New Final Rules under the No Surprises Act: Four Takeaways

Posted by on September 14, 2022
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On August 19, 2022, the United States Departments of Health and Human Services, Labor and Treasury released final rules (“Final Rules”) revising certain provisions of their previously issued interim final rules regarding the No Surprises Act (“NSA”).

The revisions reflect some comments received on the interim final rules under the NSA that the department published in 2021, but they were made necessary because two separate federal trial courts vacated certain provisions of the department’s interim final rules regarding the use of the Qualified Payment Amount (“QPA”) in the Independent Dispute Resolution IDR process. Here are the four things you need to know about the Final Rules:

  • The QPA, the plan’s median contract rate for a particular item or service, is a factor that the certified IDR entity must take into account in determining the payment that best represents the value of the item or service in dispute, along with the additional information, if any, submitted by the parties that is permissible under the NSA rules (“Additional Information”). This is a change to the interim final rules that were necessitated by the litigation challenging those rules. The vacated interim final rules established a “rebuttable presumption” that the QPA best represents the value of the item or service in dispute.
  • The Final Rules do not require the certified IDR entity to select the offer closest to the QPA. Rather, they require certified IDR entities to select the offer that best represents the value of the item or service under dispute after considering the QPA and all Additional Information. This is another change to the interim final rules that were necessitated by the litigation challenging those rules.
  • The Departments were clearly concerned that the certified IDR entities’ consideration of   Additional Information might lead to “double counting” information that is already factored into the establishment of the QPA and provided several examples of how double counting can be avoided while still considering non-duplicative Additional Information.
  • To increase transparency as to the plans’ initial payment determinations and the certified IDR entities’ ultimate payment determinations, the Final Rule added the following requirements: 
    • A plan must provide a statement that the service code or modifier billed by the provider was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and which modifiers were altered, added, or removed if any; and the amount that would have been the QPA had the service code or modifier not been downcoded.
    • A certified IDR entity’s written decision must include an explanation of its determination, including what information the certified IDR entity determined demonstrated that the offer selected as the out-of-network rate is the offer that best represents the value of the item or service in dispute, including the weight given to the QPA and any Additional Information.  

The Final Rules as well as the litigation that necessitated them, are generally seen as favorable to providers, but it remains to be seen whether they will have a material effect on what providers are paid by plans for out-of-network services that are subject to the NSA.     

Office of Civil Rights Releases Patient Privacy Guidance in the Wake of Dobbs Decision

Posted by on July 01, 2022
OCR / No Comments

Patient privacy concerns are at an all-time high following the Supreme Court’s ruling in Dobbs v. Jackson Women’s Health Organization. Following their statements affirming that abortion constitutes basic and essential health to which every woman should be entitled issued by both Xavier Becerra, Secretary of the United States Department of Health and Human Services (“HHS”) and Chiquita Brooks-LaSure, Administrator of the Centers for Medicare and Medicaid Services, the Office of Civil Rights of HHS (“OCR”) released new guidance on June 29th clarifying scenarios when an individual’s protected health information (“PHI”) may, but does not have to be, released. One such example is disclosures required for law enforcement purposes. OCR explains that the Privacy Rule permits, but does not require covered entities to disclose PHI about an individual for law enforcement purposes “pursuant to process and as otherwise required by law”, under certain conditions. For example, “a covered entity may respond to a law enforcement request made through such legal processes as a court order or court-ordered warrant, or a subpoena or summons, by disclosing only the requested PHI, provided that all of the conditions specified in the Privacy Rule for permissible law enforcement disclosures are met.” It states further:

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CMS Releases Second Set of FAQs Regarding Good Faith Estimates to Uninsured and Self-pay Patients Under “No Surprises Act”

Posted by on April 06, 2022
CMS / No Comments

CMS continued to roll out guidance regarding the No Surprises Act. The latest guidance is the second set of FAQs regarding the Good Faith Estimate Requirement for uninsured and self-pay patients was issued on April 5, 2022. The FAQs address six questions regarding the requirement and can be found here.

Federal District Court Partially Guts Regulations Affecting the No Surprises Act Arbitration Process

Posted by on March 30, 2022
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On February 23, 2022, the U.S. District Court for the Eastern District of Texas gutted portions of the interim final rule affecting the independent dispute resolution (“IDR”) process of the No Surprises Act (the “Act”). Tex. Med. Ass’n v. U.S. Dep’t of Health & Human Servs., No. 6:21-cv-425-JDK, 2022 WL 542879, at *15 (E.D. Tex. Feb. 23, 2022). In particular, the Court found that the rule did not square with the plain language of the Act, which mandates that the IDR process equally consider a number of factors in deciding payments for out-of-network (“OON”) services. Id. at *7–9. Instead, the rule substantially favored one factor over the others. In further rejecting the IDR-related portions of the rule, the Court found that the government had failed to provide an opportunity for notice and comment in advance of publishing the interim final rule. Id. at *10–14. As a result, the Court granted the plaintiffs’ motion for summary judgment, denied the defendants’ cross-motion for summary judgment, and severed portions of the rule. Id. at *15.

