On September 30, 2021, the Departments of Health and Human Services (“HHS”), Labor and Treasury and the Office of Personnel Management (collectively, the “Departments”) published the second interim final rule implementing certain provisions of the No Surprises Act (“Part II of the IFR”). Part II of the IFR addresses key aspects of the No Surprises Act (the “Act”) not addressed in the Departments’ first interim final rule (“Part I of the IFR”), including the independent dispute resolution process, patient-provider dispute process, and the good faith estimate requirements for uninsured and self-pay patients. The requirements outlined in Part II of the IFR will go into effect on January 1, 2022. Comments are due by December 6, 2021. Please refer to our article available here to learn more about the good faith estimate requirements for uninsured/self-pay patients and the patient-provider dispute resolution process.
Applicability of the IDR Process
Part II of the IFR sets forth the details on the much anticipated federal independent dispute resolution (“IDR”) process effective January 1, 2022.
The federal IDR process will be a mechanism that nonparticipating providers and health plans may utilize to determine the out-of-network (“OON”) rate for OON items/services subject to the balance billing prohibition under the Act. Importantly, the federal IDR process is only available if the OON rate for such items/services is not otherwise determined based on a specified state law, or an All-Payer Model Agreement. For further discussion of the balance billing prohibition under the Act, please refer to our previous article on Part I of the IFR.
Open Negotiation Period
Prior to initiating the federal IDR process, the parties must first undergo an open negotiation period in an attempt to mutually agree upon an OON rate.
The open negotiation between the provider and health plan shall begin on the day the provider sends the open negotiation notice, and shall last for thirty (30) business days (the “Open Negotiation Period”). A provider may initiate the Open Negotiation Period by providing the health plan with a written “open negotiation notice” within 30 business days from the date the provider receives an initial payment or notice of denial of payment. The open negotiation notice must include the following:
- Information to identify the items or services subject to negotiation, including the day the item or service was furnished and the service code;
- The initial payment amount, or notice of denial of payment;
- The provider’s offer for the appropriate OON rate; and
- Contact information of the provider.
In order to satisfy the foregoing requirements, the Departments issued a model Open Negotiation Notice which providers must utilize.
The IDR Process
Initiating IDR
If the parties are unable to come to an agreement during the Open Negotiation Period, either party may initiate the federal IDR process.
In order to initiate the IDR process, the initiating party shall provide to the other party, and the Departments through the federal IDR portal, a “Notice of IDR Initiation” within four (4) business days from the date of the conclusion of the Open Negotiation Period. The Notice of IDR Initiation must include the following:
- Information sufficient to identify the item or service subject to IDR (including the date and location where the item or service was provided, the type of service provided, any corresponding service and place of service code, the amount of cost-sharing allowed as determined by the requirement outlined in Part I of the IFR, and (if applicable) the initial payment made by the health plan for the item or service);
- The contact information of the parties involved;
- The state where the item or service was furnished;
- The commencement date of the open negotiation period;
- The initiating parties’ preferred Certified IDR Entity;
- An attestation that the items or services in question are within the scope of the federal IDR process; and
- The Qualifying Payment Amount (“QPA”) established by the health plan for the item or service and corresponding information as required by Part I of the IFR.
In order to satisfy the foregoing requirements, the Departments issued a model Notice of IDR Initiation which the initiating party must use to provide the corresponding notice to both the other party and the Departments.
IDR Entity Certification
In addition to other requirements, each Certified IDR Entity must apply to the Departments through the federal IDR Portal to become a Certified IDR entity, by providing evidence that they have sufficient expertise and staffing to reach determination on a timely basis, are free of any conflicts of interests with the providers and health plans to which they might be issuing IDR determinations, and are accredited by a nationally recognized accrediting body or ensure that their personnel possess the proper training to conduct payment determinations. IDR Entities are certified for a five (5) year period.
