IRS Releases Guidance on Surprise Billing 2022 Qualifying Payment Amount Determination

On December 28, 2021, the IRS issued Rev. Proc. 2022-11, which provides information necessary to implement the surprise billing prohibitions under the No Surprises Act (NSA) of the Consolidated Appropriations Act, 2021. Specifically, the guidance provides the methodology for calculating the qualifying payment amount (QPA) for 2022. (See our recent article on the NSA surprise billing prohibitions in the July 8, 2021 edition of Compliance Corner.)

The NSA provisions, which are applicable to both insured and self-funded group health plans, are effective for plan years beginning on or after January 1, 2022. These provisions protect participants from surprise bills for certain unexpected out-of-network (OON) items and services, including, but not limited to, emergency services.

The QPA is a significant component of the NSA surprise billing prohibitions and the related independent dispute resolution (IDR) process. The QPA is the median contracted rate for an item or service for a geographic region. A participant’s cost-sharing for protected OON services would be based upon the QPA in the absence of an applicable state surprise billing law or All-Payer Model Agreement. Additionally, if the IDR process is invoked to resolve plan and provider payment disputes, the IDR entity must consider the QPA in the determination. (See our recent article on the IDR process in the October 14, 2021 edition of Compliance Corner.)

For an item or service provided during 2022, the plan or insurer must calculate the QPA by increasing the median contracted rate for the same or similar item or service under the plan or coverage on January 31, 2019, by the combined percentage increase in the consumer price index for all urban consumers (U.S. city average) (CPI-U) over 2019, 2020 and 2021. For an item or service provided during 2023 or a subsequent year, the QPA is calculated by increasing the QPA determined for the item or service provided in the immediately preceding year by the applicable percentage increase, as published by the IRS.

The guidance specifies that for items and services provided on or after January 1, 2022, and before January 1, 2023, the combined percentage increase to adjust the median contracted rate is 1.0648523983. Plans and insurers are permitted to round any resulting QPA to the nearest dollar. To illustrate the methodology, an example is provided where the median contracted rate for a covered service (as identified by service code) was $12,480 as of January 31, 2019. For a service with the same code provided during 2022, the 2019 median contracted rate would be increased by the combined percentage increase of 1.0648523983, resulting in $13,289.36 or a 2022 QPA of $13,289 (rounded to the nearest dollar).

Although the actual QPA calculation may be performed by the plan’s insurer or third-party administrator, employers should be aware of this guidance.

Rev. Proc. 22-11 »