Requirements Related to Surprise Billing, 52618-52655 [2022-18202]

Download as PDF 52618 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations FOR FURTHER INFORMATION CONTACT: DEPARTMENT OF THE TREASURY Shira McKinlay, Internal Revenue Service, Department of the Treasury, at 202–317–5500; Elizabeth Schumacher or David Sydlik, Employee Benefits Security Administration, Department of Labor, at 202–693–8335; Deborah Bryant, Centers for Medicare & Medicaid Services, Department of Health and Human Services, at 301– 492–4293; Lindsey Murtagh, Centers for Medicare & Medicaid Services, Department of Health and Human Services, at 301–492–4106. Internal Revenue Service 26 CFR Part 54 [TD 9965] RIN 1545–BQ01 and 1545–BQ02 DEPARTMENT OF LABOR Employee Benefits Security Administration 29 CFR Part 2590 RIN 1210–AB99 and 1210–AC00 DEPARTMENT OF HEALTH AND HUMAN SERVICES 45 CFR Part 149 [CMS–9909–F and CMS–9908–F] RIN 0938–AU62 and RIN 0938–AU63 Requirements Related to Surprise Billing Internal Revenue Service, Department of the Treasury; Employee Benefits Security Administration, Department of Labor; Centers for Medicare & Medicaid Services, Department of Health and Human Services. ACTION: Final rules. AGENCY: This document includes final rules under the No Surprises Act, which was enacted as part of the Consolidated Appropriations Act, 2021 (CAA). The document finalizes certain disclosure requirements relating to information that group health plans, and health insurance issuers offering group or individual health insurance coverage, must share about the qualifying payment amount (QPA) under the interim final rules issued in July 2021, titled Requirements Related to Surprise Billing; Part I (July 2021 interim final rules). Additionally, this document finalizes select provisions under the October 2021 interim final rules, titled Requirements Related to Surprise Billing; Part II (October 2021 interim final rules), to address certain requirements related to consideration of information when a certified independent dispute resolution (IDR) entity makes a payment determination under the Federal IDR process. DATES: Effective date: These final rules are effective on October 25, 2022. Applicability date: See Section III of the SUPPLEMENTARY INFORMATION section for information on the applicability dates. lotter on DSK11XQN23PROD with RULES2 SUMMARY: VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 Customer Service Information Individuals interested in obtaining information from the Department of Labor (DOL) concerning employmentbased health coverage laws may call the Employee Benefits Security Administration (EBSA) Toll-Free Hotline at 1–866–444–EBSA (3272) or visit the DOL’s website (www.dol.gov/ agencies/ebsa). In addition, information from the Department of Health and Human Services (HHS) on private health insurance coverage, coverage provided by non-Federal governmental group health plans, and requirements that apply to health care providers, health care facilities, and providers of air ambulance services can be found on the Centers for Medicare & Medicaid Services (CMS) website (www.cms.gov/ cciio), and information on surprise medical bills can be found at www.cms.gov/nosurprises. SUPPLEMENTARY INFORMATION: I. Background A. Preventing Surprise Medical Bills Under the CAA On December 27, 2020, the CAA, which includes the No Surprises Act, was enacted.1 The No Surprises Act provides Federal protections against surprise billing by limiting out-ofnetwork cost sharing and prohibiting ‘‘balance billing,’’ in many of the circumstances in which surprise bills arise most frequently. Balance billing refers to the practice of out-of-network providers billing patients for the difference between: (1) the provider’s billed charges, and (2) the amount collected from the plan or issuer plus the amount collected from the patient in the form of cost sharing (such as a copayment, coinsurance, or amounts paid toward a deductible). In particular, the No Surprises Act added new provisions applicable to group health plans and health insurance issuers offering group or individual health 1 Public PO 00000 Law 116–260 (December 27, 2020). Frm 00002 Fmt 4701 Sfmt 4700 insurance coverage to Subchapter B of chapter 100 of the Internal Revenue Code (Code), Part 7 of the Employee Retirement Income Security Act (ERISA), and Part D of title XXVII of the Public Health Service Act (PHS Act). Section 102 of the No Surprises Act added section 9816 of the Code, section 716 of ERISA, and section 2799A–1 of the PHS Act,2 which contain limitations on cost sharing and requirements regarding the timing of initial payments and notices of denial of payment for emergency services furnished by nonparticipating providers and emergency facilities, and for nonemergency services furnished by nonparticipating providers with respect to patient visits to participating health care facilities, defined as hospitals, hospital outpatient departments, critical access hospitals, and ambulatory surgical centers. Section 103 of the No Surprises Act amended section 9816 of the Code, section 716 of ERISA, and section 2799A–1 of the PHS Act to establish a Federal IDR process that allows plans and issuers and nonparticipating providers and facilities to resolve disputes regarding out-ofnetwork rates. Section 105 of the No Surprises Act added section 9817 of the Code, section 717 of ERISA, and section 2799A–2 of the PHS Act. These sections contain limitations on cost sharing and requirements for the timing of initial payments and notices of denial of payment for air ambulance services furnished by nonparticipating providers of air ambulance services, and allow plans and issuers and nonparticipating providers of air ambulance services to access the Federal IDR process described in section 9816 of the Code, section 716 of ERISA, and section 2799A–1 of the PHS Act. The No Surprises Act provisions that apply to health care providers, facilities, and providers of air ambulance services, such as prohibitions on balance billing for certain items and services and requirements related to disclosures about balance billing protections, were added to title XXVII of the PHS Act in a new part E. The Departments of the Treasury, Labor, and Health and Human Services 2 Section 102(d)(1) of the No Surprises Act amended the Federal Employees Health Benefits Act, 5 U.S.C. 8901 et seq., by adding a new subsection (p) to 5 U.S.C. 8902. Under this new provision, each Federal Employees Health Benefits (FEHB) Program contract must require a carrier to comply with requirements described in sections 9816 and 9817 of the Code, sections 716 and 717 of ERISA, and sections 2799A–1 and 2799A–2 of the PHS Act (as applicable) in the same manner as these provisions apply with respect to a group health plan or health insurance issuer offering group or individual health insurance coverage. E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 (the Departments) previously issued interim final rules implementing provisions of sections 9816 and 9817 of the Code, sections 716 and 717 of ERISA, and sections 2799A–1 and 2799A–2 of the PHS Act to protect consumers from surprise medical bills for emergency services, non-emergency services furnished by nonparticipating providers with respect to patient visits to participating facilities in certain circumstances, and air ambulance services furnished by nonparticipating providers of air ambulance services.3 The interim final rules also implement provisions requiring the Departments to create a Federal IDR process to determine payment amounts when there is a dispute between payers and providers or facilities over the out-ofnetwork rate due for emergency services, non-emergency services furnished by nonparticipating providers with respect to patient visits to participating facilities in certain circumstances, and air ambulance services furnished by nonparticipating providers of air ambulance services.4 To implement these provisions, the Departments published in the Federal Register the July 2021 interim final rules on July 13, 2021 (86 FR 36872), and the October 2021 interim final rules on October 7, 2021 (86 FR 55980).5 The July 2021 interim final rules and October 2021 interim final rules generally apply to group health plans and health insurance issuers offering group or individual health insurance coverage (including grandfathered health plans) with respect to plan years (in the individual market, policy years) beginning on or after January 1, 2022; and to health care providers and facilities, and providers of air ambulance services with respect to items and services provided during plan years (in the individual market, policy years) beginning on or after January 1, 2022.6 3 86 FR 36872 (July 13, 2021) and 86 FR 55980 (October 7, 2021). 4 The Federal IDR process does not apply if an All-Payer Model Agreement under section 1115A of the Social Security Act or a specified State law applies. 