Legislation had big problems from the get-go

By LYNNE JETER

The No Surprises Act (NSA), which went into effect Jan. 1, 2022, to protect patients from an estimated 12 million surprise bills annually, has been fraught with challenges, with medical professionals calling at least one of its processes flawed and ineffective.

“While the goals of consumer protection, price transparency, and cost concessions are important and necessary, the legislation is starting to present real challenges to practices’ financial stability,” said Dan D’Orazio, CEO of Sage Growth Partners, a national consulting firm for healthcare organizations.

The NSA applies to employer-sponsored health plans for certain emergency services and those received from out-of-network providers at in-network facilities regarding balanced billing. The act doesn’t apply to out-of-network providers at out-of-network facilities. Providers risk a penalty of up to $10,000 per violation.

“If a patient requests it, even physician offices are required to provide a good faith estimate,” said Matt Clements, CFO of Sage Infusion, a Type 1 diabetic well-versed in clinical visits. “One day soon, upfront pricing may be a requirement for all practices.”

The Benefit Claim Process

The benefit claim process is wieldy and time-sensitive and -consuming. When negotiation doesn’t resolve the dispute, the NSA provides for an arbitration process, Independent Dispute Resolutions (IDR).

The Centers for Medicare and Medicaid Services (CMS) anticipated 22,000 IDR appeals in 2022. Yet within the first six months of the law going into effect, more than 90,000 IDR appeals were initiated. What’s more, only 3,500 determinations had been made by mid-December. 

The Trouble with IDRs

Under the IDR process, a strictly controlled baseball-style arbitration for disputing unreasonable reimbursement amounts with insurers, a provider must initiate open negotiations within 30 days of receipt of the payment or notice of denial.

“If open negotiations fail, then the IDR process is initiated within four days of the end of the 30-day open negotiation period,” said Michael Lowe, a board-certified health law attorney at Lowe & Evander, PA, in Florida. “IDR is initiated by issuing notice to the other party and the HHS Secretary. The parties have three business days from the initiation of the IDR process to jointly select (the arbitrator). If the parties fail to agree on the IDR entity, then the HHS Secretary shall select the IDR entity within six business days from the initiation of the IDR process. After the IDR entity is selected, within 10 days from the selection, the parties must submit the amount(s) desired -- their offer -- along with any supporting evidence or documentation required. After the submission, the IDR entity must choose one of the two offer amounts.”

Here’s the rub: “There are only 13 IDR entities (arbitrators) and only 11 accepting new disputes, which is simply not enough,” said Christine Cooper, CEO of aequum LLC and the co-managing member of Koehler Fitzgerald LLC, a law firm with a national practice. “The IDR process is also occurring piecemeal. Appeals are initiated in the federal portal; every other step is managed by the IDR entity. Each IDR entity manages the process differently, some by email, some by their own portal. Progress is difficult to track and monitor, and some IDR entities have failed to follow deadlines. Rather, they pause the acceptance of offers upon receipt of new disputes. It’s been very difficult to communicate with the IDR entities, as most don’t respond to phone calls or emails.”

Physicians will not only need to become savvy at submitting bids to receive more favorable reimbursements, but also because the loser in the arbitration may be required to cover fees for both parties, said D’Orazio.

To add to the uncertainty, the IDR rules keep changing.

“Early (in 2022), several state medical associations and air ambulance companies filed suits about the interim final rule that bases appropriate reimbursements on insurers’ qualifying payment amounts (QPA),” he said. “In April, CMS retracted its stance on just how much weight QPAs should carry in arbitrators’ decision-making.”

More Legal Woes

Last February, Eastern District of Texas Judge Jeremy Kernodle agreed with the Texas Medical Association that the Department of Health and Human Services (HHS) interim final rule governing the IDR process conflicted with the NSA statute when it created a rebuttable presumption that the QPA was the correct out-of-network rate for purposes of the IDR process, explained Cooper.

In September, the Tennessee Advisory Commission on Intergovernmental Relations revealed that it was studying “the overall effect on health insurance prices when reference-based pricing is used.” Tennessee may be the latest state to adopt reference-based pricing to control healthcare costs, noted Cooper. (The final report had not been presented by press time.)

“Several other states have adopted reference-based pricing and are successfully using it,” said Cooper. “The most well-known is Montana, which became the first state to use reference-based pricing for all of its employees’ health benefits. Other states that have adopted reference-based pricing include California, Oregon, Colorado, and Washington. Each of these states was armed with the experience of Montana.”

Reference-based pricing is a way to avoid the uncertainty the NSA is creating, said Cooper.

“We anticipate seeing a broader adoption of reference-based pricing plan design both for public entities and private corporations,” she said. “It’s a true cost control mechanism that brings uncertainty to the plans and the providers.”

Woes Before NSA Became Law

In November 2021, congressional doctors, their medical associations and members of Congress led the charge that the rule released by the Biden Administration two months earlier for implementing the law, favored insurers and didn’t follow the spirit of the legislation, wrote Michael McAuliff for Kaiser Health News.

“The Administration’s recently proposed regulation to begin implementing the law doesn’t uphold Congressional intent and could incentivize insurance companies to set artificially low payment rates, which would narrow provider networks and potentially force small practices to close, thus limiting patients’ access to care,” wrote Rep. Larry Bucshon (R-Indiana). Roughly half of the 152 lawmakers who signed the letter were Democrats.

“The doctors in Congress are furious about this,” a staff member told McAuliff.

Cooper said it was clear that providers would take issue with the language in the Rule creating a rebuttable presumption that the payor’s median contracted rate is the proper reimbursement rate for claims governed by the NSA, ignoring the other factors listed in the NSA.

“The median contracted rate is solely within control of the payors and it stripped the providers of any say,” said Cooper. “In addition, the providers likely understood that the IDR entities would naturally select the offer closest to the median contracted rate because they’re on a tight timeline and couldn’t reasonably process the number of claims they would be receiving if they had to evaluate each factor listed in the NSA and provide a written opinion as to why they deviated from the median contracted rate.”