Selecting a Certified IDR Entity
After receipt of the Notice of IDR Initiation, the parties have three (3) business days to jointly select a “Certified IDR Entity.” Importantly, if the non-initiating party does not object to the initiating’s party’s preferred Certified IDR Entity, as stated within the Notice of IDR Initiation, within three (3) business days, the preferred Certified IDR entity will be considered the selected Certified IDR Entity. If the parties cannot agree on a Certified IDR Entity within three (3) business days, the Departments will then randomly select a Certified IDR Entity within six (6) business days after the date of receipt of the Notice of IDR Initiation. The Departments shall publish a list of Certified IDR Entities the parties may choose from on the federal IDR portal.
Submission of Offer
After the Certified IDR Entity is selected, each party has ten (10) business days to submit an offer to the Certified IDR Entity for what that party believes the appropriate OON rate should be for the item/service (the “Offer”). The Offer must be expressed as both a dollar amount and the corresponding percentage of the QPA represented by that dollar amount.
In addition to the Offer, the parties must submit the following information for consideration by the Certified IDR Entity:
- Any information requested by the Certified IDR Entity relating to the offer or the items or services provided;
- The size of the provider’s practice;
- The coverage area of the health plan;
- Whether the health plan is fully-insured, or partially or fully self-insured;
- The relevant geographic region for purposes of the QPA; and
- Any other credible information related to the Offer which the party wishes the Certified IDR Entity to consider in making their determination.
In certain circumstances, instead of having each item or service determined separately, Part II of the IFR provides that items and services may be considered jointly by a Certified IDR Entity. In order to have these “batched” items and services considered jointly, the items and services must be:
- Billed by the same provider;
- Paid by the same health plan;
- The same or similar items and services; and
- Provided within the same thirty (30) business day period (or ninety (90) calendar day period if provided during the “Cooling-Off Period”).
Out-of-Network Payment Determination
In order to incentivize each party to submit reasonable Offers, the federal IDR process is structured as “baseball style arbitration” where the Certified IDR Entity is required to select one (1) of the two (2) Offers as the amount to be paid.
However, under Part II of the IFR, the Certified IDR Entity must begin with the presumption that the QPA is the appropriate OON rate for the item or service in question. The Certified IDR Entity must select the offer that is closest to the QPA, unless credible information submitted by the parties clearly demonstrates that the QPA is materially different from the appropriate OON rate. Importantly, the Certified IDR Entity is not to determine whether the health plan correctly calculated the QPA.
The following factors are to be considered by the Certified IDR Entity in determining whether the OON rate is materially different from the QPA:
- The training, experience, quality and outcome measurements of the provider;
- The market share held by the nonparticipating provider or health plan;
- The specific patient acuity and complexity;
- The teaching status, case mix and scope of services;
- Good faith efforts of the parties to enter into network agreements and contracted rates during the previous four (4) years; and
- Any additional information submitted by a party, so long as it is credible and relates to the Offer.
However, the Certified IDR Entity is prohibited from considering the following:
- Usual and customary charges for the item or service;
- The amount the provider would have billed for the items or services absent the surprise billing prohibition; and
- Public payor reimbursement rates for the item or service.
Within thirty (30) business days after the Certified IDR Entity is selected, the Certified IDR Entity must select an Offer and provide a written decision, including detailed explanations of any additional considerations the Certified IDR Entity relied upon in making its determination. The Certified IDR Entity’s decision is binding and non-appealable. The costs of the IDR process are borne by the unsuccessful party.
Once the Certified IDR Entity issues a determination, the initiating party may not submit a subsequent Notice of IDR Initiation involving the same party for the same or similar item or service for ninety (90) calendar days following the determination (the “Cooling-Off Period”).
In the event that the OON rate is determined by the Certified IDR Entity to be greater than the initial payment issued by the health plan, the health plan has thirty (30) calendar days to issue any additional payment required to the provider. In the event the OON rate is determined to be less than the initial payment amount that was paid by the health plan, the provider has thirty (30) calendar days to remit any overpayment to the health plan.
