbitrators are not required to give the QPA special consideration, the IDR process may be filled with more uncertainty than perhaps the NSA’s authors initially intended, which may incentivize plans to settle with providers. However, plans will need to be mindful of their stop loss carrier when settling a dispute, as the terms of most stop loss policies require any payments under the plan to be made in accordance with the plan’s terms so that they are coverable. If a plan is not carefully drafted, settlements to avoid the IDR process could violate the terms of the plan and would not be covered by the stop loss insurance. Therefore, plans, TPAs, and stop loss carriers need to strengthen their partnerships so that all are aligned when key decisions are made relating to a claim within the scope of the NSA, such as when to settle to avoid the IDR process.
Conclusion
This paper serves as an introductory overview of potential disruptions that the NSA may cause to the self-funded employer group market. Stakeholders in this sector may face various additional challenges due to the NSA, including delays in the IDR process due to higher than expected volume[22] and potential amendments to the Act, such as the extension of NSA requirements to ground ambulance services.[23] All impacted parties must keep abreast of ongoing developments, so that plan members can continue to enjoy the benefits of the NSA without rendering their plans unworkable.