5 The interim final rules also include interim final regulations under 5 U.S.C. 8902(p) issued by the Office of Personnel Management that specify how certain provisions of the No Surprises Act apply to health benefit plans offered by carriers under the Federal Employees Health Benefits Act. 6 86 FR 36872 (July 13, 2021) and 86 FR 55980 (October 7, 2021). These provisions apply to carriers in the Federal Employees Health Benefits Program with respect to contract years beginning on or after January 1, 2022. The disclosure requirements at 45 CFR 149.430 regarding patient protections against balance billing are applicable as of January 1, 2022. VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 B. July 2021 Interim Final Rules The July 2021 interim final rules implement sections 9816(a)–(b) and 9817(a) of the Code, sections 716(a)–(b) and 717(a) of ERISA, and sections 2799A–1(a)–(b), 2799A–2(a), 2799A–7, 2799B–1, 2799B–2, 2799B–3, and 2799B–5 of the PHS Act. Among other requirements, the July 2021 interim final rules generally prohibit balance billing for items and services subject to the requirements in those interim final rules.7 The July 2021 interim final rules also specify that consumer cost-sharing amounts for emergency services furnished by nonparticipating providers or facilities, and for non-emergency services furnished by nonparticipating providers with respect to patient visits to certain participating facilities, must be calculated based on the ‘‘recognized amount,’’ which is defined as one of the following amounts: (1) an amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act; (2) if there is no such applicable All-Payer Model Agreement, an amount determined by a specified State law; or (3) if there is no such applicable All-Payer Model Agreement or specified State law, the lesser of the billed charge or the QPA. The July 2021 interim final rules establish the methodology for calculating the QPA, which in most circumstances will be the plan’s or issuer’s median contracted rate that was in effect for the particular item or service on January 31, 2019, increased for inflation. Cost-sharing amounts for air ambulance services provided by nonparticipating providers of air ambulance services must be the same as the cost-sharing amounts that would apply if the services were provided by a participating provider of air ambulance services, and these costsharing amounts must be calculated using the lesser of the billed charge or the QPA. The No Surprises Act directs the Departments to specify the information that a plan or issuer must share with a nonparticipating provider, nonparticipating emergency facility, or nonparticipating provider of air ambulance services, as applicable, after determining the QPA. Therefore, 26 CFR 54.9816–6T(d), 29 CFR 2590.716–6(d), and 45 CFR 149.140(d) require that plans and issuers make certain disclosures about the QPA with each initial payment or notice of denial of payment, and that plans and issuers provide certain additional information 7 45 PO 00000 CFR 149.410(a), 149.420(a), and 149.440(a). Frm 00003 Fmt 4701 Sfmt 4700 52619 upon request of the provider, facility, or provider of air ambulance services. This information must be provided in writing, either on paper or electronically, to a nonparticipating provider, facility, or provider of air ambulance services, as applicable, when the QPA serves as the recognized amount. With an initial payment or notice of denial of payment, a plan or issuer must provide the QPA for each item or service involved as well as a statement certifying that, based on the determination of the plan or issuer: (1) the QPA applies for purposes of the recognized amount (or, in the case of air ambulance services, for calculating the participant’s, beneficiary’s, or enrollee’s cost sharing), and (2) each QPA shared with the provider, facility, or provider of air ambulance services was determined in compliance with the methodology outlined in the July 2021 interim final rules. A plan or issuer is also required to provide a statement that, if the provider, facility, or provider of air ambulance services wishes to initiate a 30-day open negotiation period for purposes of determining the amount of total payment, the provider, facility, or provider of air ambulance services may contact the appropriate person or office to initiate open negotiation, and that if the 30-day open negotiation period does not result in an agreement on the payment amount, the provider, facility, or provider of air ambulance services typically may initiate the Federal IDR process within 4 days after the end of the open negotiation period. The Departments note that these time frames are measured in business days, and plans and issuers should reflect this in the statement. The plan or issuer must provide contact information, including a telephone number and email address, for the appropriate office or person for the provider, facility, or provider of air ambulance services to contact to initiate open negotiation for purposes of determining an amount of payment (with the amount including cost sharing) for the item or service. It has come to the Departments’ attention that some plans and issuers are requiring nonparticipating providers, nonparticipating emergency facilities, and nonparticipating providers of air ambulance services to utilize plan- or issuer-owned web systems to initiate an open negotiation period. As discussed earlier, the July 2021 interim final rules require plans and issuers to provide a telephone number and email address for providers, facilities, and providers of air ambulance services to initiate the open E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 52620 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations negotiation period. When a party to a payment dispute chooses to initiate the open negotiation period, the October 2021 interim final rules specify that the party must use the standard notice of initiation of open negotiation issued by the Departments and may satisfy the requirement to provide notice to the opposing party by sending the notice electronically if the party sending the notice has a good faith belief that the electronic method is readily accessible to the other party and the notice is also provided free of charge in paper form upon request.8 For example, it is reasonable for a provider, facility, or provider of air ambulance services to have a good faith belief that an email address provided by a plan or issuer with the initial payment or notice of denial of payment is readily accessible to the plan or issuer. Thus, if a provider, facility, or provider of air ambulance services sends the standard notice of initiation of open negotiation to the email address identified by the plan or issuer in the notice of denial of payment or initial payment, that transmission would satisfy the regulatory requirement to provide notice to the opposing party (so long as the provider, facility, or provider of air ambulance services also sends the notice free of charge in paper form upon request).9 Although plans and issuers may encourage the use of an online portal for nonparticipating providers, facilities, and providers of air ambulance services to submit the information necessary to initiate the open negotiation period, or may seek additional information to inform good faith open negotiations, such as through use of a supplemental open negotiation form, the July 2021 interim final rules require plans and issuers to provide a telephone number and email address for providers, facilities, and providers of air ambulance services to initiate the open negotiation period, and the October 2021 interim final rules permit a party to initiate the open negotiation period by sending the standard notice of initiation electronically to the email address identified in the notice of denial of payment or initial payment. Accordingly, a plan or issuer cannot refuse to accept the standard notice of initiation of open negotiation from a provider, facility, or provider of air ambulance services because the provider or facility did not utilize the plan’s or issuer’s online portal when the standard notice of initiation of open 8 26 CFR 54.9816–8T(b)(2)(iii)(B), 29 CFR 2590.716–8(b)(2)(iii)(B), and 45 CFR 149.510(b)(2)(iii)(B). 9 86 FR 55980, 55990 (Oct. 7, 2021). VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 negotiation is provided in a manner consistent with the requirements of the July 2021 and October 2021 interim final rules. In addition, upon request by the provider, facility, or provider of air ambulance services, a plan or issuer must provide, in a timely manner, information about whether the QPA includes contracted rates that were not set on a fee-for-service basis for the specific items and services and whether the QPA for those items and services was determined using underlying fee schedule rates or a derived amount.10 If an eligible database was used to determine the QPA, the plan or issuer must provide information to identify which database was used. Similarly, if a related service code was used to determine the QPA for an item or service billed under a new service code, the plan or issuer must provide information to identify which related service code was used. Finally, upon request by the provider, facility, or provider of air ambulance services, the plan or issuer must provide a statement, if applicable, that the plan’s or issuer’s contracted rates include risksharing, bonus, penalty, or other incentive-based or retrospective payments or payment adjustments that were excluded for purposes of calculating the QPA for the items and services involved. C. October 2021 Interim Final Rules The October 2021 interim final rules build on the July 2021 interim final rules and implement the Federal IDR process under sections 9816(c) and 9817(b) of the Code, sections 716(c) and 717(b) of ERISA, and sections 2799A– 1(c) and 2799A–2(b) of the PHS Act. The October 2021 interim final rules provide for a Federal IDR process that group health plans and health insurance issuers offering group or individual health insurance coverage and nonparticipating providers, facilities, and providers of air ambulance services may use to determine the out-ofnetwork rate for items and services that are emergency services, non-emergency services furnished by nonparticipating 10 26 CFR 54.9816–6T(d)(2)(i), 29 CFR 2590.716– 6(d)(2)(i), and 45 CFR 149.140(d)(2)(i). Under the July 2021 interim final rules, plans and issuers are required to calculate the QPA using underlying fee schedule rates or derived amounts when the plan or issuer has sufficient information to calculate the median of its contracted rates, but the payments under the contractual agreements are not on a feefor-service basis (such as bundled or capitation payments). 