Overview of IDR Timeline
Key steps and timeframes of the federal IDR process are set forth below:
| FEDERAL IDR PROCESS TIMELINES | ||
| Action | Timeframe | Responsible Party |
| Open Negotiation Notice | 30 Business Days from the date of receipt of initial payment or denial | Provider (sent to Health Plan) |
| Open Negotiation Period | 30 Business Days from the day provider sends the Open Negotiation Notice | N/A |
| Notice of IDR Initiation | 4 Business Days from the end of the Open Negotiation Period | Either party (sent to the other party in writing; sent to the Departments through the federal IDR portal) |
| Selection of Certified IDR Entity (by parties) | 3 Business Days from receipt of Notice of IDR Initiation
Notice of selection to be sent to the Departments and the Certified IDR Entity on the 4th Business Day from receipt of Notice of IDR Initiation |
Both parties to mutually select the Certified IDR Entity
Initiating Party (notice of selection to be provided to the Departments and the Certified IDR Entity through the federal IDR Portal) |
| Selection of Certified IDR Entity (by Departments) | 6 Business Days from receipt of the Notice of IDR Initiation, the Departments will select the Certified IDR Entity if the parties are unable to mutually select | Departments |
| Submission of Offer and Other Credible Information | 10 Business Days from selection of the Certified IDR Entity | Each party (submitted through the federal IDR portal) |
| Payment of Certified IDR Entity Fee | At the time the party submits its offer to the Certified IDR Entity | Each party shall submit the entire fee, the prevailing party will have its fee remitted within 30 Business Days from the date the Certified IDR Entity issues its determination |
| Selection of Offer and Decision | 30 Business Days from selection of the Certified IDR Entity | Certified IDR Entity (submitted through the federal IDR portal) |
| Payment of OON Rate | 30 Calendar Days from the Certified IDR Entity’s determination | Health plan (if OON rate is less than initial the payment)
Provider (if OON) rate is more than the initial payment |
| “Cooling-Off Period” | 90 Calendar Days from the Certified IDR Entity’s determination | Neither party may initiate the IDR process for the same or similar item or service with the same opposing party |
Practical Takeaways
- Providers/facilities should become familiar with their state surprise billing laws to determine, prior to initiating the federal IDR process, whether their state has a process for determining the appropriate OON rate that will supersede the federal IDR process.
- Providers/facilities will have to rebut the presumption that the QPA is the appropriate OON rate for the item/service in question. To that end, we recommend providers/facilities:
- Become acutely aware of how health plans determine the QPA in order to demonstrate why the QPA is not an accurate reflection of the appropriate OON rate. However, we recognize that this will be a difficult task to accomplish until such time as health plans are required to publish their negotiated rates. Please note, the Departments, through a set of Frequently Asked Questions, announced that they will not be enforcing the requirement that health plans publish their negotiated rates until July 1, 2022.
- Prepare information and documentation in advance that will demonstrate the appropriate rate to be paid for their OON service. This information could include anything from the provider’s education and experience to the amount the provider must be reimbursed in order to just break even for providing the item or service. This information will be provided to the certified IDR Entity in an attempt to prove that the appropriate OON rate is materially different from the health plan’s established QPA.
- Make good faith efforts to become network providers with the larger payers in the area, as this is a specific fact which may be considered in IDR. Maintain records of all communications, even if an agreement is not reached, as the record of the effort, including the details of the negotiations, is admissible in IDR.
- Finally, providers/facilities should work with legal counsel to prepare any documentation for the IDR process so that it may be protected under the attorney-client privilege, or the attorney work product doctrine. While it may not be economical to include counsel in every IDR claim, consulting with counsel for an overall strategy and process is crucial to success on individual claims.
For more information on surprise billing, please contact:
- Lisa Lucido at (248) 457-7812 or llucido@wp.hallrender.com;
- David Honig at (317) 977-1447 or dhonig@wp.hallrender.com;
- Matthew Reed at (317) 429-3609 or mreed@wp.hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer an individual’s questions that may constitute legal advice.
