Health Law

Published on: August 25, 2022

HHS Issues New Rules for No Surprises Act Dispute Resolution

The Departments of Health and Human Services (HHS), Labor, and the Treasury recently issued new guidance for the dispute resolution process under the federal No Surprises Act. The Departments have made several attempts to implement regulations since the No Surprises Act was enacted in late 2020. Some have been interim rules, and some have been struck down by federal courts. This is the first final rule to implement the statute.

Under the No Surprises Act (NSA), if a healthcare provider and insurance company cannot resolve a disagreement over payment for out-of-network services through negotiation, the parties may proceed to a “baseball-style” arbitration. In this process, a third party chooses one appropriate payment from two suggestions offered by the provider and the insurer, taking into account certain considerations. Where the insurer denies or “downcodes” a claim under the No surprises Act, HHS requires the insurer to disclose the Qualified Payment Amount (QPA) for each item or service at issues. The QPA is generally the insurer’s median in-network rate and may be an approximation of what the insurer would have paid for the service if provided by an in-network provider or facility. Under the new rule, HHS has defined “downcode” to mean the alteration by a plan or issuer of the service code to another service code or the alteration, addition, or removal by a plan or issuer of a modifier, if the changed code or modifier is associated with a lower QPA than the service code or modifier billed by the provider, facility, or provider of air ambulance services. Therefore, where this occurs, insurers are required to disclose their QPA.

Further, HHS has been forced to shift course regarding the use of the QPA. Initially, HHS had required that the arbitrators that resolve these disputes defer to the QPA and give it additional weight by selecting the proposed payment amount closest to the QPA. Healthcare providers argued that this over-reliance on the insurer’s QPA was contrary to the No Surprises Act itself and that HHS skipped the notice-and-comment process when implementing it. A federal court agreed and struck down that prior version of the rule. The new rule directs arbitrators to consider the QPA and then consider all additional permissible information submitted by each party to determine which offer best reflects the appropriate out-of-network rate. The arbitrator should then select the offer that best represents the value of the item or service under dispute.

Published on: July 18, 2022

Insurer Rates Have Gone Public

by Wachler & Associates, P.C.

The reimbursement paid by health insurers for services is often concealed from healthcare providers and difficult to obtain. However, a recent federally required data release may change all of this, bringing a multitude of consequences. The Center for Medicaid and Medicare Services (CMS) recently released a plan regarding Health Plan Price Transparency that began on July 1^st, 2022. This plan will take place in three phases. Phase 1 began with a release of Machine-Readable Files containing both the In-Network Rate File (rates for all covered items and services between the plan or issuer and in-network providers) and the Allowed Amount File (allowed amounts for, and billed charges from, out-of-network providers). Phase 2, beginning in 2023, involves the release of an Internet-based price comparison tool allowing an individual to receive an estimate of their cost-sharing responsibility for a specific item or service from a specific provider or providers, for 500 items and services. Finally, beginning in 2024, CMS will release Phase 3, which expands the use of the price comparison tool to ALL items and services.

With the required data release starting July 1^st, anyone interested in healthcare prices will be able to see what insurers pay for healthcare because they will have to post every price they have negotiated with providers for their healthcare services. The only exclusions would be prices paid for prescription drugs that are not administered in hospitals or doctors’ offices. In order to enforce this, CMS will punish non-compliance by either requiring corrective actions or imposing a civil money penalty of up to $100 per day for each violation and individual that is impacted by that violation.

The data release of Phase 1 will reveal differentiation in prices and almost certainly lead to market disruption, bargaining, and rate changes. The direction of this bargaining, however, is not yet clear. If insurers realize that they have higher in-network rates than their rivals, insurers may seek to lower rates. On the other hand, providers will have more information about the rates insurers have negotiated and are paying and may be in a better position to negotiate.

Published on: June 2, 2022

Michigan Passes Legislation to Improve Prior Authorization Process

by Wachler & Associates, P.C.

For decades, both health professionals and patients alike have suffered from the consequences of prior authorization requirements. Important treatments and procedures are often put on pause for the sake of the finances or administrative inefficiencies of insurance companies. These treatment delays could even cause treatment abandonment after long periods of time. Michigan legislators sought to resolve this issue by approving a law that tightens the standards of authorization for insurance providers and accelerates the approval process, saving time, money, and even lives.