26 CFR 54.9816–6T(b)(2)(iii), 29 CFR 2590.716–6(b)(2)(iii), 45 CFR 149.140(b)(2)(iii). Plans and issuers are not otherwise permitted to use underlying fee schedule rates or derived amounts to calculate the QPA. PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 providers with respect to patient visits to participating facilities, and air ambulance services furnished by nonparticipating providers of air ambulance services, where an All-Payer Model Agreement or specified State law does not apply. The October 2021 interim final rules generally specify rules to implement the Federal IDR process, including the requirements governing the open negotiation period; the initiation of the Federal IDR process; the Federal IDR process following initiation, including the selection of a certified IDR entity, submission of offers, payment determinations, and written decisions; costs of the Federal IDR process; certification of IDR entities, including the denial or revocation of certification of an IDR entity; and the collection of information related to the Federal IDR process from certified IDR entities to satisfy reporting requirements under the statute. The October 2021 interim final rules provide that, not later than 30 business days after selection of a certified IDR entity, the certified IDR entity must select one of the offers submitted by the plan or issuer and the provider, facility, or provider of air ambulance services to be the out-of-network rate for the qualified IDR item or service.11 For each qualified IDR item or service, the amount by which this out-of-network rate exceeds the cost-sharing amount for the qualified IDR item or service is the total plan or coverage payment (with any initial payment made by the plan or issuer counted towards the total plan or coverage payment). The October 2021 interim final rules state that, in selecting the offer, the certified IDR entity must consider the QPA for the applicable year for the same or similar item or service, or, in the case of batched or bundled items or services, the QPA or QPAs for the applicable year. The preamble to the July 2021 interim final rules provides that if multiple items and services are reimbursed under non-fee-for-service contractual arrangements, such as a bundled or capitated arrangement, and are billed for under a single billing code, plans and issuers must calculate a QPA for each item or service using the underlying fee schedule rates for the relevant items and services if the underlying fee schedule rates are available.12 If there is no underlying fee schedule rate for an item or service, the plan or issuer must calculate the QPA 11 Qualified IDR item or service has the same meaning as set forth in 26 CFR 54.9816– 8T(a)(2)(xii), 29 CFR 2590.716–8(a)(2)(xii), and 45 CFR 149.510(a)(2)(xii). 12 86 FR 36893 (July 13, 2021). E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 using a derived amount.13 In addition, the October 2021 interim final rules state that the certified IDR entity must also consider information requested by, or submitted by the parties to, the certified IDR entity relating to the offer, to the extent a party provides credible information that is not otherwise prohibited under 26 CFR 54.9816– 8T(c)(4)(v), 29 CFR 2590.716–8(c)(4)(v), and 45 CFR 149.510(c)(4)(v). The October 2021 interim final rules also require the parties to provide certain information to the certified IDR entity, including practice size and practice specialty or type; geographic region used to calculate the QPA; the QPA for the applicable year for the same or similar item or service as the qualified IDR item or service; and, if applicable, information showing that the Federal IDR process is inapplicable to the dispute. In addition, prior to vacatur in the United States District Court for the Eastern District of Texas, in the cases of Texas Medical Association, et al. v. United States Department of Health and Human Services, et al., Case No. 6:21–cv–425 (E.D. Tex.) (Texas Medical Association) (February 23, 2022) and LifeNet, Inc. v. United States Department of Health and Human Services, et al., Case No. 6:22– cv–162 (E.D. Tex.) (LifeNet) (July 26, 2022), these interim final rules specified that the certified IDR entity may request additional information relating to the parties’ offers and must consider credible additional information submitted, as further described in the next paragraph, that relates to the parties’ offers and the qualified IDR item or service that is the subject of a payment determination to determine if the information submitted clearly demonstrates that the QPA is materially different from the appropriate out-ofnetwork rate (unless the information relates to a factor that the certified IDR entity is prohibited from considering). For this purpose, the October 2021 interim final rules specify that credible information is information that upon critical analysis is worthy of belief and is trustworthy.14 Prior to vacatur in Texas Medical Association, the term ‘‘material difference’’ was defined to mean a substantial likelihood that a reasonable person with the training and qualifications of a certified IDR entity making a payment determination would consider the information important in 13 The Departments also specify an alternative method to calculate the QPA when there is insufficient information based on contracted rates. See 26 CFR 54.9816–6T(c)(2)–(4), 29 CFR 2590.716– 6(c)(2)–(4), and 45 CFR 149.140(c)(2)–(4). 14 26 CFR 54.9816–8T(a)(2)(v), 29 CFR 2590.716– 8(a)(2)(v), and 45 CFR 149.510(a)(2)(v). VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 determining the out-of-network rate and view the information as showing that the QPA is not the appropriate out-ofnetwork rate.15 For items and services that are not air ambulance services, in determining which offer to select, the certified IDR entity must consider the following additional information under certain circumstances: 1. The level of training, experience, and quality and outcomes measurements of the provider or facility that furnished the qualified IDR item or service (such as those endorsed by the consensus-based entity authorized in section 1890 of the Social Security Act). 2. The market share held by the provider or facility or that of the plan or issuer in the geographic region in which the qualified IDR item or service was provided. 3. The acuity of the participant, beneficiary, or enrollee who received the qualified IDR item or service, or the complexity of furnishing the qualified IDR item or service to the participant, beneficiary, or enrollee. 4. The teaching status, case mix, and scope of services of the facility that furnished the qualified IDR item or service, if applicable. 5. Demonstration of good faith efforts (or lack thereof) made by the provider or facility or the plan or issuer to enter into network agreements with each other, and, if applicable, contracted rates between the provider or facility and the plan or issuer during the previous 4 plan years. Under the October 2021 interim final rules, the certified IDR entity may only consider this information submitted by the parties if the information is credible and relates to the offer submitted by either party.16 The certified IDR entity may not consider any information submitted on the prohibited factors, including usual and customary charges (including payment or reimbursement rates expressed as a proportion of usual and customary charges); the amount that would have been billed if the provider, facility, or provider of air ambulance services were not subject to a prohibition on balance billing; and payment or reimbursement rates payable by a public payor, in whole or in part, for items and services furnished by the providers, facilities, or providers of air ambulance services.17 15 26 CFR 54.9816–8T(a)(2)(viii), 29 CFR 2590.716–8(a)(2)(viii), and 45 CFR 149.510(a)(2)(viii). 16 This requirement was vacated by the District Court in Texas Medical Association. 17 26 CFR 54.9816–8T(c)(4)(v), 29 CFR 2590.716– 8(c)(4)(v), and 45 CFR 149.510(c)(4)(v). For this purpose, payment or reimbursement rates payable PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 52621 The October 2021 interim final rules also provided, prior to vacatur in Texas Medical Association and LifeNet, that after considering the QPA, additional information requested by the certified IDR entity from the parties, and all of the credible information submitted by the parties that is consistent with the requirements and is not prohibited information, the certified IDR entity must select the offer closest to the QPA, unless the certified IDR entity determined that the credible information submitted by the parties clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate, or if the offers are equally distant from the QPA but in opposing directions. In those cases, the October 2021 interim final rules required the certified IDR entity to select the offer that the certified IDR entity determines best represents the value of the item or service, which could be either party’s offer. Not later than 30 business days after the selection of the certified IDR entity, the certified IDR entity must notify parties to the dispute of the selection of the offer and provide a written decision,18 which must be submitted to the parties and the Departments through the Federal IDR portal.19 The October 2021 interim final rules also provided that if the certified IDR entity did not choose the offer closest to the QPA, this written decision must include an explanation of the credible information that the certified IDR entity determined demonstrated that the QPA was materially different from the appropriate out-of-network rate. The October 2021 interim final rules also implemented the Federal IDR process for qualified IDR services that are air ambulance services. The process for a certified IDR entity to select an offer in a dispute related to qualified IDR services that are air ambulance services is essentially the same as that for other qualified IDR items or services. As with disputes related to qualified IDR items or services that are not air by a public payor include payments or reimbursement rates under the Medicare program under title XVIII of the Social Security Act, the Medicaid program under title XIX of the Social Security Act, the Children’s Health Insurance Program under title XXI of the Social Security Act, the TRICARE program under chapter 55 of title 10, United States Code, chapter 17 of title 38, United States Code, and payment rates for demonstration projects under section 1115 of the Social Security Act. 18 26 CFR 54.9816–8T(c)(4)(vi)(A), 29 CFR 2590.716–8(c)(4)(vi)(A), and 45 CFR 149.510(c)(4)(vi)(A). 