No More Surprise Medical Bills: Second ‘No Surprises Act’ Rule Issued, But More Remains to Be Done

Passed by Congress late last year, the Act, which covers most health care providers and payers, requires out-of-network providers and health insurers to agree on a fair price for medical care, rather than leaving patients to face unexpected out-of-pocket liability. The Biden Administration’s first interim final rule, Part I (summarized here), was issued in July 2021 and defined the “fair” price that functions as a baseline for deciding how much a doctor, facility, or hospital should be paid. The new rule, “Part II,” provides guidance on the independent dispute resolution (“IDR”) process that will be available as of January 1, 2022 to out-of-network providers and health insurers to settle disputes over payment rates, and it also addresses requirements for providers to offer a good faith estimate of expected charges for uninsured, self-pay patients.

Independent Dispute Resolution Process

Part I outlined the methodology for calculating the “qualifying payment amount” – the baseline amount that should presumably be paid by an insurer to an out-of-network provider – which it defined as a health plan’s historic median contracted rate for similar services in a particular geographic area, adjusted by the consumer price index. Part II outlines the IDR, or arbitration, process. When a reimbursement dispute arises between an out-of-network provider and insurer, the parties will have a 30-day open negotiation period to determine the payment amount for the item or service, including any cost-sharing. If negotiations fail at the end of that open negotiation period, either a provider or insurer may initiate the IDR process.

To begin the process, the requesting party must submit a specific Notice of IDR Initiation to the opposing party and specified agencies. The parties are given the opportunity to jointly select an IDR entity (a group contracted with the government to arbitrate disputes), but the government will randomly select an IDR entity for the parties if they cannot reach a decision within one week. Within 10 days of this selection, each party will submit to the IDR entity an offer for a payment amount for the item or service in dispute, along with certain information related to the offer. Under the interim rule, the IDR entity must presume that the qualifying payment amount, as defined in the earlier guidance, is the appropriate out-of-network rate. The arbitration is “baseball style,” meaning that the IDR entity cannot determine its own amount, but must select the submitted offer it deems closest to the qualifying payment amount, unless it finds credible evidence showing a material difference between the presumptively applicable qualifying payment amount and an appropriate out-of-network rate. The IDR entity must issue its decision to the parties in writing, and the insurer must then pay the provider, consistent with that decision, within 30 days.

Good Faith Estimate Requirement 

The other notable provision sets forth requirements pertaining to the provision of a “good faith estimate” of expected charges to uninsured, self-pay patients. Specifically, according to the new rule, any health care provider or health care facility subject to state licensure, upon scheduling an item or service, or upon request of an uninsured, self-pay patient, must provide a good faith estimate of expected charges within specified timeframes.

Looking Ahead: More Rule-Making on the Horizon

The 60-day public comment period for this interim final rule will close on December 6, 2021. Thousands of public comments have already been submitted, and comments received could prompt changes. It is also clear that the Administration has more work to do to contract with IDR entities and make the resolution program fully operational. It is expected that more information will be released before the provisions take effect on January 1, 2022.