On March 23, 2022, the Michigan House of Representatives passed Senate Bill 247 by a vote of 103-2. The bill states that starting June 2023, health insurers must act on urgent prior authorization requests within 72 hours and non-urgent prior authorization requests within nine days, which will be narrowed to seven days by 2024. If the insurer fails to act within this nine- or seven-day period, the non-urgent prior authorization will be considered automatically granted. The decision on these prior authorization requirements must also now be based on peer-reviewed clinical review criteria.

In addition to these time and material restrictions, the law also requires insurers to implement an electronic process for prior authorization requests, making them more efficient. If any changes or additions arise on the existing requirements for health care providers, insurers must give notice.

Published on: March 22, 2022

HHS Withdraws No Surprises Act IDR Rule

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) has withdrawn its interim final rule requiring arbitrators in the independent dispute resolution (IDR) process under the No Surprises Act (NSA) to select the payment rate closest to the insurers’ median in-network rate (i.e., the Qualified Payment Amount or QPA, discussed further below). HHS’ move represents an official and significant victory for providers.

Under the No Surprises Act (NSA), if a provider and insurance company cannot resolve a disagreement over payment for out-of-network services through negotiation, the parties may proceed to a “baseball-style” arbitration. In this process, a third party chooses one appropriate payment from two suggestions offered by the provider and the insurer, taking into account certain considerations. In a July 2021 interim final rule, promulgated jointly by HHS, the Department of Labor (DOL), and the Treasury Department, the agencies adopted certain elements of the No Surprises Act, including the methodology for establishing the QPA. Essentially, the QPA is the medium rate the insurer would have paid for the service if provided by an in-network provider or facility. Under the September 2021 interim final rule, the agencies established a process in which the arbitrator must select the proposed payment amount closest to the QPA, unless certain conditions are met. In other words, the rule creates a rebuttable presumption that the amount closest to the QPA is the proper amount. Healthcare providers generally viewed this rebuttable presumption unfavorably because it allegedly conflicts with the NSA, which established specific circumstances for consideration in addition to the QPA.

Healthcare providers proceeded to challenge the rule and ultimately on February 23, 2022, a federal judge in Texas agreed with those providers in the case of Texas Medical Association v. US Department of Health and Human Services. The case held that the September 2021 interim final rule does in fact conflict with the plain language of the NSA and that the agencies improperly bypassed notice and comment rulemaking when promulgating the rule. HHS announced withdrawal of the interim final rule in light of the federal court’s decision. While the court held that the NSA requires the arbitrator to consider all of the specified factors when determining the reimbursement rate, without giving weigh to any one factor, HHS has not yet adopted this interpretation. HHS announced that it will be re-issuing guidance, but has not yet provided a specific date.

Published on: March 8, 2022

HHS Delays SUNSET Rule …Again

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) has again delayed implementation of a rule that would cause it to review many of its regulations and would eliminate regulations that HHS fails to review. The rule had the potential to remove many non-statutory restrictions that HHS has placed on the healthcare industry. This delay likely presages the ultimate repeal of the rule.

The SUNSET Rule, which was finalized in the closing days of the Trump Administration, requires HHS to assess its current rules. First, HHS would determine whether a rule has a significant economic impact on a large number of small entities. If it does, then HHS would consider the complaints against the rule, the original asserted need for the rule, the complexity of the rule, and whether the rule is duplicative of or in conflict with any other rules. HHS would ultimately determine whether the rule is still needed, should be reworked, or should be withdrawn. Any rule that is not reviewed by HHS every ten years would expire. Any rule that was more than ten years old at the time the SUNSET Rule came into effect would expire unless it was reviewed within five years.

Under the Biden Administration, HHS first delayed the implementation of the SUNSET. Then, in late 2021, HHS proposed to repeal the SUNSET Rule in its entirety. HHS’ rational for the proposed repeal was that it did not have sufficient resources to review all of its regulations within the required timeframes and this would cause some regulations to expire before HHS could complete reviews. While this position may indicate that HHS has engaged in excessive rule-making, HHS’ most recent proposal evinces a likely intent to repeal the SUNSET Rule in its entirety. In March 2022, HHS again delayed the implementation of the SUNSET Rule, including that it was still considering public comments to its proposal to repeal the Rule.