19 The Federal IDR portal is available at https:// www.nsa-idr.cms.gov and must be used throughout the Federal IDR process to maximize efficiency and reduce burden. E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 52622 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations ambulance services, in determining which offer to select, the No Surprises Act and October 2021 interim final rules provide that the certified IDR entity must consider the QPA for the applicable year for the qualified IDR services that are air ambulance services. The No Surprises Act and the October 2021 interim final rules likewise specified additional circumstances, in addition to the QPA, that the certified IDR entity must consider in making the payment determination for air ambulance services. With respect to air ambulance services, the certified IDR entity is required to consider, to the extent the parties provide credible information, a different set of additional circumstances: 1. The quality and outcomes measurements of the provider that furnished the services. 2. The acuity of the condition of the participant, beneficiary, or enrollee receiving the service, or the complexity of furnishing the service to the participant, beneficiary, or enrollee. 3. The training, experience, and quality of the medical personnel that furnished the air ambulance services. 4. Ambulance vehicle type, including the clinical capability level of the vehicle. 5. Population density of the point of pick-up (as defined in 42 CFR 414.605) for the air ambulance (such as urban, suburban, rural, or frontier). 6. Demonstrations of good faith efforts (or lack thereof) made by the nonparticipating provider of air ambulance services or the plan or issuer to enter into network agreements with each other and, if applicable, contracted rates between the provider of air ambulance services and the plan or issuer during the previous 4 plan years. As with qualified IDR items or services that are not air ambulance services, the October 2021 interim final rules provide that after considering the QPA, additional information requested by the certified IDR entity from the parties, and all of the credible information submitted by the parties that is consistent with the requirements and is not prohibited information, the certified IDR entity must select the offer closest to the QPA, unless the certified IDR entity determined that the credible information submitted by the parties clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate, or if the offers are equally distant from the QPA but in opposing directions. In those cases, the October 2021 interim final rules require the certified IDR entity to select the offer that the certified IDR entity determined best represents the value of the item or VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 service, which could be either party’s offer. D. Public Comments Received in Response to the July 2021 and October 2021 Interim Final Rules In response to the July 2021 and October 2021 interim final rules, the Departments received thousands of comments on many different aspects of the rules. In particular, the Departments received many comments related to a clarification in the preamble to the October 2021 interim final rules 20 stating that the July 2021 interim final rules do not require the plan or issuer to calculate the participant’s, beneficiary’s, or enrollee’s cost sharing using the QPA for the service code submitted by the provider or facility, and that instead the plan or issuer could calculate the participant’s, beneficiary’s, or enrollee’s cost sharing using the QPA for a downcoded service code that the plan or issuer determined was more appropriate. Many of these comments addressed the information required by the July 2021 interim final rules that must be shared about the QPA, the importance of this disclosure, and how additional disclosures related to the QPA would be useful in the context of the Federal IDR process, particularly when the QPA is based on a service code or modifier that is different than the one the provider or facility billed. The Departments also received many comments related to the payment determination standards under the Federal IDR process, including the provisions that govern the certified IDR entity’s consideration of the enumerated factors. These final rules address only the provisions related to these comments, and they make changes in light of the decisions in Texas Medical Association and LifeNet. The Departments intend to address comments related to other provisions of the July 2021 and October 2021 interim final rules, including comments received in response to the July 2021 interim final rules related to the disclosure requirements that are not specifically related to downcoded service codes, at a later date. 1. QPA Disclosure Requirements With respect to the information that must be shared about the QPA, the Departments received comments on both the July 2021 interim final rules and the October 2021 interim final rules supporting the disclosure requirement and emphasizing the importance of ensuring that the QPA and other information related to the item or 20 See PO 00000 86 FR 55997–98 n.35. Frm 00006 Fmt 4701 Sfmt 4700 service are provided to providers, facilities, and providers of air ambulance services at the time of the initial payment or notice of denial of payment. Many commenters on the July 2021 interim final rules stressed that the methodology to calculate the QPA should be transparent, and that the Departments should expand the range of information that is shared with providers, facilities, and providers of air ambulance services with the QPA. Some commenters felt the degree of disclosure was insufficient, and that it provided too much power and discretion to plans and issuers. Others, however, questioned whether plans, in particular, would be able to obtain the information required under the July 2021 interim final rules, as much of the information may be in the control of vendors or other service providers. In particular, the Departments received comments in response to the July 2021 interim final rules and the October 2021 interim final rules requesting that the disclosures that must be provided with each initial payment or notice of denial of payment include additional information about how the QPA was determined to ensure that providers, facilities, and providers of air ambulance services have sufficient information when the Federal IDR process is used for a payment determination. For example, commenters requested that plans and issuers be required, without a request, to provide information on the number of contracts and the geographic region used to calculate the QPA, whether the QPA is based on downcoding 21 of the billed claim, information about the use of modifiers in calculating the QPA, the types of specialties and subspecialties that have contracted rates included in the data set used to determine the QPA, and whether bonuses and supplemental payments were paid to in-network providers. The manner in which items and services are coded, including the concept of downcoding claims was reflected in both the July 2021 interim final rules and the October 2021 interim final rules. The preamble to the July 2021 interim final rules noted that it is important that the QPA methodology account for modifiers that affect payment rates.22 The preamble to the 21 Downcode is defined in these final rules at 26 CFR 54.9816–6, 29 CFR 2590.716–6, and 45 CFR 149.30, to mean the alteration by a plan or issuer of a 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. 22 The preamble to the July 2021 interim final rules also noted that modifiers affect the payment E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 October 2021 interim final rules noted that the Departments are aware that some plans and issuers review claims and alter the service code or modifier submitted by the provider or facility to another service code or modifier that the plan or issuer determines to be more appropriate (a practice commonly referred to as ‘‘downcoding’’ when the adjustment results in a lower reimbursement, as noted in the preamble to the October 2021 interim final rules).23 Some commenters expressed concern that plans and issuers may calculate the QPA for a lower level service code (and/or modifier) instead of calculating the QPA for the particular service code or modifier specified in the claim submitted for reimbursement. These commenters stated that it is important for providers and facilities to know whether the plan or issuer has downcoded a particular claim that is subject to the balance billing protections in the No Surprises Act to ensure that providers receive information that may be relevant to the open negotiation process and that could inform a provider’s offer in the Federal IDR process, and which the provider has no other means of ascertaining. Several commenters requested that these final rules require plans and issuers to disclose whether the claim has been downcoded for purposes of computing the QPA and include an explanation of why the claim was downcoded, as well as what the QPA would have been had the claim not been downcoded. 