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Criteria on Contested Medical Bills Laid Out by Biden Agencies (1)

Aug. 19, 2022, 8:25 PMUpdated: Aug. 19, 2022, 9:31 PM

The Biden administration Friday issued a finalized rule stipulating that median contract rates must be the starting point for resolving payment disputes over emergency health care and when patients don’t have an opportunity to select medical providers in their insurance networks.

The final rule (RIN 1210-AB99 and 1210-AC00) clarifies what arbitrators must consider in resolving billing disputes for out-of-network emergency care, and for treatment by out-of-network providers such as anesthesiologists during procedures at facilities in a patient’s network. The rule was issued by the Labor Department, Health and Human Services Department, and Internal Revenue Service.

The payment disputes typically are between insurers and out-of-network providers that are sometimes owned by private equity firms and other investors.

Under the new rule, arbitrators, also called independent dispute resolution (IDR) entities, must consider the so-called qualifying payment amount, which is based on the median contract rate, “and then must consider all additional permissible information submitted by each party to determine which offer best reflects the appropriate out-of-network rate,” a fact sheet on the rule said.

HR Group ‘Pleased’

That pleased Mark Wilson, vice president of health and employment at the HR Policy Association, which represents chief human resources officers at about 400 of the largest U.S. companies. “I am pleased that they have instructed the IDR entities to start with the QPA, and then consider other factors that may not be included as part of the qualifying payment amount,” he said.

Hospitals and doctors wanted other factors listed in the No Surprises Act—such as the severity of the patient’s condition, the training and experience of the provider, and the market share held by providers and health insurers—to be considered equally with the median contract rate. Employer groups and insurers argued for relying primarily on the qualifying payment amount, which is likely to lead to lower reimbursements.

“The business community employers will have to wait and see what impact this is going to have on reimbursement rates and whether this will result in greater costs compared to the interim final rule or not,” Wilson said.

The rule also includes a provision requiring arbitrators to explain their payment determinations and underlying rationale in a written decision submitted to the parties and to the departments. “This includes the weight given to the QPA and any additional credible information regarding the relevant factors,” the fact sheet said.

The rule implements provisions of the No Surprises Act passed in 2020 as part of budget legislation (H.R. 133). That law, which took effect Jan. 1, 2022, bars health-care providers from billing patients for more than they would owe based on in-network rates. Such bills can run in the thousands or even tens of thousands of dollars.

An interim final rule issued in September 2021 directed arbitrators to pick the offer that is closest to the health plan’s median in-network rate barring overriding reasons. Health-care providers challenged that interpretation, and in February, a federal district court in Texas invalidated the arbitration process.

(Updates with additional reporting throughout.)

To contact the reporter on this story: Sara Hansard in Washington at shansard@bloomberglaw.com

To contact the editors responsible for this story: Alexis Kramer at akramer@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com