Published on: December 13, 2021

Primer on Provider Requirements under the No Surprises Act (Part II)

by Wachler & Associates, P.C.

This is the second installment in a two-part series regarding the No Surprises Act, which establishes new requirements that will apply to certain healthcare providers and facilities, and providers of air ambulance services. These requirements generally apply to items and services provided to individuals enrolled in group health plans, group or individual health insurance coverage, and Federal Employees Health Benefit plans. Please see our previous post for more information on these requirements.

Below is an overview of the remaining provider and facility requirements that will become effective on January 1, 2022:

No balance billing for air ambulance services by non-participating air ambulance providers: Providers of air ambulance services will generally be prohibited from billing or holding liable beneficiaries, enrollees, or participants in group health plans or group or individual health insurance coverage who received covered air ambulance services from a non-participating air ambulance provider for a payment amount greater than the in-network cost-sharing requirement for such services.

Published on: December 9, 2021

Primer on Provider Requirements under the No Surprises Act (Part I)

by Wachler & Associates, P.C.

Effective January 1, 2022 under the No Surprises Act, healthcare providers, facilities, and providers of air ambulance services will be subject to new requirements that generally apply to items and services provided to individuals enrolled in group health plans, group or individual health insurance coverage, and Federal Employees Health Benefit plans. The good faith estimate requirement and the requirements related to the patient-provider dispute resolution process also generally apply to the uninsured. These requirements generally do not apply to beneficiaries or enrollees in federal programs such as Medicare, Medicaid, Indian Health Services, Veterans Affairs Health Care, or TRICARE.

Below is an overview of some of the provider and facility requirements that will become effective on January 1, 2022. Stay tuned next week for further information.

No balance billing for out-of-network emergency services: Non-participating providers and emergency facilities will generally be forbidden from billing or holding liable beneficiaries, enrollees, or participants in group health plans or group or individual health insurance coverage who receive emergency services at a hospital or an independent freestanding emergency department for a payment amount greater than the in-network cost-sharing requirement for such services. There are exceptions for certain post-stabilization services if the notice and consent requirements are satisfied. However, the exception is not available for services furnished as a result of unforeseen, urgent medical needs that arise at the time an item or service is furnished, regardless of whether the notice and consent criteria are satisfied and regardless of whether they are emergency or non-emergency services.

Published on: November 1, 2021

HHS Proposes to Repeal Rules that Limit Its Authority

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) recently proposed to repeal two rules implemented under the Trump Administration to moderate the power of the agency. The rules HHS seeks to repeal are the Good Guidance Rule and the Civil Enforcement Rule. Public comments on the proposal are due by November 19, 2021.

The Good Guidance Rule was implemented to make guidance documents easier for the public to access and provide input on, and created extra screening steps before HHS may implement guidance. The major provisions of the Good Guidance Rule are: (1) a requirement that each guidance document issued by HHS generally include certain information, including a statement that the guidance does not have the force and effect of law and is not binding unless specifically incorporated into a contract; (2) additional procedures for ‘‘significant guidance documents’’ (defined as those with an estimated impact of greater than $100 million), including a period of notice and comment, a requirement that the Secretary of HHS personally approve new guidance, and a requirement for submission to the Office of Information and Regulatory Affairs (OIRA) for review; (3) creation of a repository for all guidance documents along with a provision stating that guidance documents not in the repository are not effective and would be considered rescinded; and (4) procedures for the public to petition the Department to withdraw or modify any particular guidance document.

The Civil Enforcement Rule was implemented to provide greater notice to providers subject to civil enforcement actions and greater transparency of HHS’s civil enforcement actions. Under the Civil Enforcement Rule, before taking civil enforcement actions, HHS must provide the targeted party with an initial notice of the agency’s legal and factual determinations, an opportunity to object or respond, and the Department’s written response to the affected party’s objections.