2. Payment Determination Standards Under the Federal IDR Process With respect to the payment determination standards under the Federal IDR process, the Departments received numerous comments from various stakeholders about the provisions that govern the certified IDR entity’s consideration of the statutory factors during the payment determination process. Many commenters supported the approach set forth in the October 2021 interim final rules that directs the certified IDR entity to begin with the QPA as a baseline when making a payment determination, which those commenters highlighted as an important part of the payment determination process that would ensure that the surprise billing provisions lead to lower health care costs for all consumers. Furthermore, rate because, for example, modifiers can be used to indicate that the work required to provide a service in a particular instance was significantly greater— or significantly less—than the service typically required. See 86 FR 36891. 23 See 86 FR 55997–98. VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 some commenters stated that the approach taken in the October 2021 interim final rules is crucial to achieving the budget savings the Congressional Budget Office calculated. Those commenters stated that the approach taken would shield consumers from surprise bills and ever higher insurance premium costs. Commenters stated that the October 2021 interim final rules reinforce the statutory directive that the QPA is the primary consideration for the certified IDR entity. Commenters also stated this use of the QPA represents a reasonable, market-based rate and would encourage greater participation in health plan networks. Commenters noted that there may be circumstances in which the appropriate out-of-network rate would exceed the QPA, and that the October 2021 interim final rules properly provide a pathway for the certified IDR entity to reach that determination when it can be justified. These commenters highlighted that nothing in the October 2021 interim final rules required a certified IDR entity to default to the selection of the QPA or the offer closest to it, but rather that the rule correctly mandated that all credible information be considered. Commenters also stated that it was not unreasonable to require a party to document why the QPA is not the appropriate payment amount. Other commenters raised concerns about giving the same weight to all factors because many of the additional circumstances outlined in the rule, such as patient acuity and complexity of care, could already be incorporated into the QPA calculation. Commenters also noted that the October 2021 interim final rules provide clear guidance to certified IDR entities, which would reduce variability in payment determinations and better position the parties to settle disputes before reaching the Federal IDR process, by giving the parties a better sense of how payment determinations would be made. Other commenters disagreed with the approach under the October 2021 interim final rules and expressed opposition to the emphasis placed on the QPA during the Federal IDR process. Many of these commenters criticized the rule as establishing a rebuttable presumption in favor of the QPA as the out-of-network rate while failing to equip the parties with the necessary information to rebut the presumption. Some commenters stated that the Departments disregarded bipartisan Congressional intent and tipped the scales in the Federal IDR process in favor of health plans and issuers. Commenters expressed concern that emphasizing the QPA ignores the PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 52623 complexity of billing factors, such as modifiers and the practice of bundling multiple health care services under a single billing code, and creates an incentive for the plan or issuer to downcode claims in bad faith. Commenters also expressed concern that the prominence of the QPA could drive down reimbursement rates for providers that are currently reimbursed above the median contracted rate, which they argued could jeopardize network adequacy and viability of physician practices and, commenters claimed, further drive down the QPA. A number of commenters stated that the emphasis given to the QPA would provide an incentive for plans and issuers to prefer out-of-network care, potentially resulting in reduced networks, because, ultimately, plans and issuers would pay the QPA rather than a market rate driven by the particular circumstances of the care delivered. Commenters also asserted that showing that the QPA is materially different from the appropriate out-of-network rate would burden providers and facilities who lack the resources to gather and submit this information during the Federal IDR process. Commenters who disagreed with the approach set forth in the October 2021 interim final rules stated that certain provisions created a rebuttable presumption that the QPA is the appropriate out-of-network rate, and these commenters requested that the Departments remove these provisions, and instead issue rulemaking and guidance that instructs certified IDR entities to consider all permissible and relevant information submitted by the parties. Other commenters suggested alternative approaches for the provisions that govern the certified IDR entity’s consideration of the enumerated factors. Some commenters requested that equal weight be given to the QPA and the contracted rates between the provider or facility and plan or issuer during the previous 4 years. Other commenters requested that the Departments replace the QPA as the baseline in the Federal IDR process with a different amount, such as the actual amount paid to a particular out-ofnetwork provider for the same or similar item or service or the median contracted rate based on the amount negotiated under each contract the provider has with a plan or issuer. 3. Payment Determinations for Air Ambulance Services A majority of commenters raised similar points with regard to the Federal IDR process for both non-air ambulance items and services and air ambulance E:\FR\FM\26AUR2.SGM 26AUR2 52624 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 services. Some supported the emphasis on the QPA, while others disagreed with the use of the QPA as the baseline in the Federal IDR process. These commenters raised concerns about the transparency of the calculation of the QPA, and questioned whether the QPA is the appropriate out-of-network rate. Several commenters stressed that the use of the QPA as a baseline also raises concerns that are unique to air ambulance services. Some commenters highlighted the prevalence of single-case agreements for air ambulance services, which the commenters interpreted as including settlements of post-service claims. The commenters asserted that, because of the prevalence of these agreements, the QPA does not adequately reflect market rates for air ambulance services and the QPA would be lower than appropriate. Other commenters argued that hospitalbased providers of air ambulance services are subsidized by the related hospitals, so including the rates of these providers in the QPA calculation with the rates of other air ambulance providers would improperly lower the QPA and therefore the use of the QPA as a baseline would not be appropriate. Another commenter argued that the negotiated rates of the few in-network providers for air ambulance services tend to be inflated by their disproportionately large market power, leading to artificially high air ambulance rates and an inflated QPA value. These commenters proposed that the rules should direct the certified IDR entities to take into account market concentration and prices charged by non-profit affiliated air ambulance providers because air ambulance services owned by private equity and publicly-traded companies receive higher payments and subsequently generate larger and more frequent surprise bills than their non-profitaffiliated counterparts. Other commenters disagreed and stated that the Federal IDR process should not make such a distinction among providers of air ambulance services. One commenter stated that Congress clearly recognized the variation in air ambulance services in distinguishing the six ‘‘additional circumstances’’ 24 24 Under section 9817(b)(5)(C) of the Code, section 717(b)(5)(C) of ERISA, and section 2799A– 2(b)(5)(C) of the PHS Act, those six additional circumstances are: (1) the quality and outcomes measurements of the provider that furnished such services; (2) the acuity of the individual receiving such services or the complexity of furnishing such services to such individual; (3) the training, experience, and quality of the medical personnel that furnished such services; (4) the ambulance vehicle type, including the clinical capability level of such vehicle; (5) population density of the point of pick-up (such as urban, suburban, rural, or VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 specific to air ambulance services that certified IDR entities should consider. 