Second Interim Final Rule Published Regarding IDR Process Under the No Surprise Act

In late September 2021, the Departments of Health and Human Services (“HHS”), Labor and Treasury, and the Office of Personnel Management (collectively, the “Departments”) published the second interim final rule implementing certain provisions of the No Surprises Act (“Part II of the IFR”). 

Part II of the IFR addresses critical components of the No Surprises Act (the “Act”) that were not addressed in the Departments’ first interim final rule (“Part I of the IFR”). These key aspects included the independent dispute resolution process, patient-provider dispute process, and the good faith estimate requirements for uninsured and self-pay patients. The requirements outlined in Part II of the IFR go into effect on January 1, 2022. Comments are due by December 6, 2021.

The federal IDR process is a mechanism that nonparticipating providers and health plans may utilize to determine the out-of-network (“OON”) rate for OON items or services subject to the Act’s balance billing prohibition. The federal IDR process is only available if the OON rate for these items or services is not otherwise determined based on specified state law or an All-Payer Model Agreement. 

Open negotiation between the provider and health plan begins on the day the provider sends the open negotiation notice and lasts for thirty (30) business days (the “Open Negotiation Period”). A provider may initiate the Open Negotiation Period by providing the health plan with a written “open negotiation notice” within 30 business days from the date the provider receives an initial payment or notice of denial of payment. 

Suppose the parties fail to reach an agreement during the Open Negotiation Period. In that case, either party may initiate the federal IDR process by providing, to the other party, and the Departments, through the federal IDR portal, a “Notice of IDR Initiation,” within four (4) business days from the date of the conclusion of the Open Negotiation Period. 

After receiving the Notice of IDR Initiation, the parties have three (3) business days to select a “Certified IDR Entity jointly.” If the non-initiating party does not object to the initiating’s party’s preferred Certified IDR Entity, as stated within the Notice of IDR Initiation, within three (3) business days, the preferred Certified IDR entity will be deemed the selected Certified IDR Entity. 

If the parties fail to agree on a Certified IDR Entity within three (3) business days, the Departments will randomly select a Certified IDR Entity within six (6) business days after the date of receipt of the Notice of IDR Initiation. 

Once the Certified IDR Entity is selected, each party has ten (10) business days to submit an offer. This offer should represent what that party believes is the appropriate OON rate for the item/service. The party must express the offer as both a dollar amount and the corresponding percentage of the Qualifying Payment Amount (“QPA”) represented by such a dollar amount. 

The federal IDR process is structured so that the parties are encouraged to submit reasonable offers. The Certified IDR Entity is required to select one of the two offers as the payable amount. However, Part II of the IFR requires the Certified IDR Entity first to presume that the QPA is the appropriate OON rate. 

The Certified IDR Entity must select the offer closest to the QPA unless credible information submitted by the parties clearly demonstrates that the QPA is materially different from the appropriate OON rate. The Certified IDR Entity is not required to determine whether the health plan correctly calculated the QPA.

Within thirty (30) business days after the Certified IDR Entity is selected, the Certified IDR Entity must select an Offer and issue a written decision, including detailed explanations of any additional information upon which the Certified IDR Entity relied in making its determination. The Certified IDR Entity’s decision is binding and non-appealable. The unsuccessful party is responsible for the costs of the IDR process.

If the Certified IDR Entity determines the OON rate to be greater than the initial payment issued by the health plan, the health plan has thirty (30) calendar days to issue any additional payment required to the provider. Conversely, if the OON rate is determined to be less than the initial payment amount paid by the health plan, the provider has thirty (30) calendar days to remit any overpayment to the health plan.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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