Published on: October 5, 2021

CMS Proposes Repeal of Breakthrough Devices Medicare Coverage Rule

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (CMS) recently announced a proposal to repeal the Medicare Coverage of Innovative Technology (MCIT) rule that has been delayed several times. The latest news in the MCIT saga comes from a CMS announcement expressing concerns with the final rule, specifically that it will require more time for adequate implementation.

The final rule was implemented to reduce the time it takes for FDA-approved medical technology to become covered under Medicare. The MCIT would reduce these wait times by granting Medicare coverage to breakthrough devices immediately after receiving FDA approval. The FDA designates medical devices as “breakthrough devices” when they are shown to be more effective at diagnosing or treating serious diseases than the currently available devices. This designation allows these devices to have reduced development, assessment, and review timelines.

However, CMS announced reservations about the final rule and has proposed changes. CMS’s primary concern is that the final MCIT is not acting in Medicare recipients’ best interest because it could provide coverage for breakthrough devices that are not reasonable and necessary to treat Medicare recipients’ diseases or conditions. This concern stems from the current guidelines for clinical trials for medical devices. Specifically, the FDA does not require Medicare recipients to be included in clinical trials for medical devices. Since Medicare recipients generally have more comorbidities than the general population, the clinical trials may not accurately reflect Medicare patient outcomes. CMS has also expressed concern that the final rule takes away its tools to deny coverage when it becomes apparent that a particular device can be harmful to the Medicare population. If the rule goes into effect, and a device approved under it is later found to be harmful to Medicare recipients, CMS would be limited in the actions it could take to withdraw or modify coverage. Lastly, CMS believes there could be confusion and disruption stemming from devices receiving approval without a clear path for appropriate coding and payment.

Published on: August 12, 2021

Court Ruling Shows Limits on FDA Authority to Regulate Medical Devices

by Wachler & Associates, P.C.

On July 6, 2021, the U.S. Court of Appeals for the D.C. Circuit issued a 2-1 opinion in Judge Rotenberg Education Center v. FDA that overturned the Food and Drug Administration’s (FDA) ban on the use of electric shock medical devices for particular purposes because the FDA is prohibited from regulating the practice of medicine. The Judge Rotenberg Education Center (Center) is a facility in Massachusetts that treats patients with severe behavioral conditions and intellectual disabilities. The Center manufactures its own electric stimulation device, known as a graduated electronic decelerator, and is the only facility in the country that uses electric shock therapy to treat individuals who severely self-injure or are aggressive. The Center admits patients that other facilities could not successfully treat, and is seen by some as a last resort for patients and their families.

The FDA first proposed to ban electric stimulation devices used to treat self-injurious or aggressive behaviors in April 2016, and a final rule banning such devices became effective in March 2020. Electrical stimulation devices are legally authorized for use in other medical settings, for example to prevent muscle atrophy and reduce muscle spasms in physical therapy patients. Thus, the key question that the Court addressed was whether the FDA has legal authority to ban an otherwise legal device from a particular use. The Court concluded that the FDA does not have such authority because a “use-specific” ban like the one at issue “interferes with a practitioner’s authority by restricting the available range of devices through regulatory action.” The Court further opined that “the FDA has no authority to choose what medical devices a practitioner should prescribe or administer or for which conditions.”

Section 360f of the Federal Food, Drug, and Cosmetic Act (Act) grants the FDA authority to ban medical devices intended for human use when such devices present “substantial deception or an unreasonable and substantial risk of illness or injury.” Section 396 of the Act prohibits the FDA from regulating the practice of medicine, specifically forbidding the agency from taking actions that “interfere with the authority of a health care practitioner to prescribe or administer any legally marketed device to a patient for any condition or disease within a legitimate health care practitioner-patient relationship.” Since electric shock stimulation devices are legally used in other settings, the FDA’s attempted use-specific ban does not render such devices as not legally marketed. As the Court stated, “any device that the FDA attempts to ban for one but not all uses will, accordingly, still be legally marketed.” Thus, the FDA only has the more comprehensive power to completely ban a medical device, but not the intermediate power to tailor a ban to only certain uses. The opinion underlines the limits of the FDA’s authority to regulate medical devices.