4. The Certified IDR Entity’s Written Decision With respect to the certified IDR entity’s written decision, several commenters supported the requirement for the certified IDR entity to provide a written decision, including the explanation of the underlying rationale for the certified IDR entity’s determination. Other commenters stressed, however, that requiring the explanation of the rationale only if the certified IDR entity determined that the QPA was materially different from the appropriate out-of-network rate could discourage certified IDR entities from considering additional factors. A few commenters requested an explanation be required when the certified IDR entity selected the amount closest to the QPA, including how the information about the other required considerations was assessed while others stated that a robust explanation should be required of the certified IDR entity in all cases. Commenters also stated that requiring an explanation in all cases would ensure that certified IDR entities considered all information submitted by the parties and allow the parties to fully understand the rationale behind the certified IDR entity’s determination. Commenters asserted that this could improve the quality and efficiency of the IDR process over time, as parties become better informed as to the types of information certified IDR entities find credible and the circumstances in which the parties should pursue the IDR process. Other commenters requested the Departments either eliminate the requirement for a written decision or require a similar analysis in all written decisions. E. Litigation Regarding Requirements Related to Surprise Billing; Part II On October 28, 2021, the Texas Medical Association, a trade association representing physicians, and a Texas physician filed a lawsuit against the Departments and the Office of Personnel Management (OPM), asserting that certain provisions of the October 2021 interim final rules relating to the certified IDR entities’ consideration of the QPA, as well as additional factors related to items and services that are not air ambulance services, should be frontier); and (6) demonstrations of good faith efforts (or lack of good faith efforts) made by the nonparticipating provider or nonparticipating facility or the plan or issuer to enter into network agreements and, if applicable, contracted rates between the provider and the plan or issuer, as applicable, during the previous 4 plan years. PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 vacated. Plaintiffs argued that the interim final rules ignored Congress’s intent that certified IDR entities weigh the QPA and other factors without favoring any factor, and they asserted that, as a result, the rules would skew IDR results in favor of plans and issuers. On February 23, 2022, the United States District Court for the Eastern District of Texas (District Court) issued a memorandum opinion and order that vacated portions of the October 2021 interim final rules governing aspects of the Federal IDR process related to nonair ambulance qualified IDR items or services including: (1) the definition of ‘‘material difference;’’ (2) the requirement that a certified IDR entity must select the offer closest to the QPA unless the certified IDR entity determines that credible information submitted by either party under 26 CFR 54.9816–8T(c)(4)(i), 29 CFR 2590.716– 8(c)(4)(i), and 45 CFR 149.510(c)(4)(i) clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate for non-air ambulance qualified IDR items or services, or if the offers are equally distant from the QPA but in opposing directions; (3) the requirement that the certified IDR entity may only consider the additional information submitted by either party to the extent that the credible information related to the circumstances under 26 CFR 54.9816– 8T(c)(4)(i), 29 CFR 2590.716–8(c)(4)(i), and 45 CFR 149.510(c)(4)(i) clearly demonstrates that the QPA is materially different from the appropriate out-ofnetwork rate for non-air ambulance qualified IDR items or services; (4) the dispute resolution examples; and (5) the requirement that, if the certified IDR entity does not choose the offer closest to the QPA, the certified IDR entity’s written decision must include an explanation of the credible information that the certified IDR entity determined demonstrated that the QPA was materially different from the appropriate out-of-network rate, based on the factors certified IDR entities are permitted to consider with respect to the qualified IDR item or service.25 On April 27, 2022, LifeNet, Inc., a provider of air ambulance services, filed a lawsuit against the Departments and OPM seeking the vacatur of additional provisions of the October 2021 interim final rules applicable to air ambulance services. In particular, LifeNet alleged that the requirement codified in the last sentence of 26 CFR 54.9817–2T(b)(2), 29 CFR 2590.717–2(b)(2), and 45 CFR 25 Tex. Med. Ass’n, et al. v. U.S. Dept. of Health and Human Servs., et al., Case No. 6:21–cv–425 (E.D. Tex.). E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations A. Information To Be Shared About the Qualifying Payment Amount As described earlier in this preamble, the July 2021 interim final rules require plans and issuers to make certain disclosures with each initial payment or notice of denial of payment. When the QPA serves as the recognized amount, or as the amount upon which cost sharing is based with respect to air ambulance services, plans and issuers must disclose the QPA and certain information related to the QPA for the item or service involved, as well as certain additional information, upon request of the provider, facility, or provider of air ambulance services for each item or service involved.27 As stated in the preamble to the July 2021 interim final rules, the Departments seek to ensure transparent and meaningful disclosure of information relating to the calculation of the QPA for providers, facilities, and providers of air ambulance services, while at the same time minimizing administrative burdens on health plans and issuers and on the Federal IDR process. The Departments sought to balance those competing interests by, on the one hand, requiring plans and issuers to make certain disclosures with each initial payment or notice of denial of payment and to provide certain additional information upon request by the provider, facility, or provider of air ambulance services and, on the other hand, avoiding more wide-reaching disclosure requirements that could add to the costs and burdens of adjudicating claims subject to the surprise billing protections in the No Surprises Act. After review of the comments submitted on the July 2021 interim final rules regarding downcoding and on the clarification in the preamble to the October 2021 interim final rules stating that, under the July 2021 interim final rules, a plan or issuer may calculate the QPA using a downcoded service code, including the comments suggesting how the disclosure requirements could be modified in light of this clarification, the Departments have concluded that additional disclosure of information about the QPA is appropriate.28 This additional disclosure will ensure that providers, facilities, and providers of air ambulance services receive information regarding the QPA that aids in their meaningful participation in open negotiation and the Federal IDR process in all payment disputes that involve qualified items or services that have been subject to downcoding. Specifically, the Departments are of the view that additional information would be helpful in cases in which the plan or issuer has downcoded the billed claim to ensure that providers, facilities, and providers of air ambulance services receive the relevant information from a 26 LifeNet, Inc. v. United States Department of Health and Human Services, et al., Case No. 6:22– cv–162 (E.D. Tex.). 27 26 CFR 54.9816–6T(d), 29 CFR 2590.716–6(d), and 45 CFR 149.140(d). 28 86 FR 55997–98 (October 7, 2021). 149.520(b)(2) that the certified IDR entity may consider information submitted by a party only if the information ‘‘clearly demonstrate[s] that the qualifying payment amount is materially different from the appropriate out-of-network rate’’ should be vacated. On July 26, 2022, the District Court issued a memorandum opinion and order vacating this language.26 F. Scope and Purpose of This Rulemaking As discussed in more detail later in this preamble, upon review of the comments the Departments received on the information that must be shared about the QPA when a service is downcoded and with respect to the Federal IDR process, and in light of the District Court’s memorandum opinions and orders in Texas Medical Association and LifeNet, the Departments have determined that it is appropriate to issue these final rules to finalize parts of the July 2021 and October 2021 interim final rules related to the information that must be disclosed about the QPA under 26 CFR 54.9816–6T(d), 29 CFR 2590.716–6(d), and 45 CFR 149.140(d) to address downcoding; related to the certified IDR entity’s consideration of the statutory factors when making a payment determination under the Federal IDR process at 26 CFR 54.9816–8T(c)(4)(iii)– (iv) and 54.9817T–2(b), 29 CFR 2590.716–8(c)(4)(iii)–(iv) and 2590.717– 2(b), and 45 CFR 149.510(c)(4)(iii)–(iv) and 149.520(b); and related to the certified IDR entity’s written decision at 26 CFR 54.9816–8T(c)(4)(vi)(B), 29 CFR 2590.716–8(c)(4)(vi)(B), and 45 CFR 149.510(c)(4)(vi)(B). These final rules also include changes to remove from the regulations the language vacated by the District Court. This rulemaking is purposefully narrow in scope and is intended to address only certain issues critical to the implementation and effective operation of the Federal IDR process. The Departments intend to finalize the remaining provisions of the July 2021 and October 2021 interim final rules after further consideration of comments. lotter on DSK11XQN23PROD with RULES2 II. Overview of Final Rules VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 52625 plan or issuer that is needed to engage in a productive open negotiation period. Without information on what the QPA would have been had the claim not been downcoded, the provider, facility, or provider of air ambulance services may be at a disadvantage compared to the plan or issuer. In cases in which the plan or issuer has downcoded the billed claim and asserts that the QPA that corresponds with the downcoded claim is the correct total payment amount, it is of particular importance that the provider, facility, or provider of air ambulance services knows that the item or service in question has been downcoded and has information regarding both the QPA for the downcoded claim and the amount that would have been the QPA had the service code or modifier not been downcoded. In the Departments’ view, this information may be critical to the provider, facility, or provider of air ambulance services in developing an offer or submitting information if it believes that the QPA calculated by the plan or issuer does not best represent the value of the item or service provided. Furthermore, the requirement to disclose this additional information will increase transparency by ensuring that the provider, facility, or provider of air ambulance services has sufficient information about the QPA to submit an informed offer, including how it relates to the billed claim. This increased transparency will aid in the open negotiation process by helping providers, facilities, and providers of air ambulance services to understand how the plan or issuer arrived at the relevant QPA in relation to the billed claim. This increased transparency will inform the provider’s, facility’s, or provider of air ambulance services’ decision whether to initiate open negotiation and the Federal IDR process, as well as its determination of the amount that it submits as its offer.29 Further, this requirement will help a provider, facility, or provider of air ambulance services ascertain what information to provide the certified IDR entity to demonstrate that the provider’s, facility’s, or provider of air ambulance 29 The Departments understand that many plans and issuers make initial payments that are equivalent to or are informed by the corresponding QPA for the item or service at issue. As noted in in the preamble to the July 2021 interim final rules, the initial payment should be an amount that the plan or issuer reasonably intends to be payment in full based on the relevant facts and circumstances, which may be higher or lower than the QPA, as required under the terms of the plan or coverage, prior to the beginning of any open negotiation or initiation of the Federal IDR process. 