Federal No Surprises Act: CMS Releases Revised Guidance For Independent Dispute Resolution

August 29, 2022

On August 22, 2022, CMS, along with the Department of Treasury and the Department of Labor, released Revised Guidance addressing the Independent Dispute Resolution (IDR) Process available under the Federal No Surprises Act (NSA).  The guidance, which was necessitated by court decisions striking down CMS’s previous IDR guidance, provides the IDR entities with greater discretion when choosing between the provider’s demand and the payor’s offer.

Specifically, the new regulations broadly permit the federal IDR entity to consider information other than the payor’s Qualifying Payment Amount (QPA).  The QPA is an amount designed to reflect the median amount the payor would have reimbursed an in-network provider for the same services that the out of network provider furnished to an insured.  Previously, the payor’s QPA was presumptively correct and it was the provider’s burden to provide “credible” information that showed the QPA was “materially different” from the appropriate out-of-network rate.  Under the new regulations, the QPA is entitled to no more weight than the other factors the IDR entity must consider, including, for example, credible information related to the acuity of the patient’s condition, the training and experience of the provider, or the market share held by the provider in the geographic region.

The new regulations also address an issue not previously addressed by regulation or litigation.  Payors on occasion “downcode” a claim during the IDR process, meaning that they do not provide a QPA for the code or codes billed, but provide a QPA for a lower reimbursement code or codes that the payor contends are the correct codes for the services provided.  The new regulations require payors who downcode to provide notice with their initial payment that the service was downcoded, an explanation of why the claim was downcoded and specifically how it was downcoded (e.g., identify the specific codes, including modifiers, that were changed, removed or added), and the payor must provide the QPA amount that would apply if the services were not downcoded.  As a result, the provider will be in a position to argue to the IDR entity that the codes they submitted to the payor were the correct codes and that the QPA for the claim as submitted should be considered, not the QPA as downcoded by the payor.

How these new regulations will impact the ultimate payment determinations reached by the IDR entities is yet to be seen but the changes made by CMS should benefit providers.

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