On January 14, 2025, the Departments of Labor, Treasury, and Health and Human Services (collectively, the “Departments”) issued new guidance (i.e., FAQ 69) on two important provisions within the No Surprises Act, which was signed into law on December 27, 2020. This first part offers insight into how plans and providers should calculate the “Qualifying Payment Amount” (“QPA”) when faced with out-of-network emergency medical and air ambulance bills.
Calculating the Qualifying Payment Amount (“QPA”)
The No Surprises Act requires plans to cover out-of-network emergency and air ambulances services at its in-network rate. The out-of-network provider and plan are supposed to agree on the applicable rate and billable charges through open negotiation. However, the regulations also established an Independent Dispute Resolution (“IDR”) process for resolving disagreements. Commonly referred to as “baseball-style” arbitration, the arbitrator must choose between the two parties’ payment offers after considering a list of statutory factors, including the QPA. The regulations define the “QPA” as an insurer’s median in-network rate as of January 31, 2019 for a particular item or service rendered by a provider in the same or similar specialty and geographic region. (adjusted for inflation).
In August of 2023, a Texas District Court vacated certain provisions within the final regulations, including rules related to the methodology used to calculate the QPA. That ruling was partially overturned in October 2024 at the Fifth Circuit Court of Appeals. With these two rulings in mind, the Departments outlined the following in the 2025 FAQs:
- Plans can use either the 2021 interim rules or the 2023 FAQ method for calculating the QPA until August 1, 2025. The key difference between the two is how the median rate is adjusted for inflation.
- Plans can exclude from the QPA calculation single case agreements along with bonuses, incentives, and risk-sharing payments.
- Plans must issue an initial payment or notice of denial within 30 days after receiving the original claim.
- The provider must initiate an open negotiation process within 30 days after receiving either the initial payment or notice of denial. This negotiation process will last for 30 days.
- If the parties cannot reach an agreement during the 30-day negotiation period, either party may initiate IDR.
Takeaways
Plans should ensure that they have access to the 2019 median in-network rates for covered benefits. While the Departments indicated that “good faith” and “reasonable” application of the 2021 or 2023 rules to calculate the QPA is acceptable, the timeframe for responding to provider challenges (i.e., 30 days) is tight. Having the information readily accessible makes this process much easier.