86 FR 36872, 36900 (July 13, 2021). E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 52626 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations services’ offer best represents the value of the item or service. If submitted for the certified IDR entity’s consideration, this information will also aid the certified IDR entity in selecting the offer that best represents the value of the item or service by ensuring that the certified IDR entity will have additional pertinent information about the item or service. For example, in a dispute that concerns a qualified IDR service for which the plan or issuer downcoded the billed service code, the provider, facility, or provider of air ambulance services may present information showing that the billed service code was more appropriate than the downcoded service code. In such an instance, the certified IDR entity could determine that the QPA based on the downcoded service code does not sufficiently encompass the complexity of furnishing the qualified IDR service because it was based on a service code for a different service from the one furnished. If the certified IDR entity makes such a determination, then the amount that would have been the QPA had the service code or modifier not been downcoded may be relevant to the certified IDR entity in determining which offer best represents the value of the qualified IDR item or service. Therefore, the Departments are issuing these final rules to add a definition for the term ‘‘downcode’’ to 26 CFR 54.9816–6, 29 CFR 2590.716–6, and 45 CFR 149.140; and final rules under 26 CFR 54.9816–6(d), 29 CFR 2590.716–6(d), and 45 CFR 149.140(d) to require additional information about the QPA that must be provided with an initial payment or notice of denial of payment, without a provider, facility, or provider of air ambulance services having to make a request for this information, in cases in which the plan or issuer has downcoded the billed claim. Although ‘‘downcoding’’ is being defined for the first time in these final rules, the concept was reflected in both sets of interim final rules. Though neither set of interim final rules specifically defines a term for this practice, the interim final rules described the practice and explained that it was permissible under certain circumstances. See 86 FR 55997–98 n.35 (clarification in October 2021 interim final rules regarding requirements of July 2021 interim final rules). Indeed, as described previously, the Departments received several comments in response to the July 2021 interim final rules and the October 2021 interim final rules requesting that the disclosures that must be provided with each initial payment or notice of denial of payment include VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 additional information about how the QPA was calculated to ensure that providers, facilities, and providers of air ambulance services have sufficient information when the Federal IDR process is used for a payment determination. For example, commenters requested that plans and issuers be required, without a request, to provide information on the number of contracts and the geographic region used to calculate the QPA, whether the QPA was calculated based on a downcoded billed claim, information about the use of modifiers in calculating the QPA, the types of specialties and subspecialties that have contracted rates included in the data set used to determine the QPA, and whether bonuses and supplemental payments were paid to in-network providers. These final rules define the term ‘‘downcode,’’ as described in the preamble to the October 2021 interim final rules, to mean the alteration by a plan or issuer of a 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. These final rules also specify that, if a QPA is based on a downcoded service code or modifier, in addition to the information already required to be provided with an initial payment or notice of denial of payment, a plan or issuer must provide a statement that the service code or modifier billed by the provider, facility, or provider of air ambulance services was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and which modifiers were altered, added, or removed, if any; and the amount that would have been the QPA had the service code or modifier not been downcoded. The Departments are continuing to consider comments on the July 2021 interim final rules about whether additional disclosures related to the QPA calculation methodology should be required to be provided with an initial payment or notice of denial of payment, or upon request. The Departments note that the statute places the responsibility for monitoring the accuracy of plans’ and issuers’ QPA calculation methodologies with the Departments (and applicable state authorities) by requiring audits of plans’ and issuers’ QPA calculation methodologies,30 and the Departments have committed to 30 86 PO 00000 FR 36872, 36899 (July 13, 2021). Frm 00010 Fmt 4701 Sfmt 4700 conducting audits. The Departments also stress that payment determinations in the Federal IDR process should center on a determination of a total payment amount for a particular item or service based on the facts and circumstances of the dispute at issue, rather than an examination of a plan’s or issuer’s QPA methodology. B. Payment Determinations Under the Federal IDR Process The October 2021 interim final rules provide that, not later than 30 business days after the selection of the certified IDR entity, the certified IDR entity must select one of the offers submitted by the plan or issuer or the provider, facility, or provider of air ambulance services as the out-of-network rate for the qualified IDR item or service. In determining which offer to select, the October 2021 interim final rules provided, prior to Texas Medical Association and LifeNet, that the certified IDR entity must first look to the QPA, as it represents a reasonable market-based payment for relevant items and services, and then to additional information requested by the certified IDR entity from the parties and other additional information submitted by the parties. After considering the QPA and additional information, the October 2021 interim final rules required the certified IDR entity to select the offer closest to the QPA, unless the certified IDR entity determined that the additional information requested by the certified IDR entity and the credible information submitted by the parties demonstrated that the QPA was materially different from the appropriate out-of-network rate, or if the offers were equally distant from the QPA but in opposing directions. In instances in which the certified IDR entity determined that the credible information submitted by the parties clearly demonstrated that the QPA was materially different from the appropriate out-of-network rate, or when the offers were equally distant from the QPA but in opposing directions, the October 2021 interim final rules state that the certified IDR entity must select the offer that the certified IDR entity determined best represents the value of the item or service, which could be either party’s offer. As stated earlier in this preamble, on February 23, 2022 and July 26, 2022, the District Court in Texas Medical Association and LifeNet issued memorandum opinions and orders that vacated certain provisions of the October 2021 interim final rules that govern aspects of the Federal IDR process, including provisions that E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations provided guidance to certified IDR entities on selecting the appropriate outof-network rate in a payment determination. In the October 2021 interim final rules, the Departments required certified IDR entities to view the QPA as an appropriate payment amount, subject to consideration of the information submitted by the parties related to the additional circumstances outlined in the statute, as a mechanism to ensure that certified IDR entities approached making payment determinations in the Federal IDR process in a consistent manner. The regulatory text required certified IDR entities to select the offer closest to the QPA unless the certified IDR entity determined that credible information submitted by a party clearly demonstrated that the QPA was materially different from the appropriate out-of-network rate. The preamble to the October 2021 interim final rules described the relevant instructions to certified IDR entities as a ‘‘rebuttable presumption’’ in favor of the QPA. The District Court in Texas Medical Association and LifeNet vacated the portions of the October 2021 interim final rules that it construed as creating a rebuttable presumption in favor of the QPA. The Departments note that these final rules are not intended to impose a rebuttable