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Fourth Circuit Adopts Safeco Scienter Standard to Prove False Claims Act Violation in Legal Falsity Cases

Posted by on March 09, 2022
False Claims Act / No Comments

A few weeks ago, the U.S. Court of Appeals for the Fourth Circuit answered a critical inquiry in the False Claims Act (“FCA”) context: does a defendant violate the FCA when its reading of the regulation is objectively reasonable and there is no government guidance discouraging or rejecting that interpretation? Answering in the negative in a 2-1 decision, the court affirmed the dismissal of the case and injected into FCA cases the requisite state of mind (i.e., scienter) for violating a regulation as set out in Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 127 S. Ct. 2201 (2007) by the U.S. Supreme Court. United States ex rel. Sheldon v. Allergan Sales, LLC, 24 F.4th 340, 347–48 (4th Cir. 2022). In doing so, the Fourth Circuit joined the ranks of five other circuit courts that had considered the issue. Disturbed by the exceedingly complex Medicaid rules at issue that were open to varying interpretations and the constitutional implications of “the veritable thicket of Medicaid regulations, “labyrinthine reporting requirements,” and “the most completely impenetrable texts within human experience,” the Fourth Circuit placed the onus on the government “to indicate a way through the maze.” Id. at 344, 350, 352 (internal quotations and citations omitted).

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Five Things Providers Need To Know About The New Interim Final Rule Under The “No Surprises” Act

Posted by on October 05, 2021
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On Thursday, September 30, 2021, The United States departments of Health and Human Services (“HHS”), Labor and Treasury released an interim final rule (“Rule”) that completes most of the regulatory framework under the federal No Surprises Act (“Act”). The Act largely bars balance billing of patients who receive emergency services or hospital-based provider services (at an in-network facility) on an out-of-network basis. This is the second part of the agencies’ rulemaking under the Act. The first part was released in July 2021. This second part deals primarily with the independent dispute resolution (“IDR”) process, which will determine the “appropriate out of network rate” to be paid to the provider by the health plan for a particular emergency or hospital-based provider service and a portion of the provider price transparency requirements under the Act.   

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US and Tyler Texas Chambers of Commerce Sue Feds to Block Portions of the Health Plan Transparency Rule

Posted by on August 12, 2021
HHS / No Comments

Two chambers of commerce, the Chamber of Commerce the United States of America and the Tyler (TX) Area Chamber of Commerce, filed a lawsuit on August 10, 2021, in the US District Court for the Eastern District of Texas against the United States departments of Health and Human Services, Labor and Treasury to block the implementation of two provisions contained in the federal regulations entitled Transparency in Coverage (“Rule”). 

The first challenged provision requires health plans to post on a website internal pricing data, including allowed amounts, in-network rates, and the negotiated rates for all services and the “historical net price” of prescription drugs, in “machine-readable” (searchable) files. The second provision being challenged requires the inclusion of the “historical net price” of prescription drugs in the machine-readable files. The provisions are set to go into effect for “plan years” beginning after January 11, 2022. Another major provision of the Rule, the one requiring insurers to provide “cost-sharing information” to individuals upon request via a website or in paper form, is not being challenged in the lawsuit.    

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HHS, Treasury and Labor Release First Set of Surprise Billing Rules

Posted by and on July 02, 2021
HHS / No Comments

The United States Departments of Health and Human Services, Treasury and Labor released interim final rules (“Rules”) regarding the “No Surprises Act” (“Act”) yesterday. The Rules are effective beginning on January 1, 2022. They cover the requirements for the billing and payment of emergency and air ambulance services by non-participating providers and non-emergency services performed by non-participating providers at participating health care facilities.  The Rules do not detail the independent dispute process between plans and providers (“IDR”), transparency requirements, or price comparison tools that are outlined in the Act. The agencies intend to issue rules covering those aspects of the Act later this year.

While we, along with the plans, providers and patient advocacy groups sift through over 400 pages of preamble and regulations in the coming days and weeks, there are a few items worth noting initially:

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Northern District of California Grants Preliminary Injunction Against Most Favored Nation Rule

Posted by on December 29, 2020
Medicaid, Medicare / No Comments

On December 28, 2020, the District Court for the Northern District of California granted a motion for a preliminary injunction enjoining the Centers for Medicare and Medicaid Services from implementing the Most Favored Nation Rule (the “Rule”, summarized in our December 23 post) until the notice and comment procedures required by the federal Administrative Procedures Act (“APA”) are completed. The opinion, penned by Judge Chhabria, largely adopts the reasoning of the District Court for the District of Maryland, which granted a temporary restraining order against the implementation of the Rule last week. Judge Chhabria notes that the plaintiffs are “virtually certain” to prevail on their claim that the government violated the APA, and concludes that vacating the Rule in its entirety pending completion of the notice and comment period is the only appropriate path, as enjoining its enforcement as to the plaintiffs only runs contrary to the underlying purposes of the Rule itself.  We will continue to monitor pending suits and other developments related to the Rule’s implementation.

District Court grants TRO on Most Favored Nation Rule

Posted by on December 23, 2020
CMS / No Comments

On December 23, 2020, The District Court for the District of Maryland granted a temporary restraining order temporarily ceasing the implementation of the Centers for Medicare and Medicaid Services’ (“CMS”) Most Favored Nations Rule (the “Rule”) for fourteen (14) days. The Rule, published on November 27, seeks to lower the amount paid for 50 high-cost Medicare Part B drugs to the lowest price that drug manufacturers receive in similar countries. The Rule was set to take effect on January 1, 2021. Several suits have been filed challenging the Rule’s validity and CMS’ authority in issuing the Rule, particularly since the Rule was issued without the usual notice and comment procedures. In granting the TRO, the Court found that the plaintiffs demonstrated a likelihood of success on the merits of their claim under the Administrative Procedures Act, which requires an agency to publish a general notice of proposed rulemaking in the Federal Register and allow stakeholders to comment. We will continue to monitor developments on this case and the other pending cases closely.

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