Departments Extend Enforcement Relief on Payment Calculation Under No Surprises

On May 1, 2024, the DOL, HHS, and Treasury (the departments) issued an FAQ regarding implementation of the No Surprises Act in light of the August 24, 2023, decision in Texas Medical Association, et al. v. U.S. HHS, et al. (TMA III) (see our August 17, 2023, and October 26, 2023, editions of Compliance Corner for coverage of this case). Specifically, the FAQ extends enforcement relief related to calculating equivalent in-network rates for out-of-network services covered under No Surprises Act protections until November 1, 2024.

As background, the No Surprises Act and July 2021 interim final rules provide protections against balance billing and limit cost-sharing for emergency services from out-of-network providers, non-emergency services from out-of-network providers during a visit to an in-network facility, and out-of-network air ambulance services. The participant’s or beneficiary’s cost-sharing for these services covered under the No Surprises Act must not be greater than the cost-sharing requirements for equivalent in-network services. Specifically, cost-sharing must be calculated based on the “recognized amount.” If there is no established amount set by an All-Payer Model Agreement under the Social Security Act, and there is no state law on the applicable amount, then the recognized amount, according to the interim final rules, would be the lesser of billed charges or the qualifying payment amount (QPA).

The QPA is generally the median contracted plan rate on January 31, 2019, for the same or similar service in the same geographic region and adjusted for inflation. Under the July 2021 interim final rules, the median contracted plan rate was determined based on all plans of the plan sponsor (or administering entity) or all coverage offered by the insurer in the same insurance market. On August 24, 2023, the court in TMA III held that the interim rules on calculating the QPA were unlawful. Some of the QPA calculation provisions that the TMA III court took issue with allowed the inclusion of “ghost rates” (rates for services that a particular provider has not provided) and rates for providers outside the applicable specialty, excluding bonus or other incentive provisions from the rate calculation, and allowing self-insured plan calculations to be based on the rates of other self-insured plans administered by the same TPA. The Department of Justice appealed the TMA III decision, which is currently pending.

On October 6, 2023, the departments issued FAQ guidance acknowledging the TMA III decision on QPAs and the significant challenges associated with revisiting and recalculating QPAs established prior to the decision. To address these challenges, the departments stated they would grant enforcement relief for any plan, issuer, or other party to a No Surprises Act payment dispute that applies a QPA calculated under the July 2021 interim rules to services delivered before May 1, 2024 (see our October 26, 2023, edition of Compliance Corner for coverage of the October 6, 2023, FAQ guidance).

The May 1, 2024, FAQ guidance extends this enforcement relief until November 1, 2024. This extension is in response to feedback that plans and insurers need more time to recalculate QPAs in a manner consistent with the TMA III decision, as several of the changes to the QPA calculation require manually locating data. Accordingly, the departments will grant enforcement relief for any plan, issuer, or other party to a No Surprises Act payment dispute that applies a QPA calculated under the July 2021 interim rules to services delivered before November 1, 2024 (previously May 1, 2024). The departments will continue to assess the status of QPA calculations but do not expect to extend this enforcement relief for services delivered on or after November 1, 2024.

Although the No Surprises Act payment calculation process is typically handled by insurers and TPAs, employers should be aware of the recent guidance and monitor future developments.

FAQ about Consolidated Appropriations Act, 2021 Implementation Part 67 »