presumption for payment determinations in the Federal IDR process. The regulatory text in these final rules does not include the provisions that the District Court reasoned would have the effect of imposing such a presumption. The Departments note that, in all cases, the QPA, which is generally based on the median contracted rate for a qualified IDR item or service, will be relevant to a payment determination, as it represents the typical payment amount that a plan or issuer that is a party to a payment determination will pay in-network providers, facilities, and providers of air ambulance services for that particular qualified IDR item or service. The Departments also note that, to the extent the QPA is calculated in a manner that is consistent with the detailed rules issued under the July 2021 interim final rules, and is communicated in a way that satisfies the applicable disclosure requirements, the QPA will meet the credibility requirement that applies to the additional information and circumstances set forth in these final rules.31 The credibility requirement is 31 To the extent there is a question whether a plan or issuer has complied with the July 2021 interim final rules’ requirements for calculating the QPA, it is the Departments’ (or applicable State authorities’) VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 designed to ensure that the additional information submitted by the parties to a payment determination meet the same credibility standard that the QPA already meets through other mechanisms, by virtue of the requirements related to the QPA set forth in the July 2021 interim final rules. The Departments also note that the credibility requirement is designed to ensure that certified IDR entities have clear guidance on how to evaluate potentially voluminous and complex information in a methodical and consistent manner. Absent clear guidance on a process for evaluating the different factors, there would be no guarantee of consistency in how certified IDR entities reached determinations in different cases. The Departments are of the view that this guidance is also important because the QPA must be a quantitative figure, like the offers that will be submitted in a payment determination. Generally, these quantitative figures will be unlike the information received related to the additional circumstances, which will often be qualitative and open to subjective evaluation. Although the QPA is a quantitative figure, the amount that best represents the value of the qualified IDR items and services may be more or less than the QPA due to additional circumstances that are not easily quantifiable such as the care setting or the teaching status of the facility. It therefore is reasonable to ensure that certified IDR entities consider the QPA, a quantitative figure, and then consider the additional, likelyqualitative factors, when determining the out-of-network rate—another quantitative figure. 1. Requirement To Consider the QPA and Additional Information Submitted In light of the Texas Medical Association and LifeNet decisions, and in response to comments received on these provisions, the Departments are finalizing rules that remove the provisions that the District Court vacated and that adopt standards for making a payment determination that are intended to achieve the statutory aims articulated earlier in this preamble. Congress granted the Departments statutory authority to ‘‘establish by regulation one independent dispute responsibility, not the certified IDR entity’s, to monitor the accuracy of the plan’s or issuer’s QPA calculation methodology by conducting an audit of the plan’s or issuer’s QPA calculation methodology. However, a provider or facility may always assert to the certified IDR entity that additional information points in favor of the selection of its offer as the out-of-network payment amount, even where that offer is for a payment amount that is different from the QPA. PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 52627 resolution process’’ under which certified IDR entities determine the amount of payment for an out-ofnetwork item or service.32 The Federal IDR process that the Departments establish under this authority is to be ‘‘in accordance with the succeeding provisions of’’ the cited statutory subsections,33 including the statutory provisions describing the factors for the certified IDR entity to consider in determining the out-of-network payment amount. Under sections 9816(c)(5) and 9817(b)(5) of the Code, sections 716(c)(5) and 717(b)(5) of ERISA, and sections 2799A–1(c)(5) and 2799A–2(b)(5) of the PHS Act, the statute provides that with respect to payment determinations, the certified IDR entity must always consider the QPA without the parties specifically bringing it to the certified IDR entity’s attention. Next, the statute provides that the certified IDR entity must also consider ‘‘additional information’’ or ‘‘additional circumstances’’ submitted to the certified IDR entity. As explained later in this preamble, the Departments are of the view that it is appropriate to exercise their authority under this provision, and that it is in accordance with these statutory provisions, to adopt a Federal IDR process that encourages a consistent methodology for evaluation of information when making a payment determination. The Departments are of the view that there is value in ensuring that all certified IDR entities approach payment determinations in a similar manner, which will promote consistency and predictability in the process, thereby lowering administrative costs and encouraging consistency in appropriate payments for out-of-network services.34 The statute requires certified IDR entities to always consider the QPA when making a payment determination, as it is the one statutory consideration that will always be present in each payment determination, whereas the parties may or may not choose to submit 32 See section 9816(c)(2)(A) of the Code, section 716(c)(2)(A) of ERISA, and section 2799A–1(c)(2)(A) of the PHS Act; see also section 9817(b)(2)(A) of the Code, section 717(b)(2)(A) of ERISA, and section 2799A–2(b)(2)(A) of the PHS Act. 33 Id. 34 See Cong. Budget Office, H.R. 5826, the Consumer Protections Against Surprise Medical Bills Act of 2020, as Introduced on February 10, 2020: Estimated Budgetary Effects at 1 (Feb. 11, 2020) (arbitrators ‘‘would be instructed to look to the health plan’s median payment rate for innetwork rate care,’’ and as a result ‘‘average payment rates for both in- and out-of-network care would move toward the median in-network rate,’’ thereby lowering health insurance premiums and budget deficits); see also H.R. Rep. No. 116–615, pt. I, at 57–58 (2020). E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 52628 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations information related to the additional circumstances as part of their offer. Consideration of the QPA, which is the first-listed statutory factor and a quantitative figure, will aid certified IDR entities in their consideration of each of the other statutory factors, as these entities will then be in a position to evaluate whether the ‘‘additional’’ factors present information that may not have already been captured in the calculation of the QPA. As commenters noted, there may be instances in which the QPA would not adequately account for one or more of the additional factors. The Departments note that these final rules do not require certified IDR entities to default to the offer closest to the QPA or to apply a presumption in favor of that offer. The Departments are of the view that it will often be the case that the QPA represents an appropriate out-ofnetwork rate, as the QPA is largely informed by similar information to what would be provided as information in support of the additional statutory circumstances. Nonetheless, the Departments acknowledge that the additional factors may be relevant in determining the appropriate out-ofnetwork rate, because the QPA may not account for information specific to a particular item or service. Therefore, these final rules do not require the certified IDR entity to select the offer closest to the QPA. Rather, these final rules specify that certified IDR entities should select the offer that best represents the value of the item or service under dispute after considering the QPA and all permissible information submitted by the parties. Accordingly, in determining which offer to select during the Federal IDR process under these final rules, the certified IDR entity must consider the QPA for the applicable year for the same or similar item or service and then must consider all additional information submitted by a party to determine which offer best reflects the appropriate out-of-network rate, provided that the information relates to the party’s offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination (and does not include information that the certified IDR entity is prohibited from considering in making the payment determination under section 9816(c)(5)(D) of the Code, section 716(c)(5)(D) of ERISA, and section 2799A–1(c)(5)(D) of the PHS Act).35 For this purpose, the Departments understand that information requested 35 See also 26 CFR 54.9816–8T(c)(4)(v), 29 CFR 2590.716–8(c)(4)(v), and 45 CFR 149.510(c)(4)(v). VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 by a certified IDR entity, or submitted by a party, would be information relating to a party’s offer if it tends to show that the offer best represents the value of the item or service under dispute. Therefore, these rules require the certified IDR entity to evaluate whether the information relates to the offer submitted by either party for the payment amount for the qualified IDR item or service that is the subject of the payment determination. In considering this additional information, the certified IDR entity should evaluate whether information that is offered is credible and should not give weight to information that is not credible.36 The appropriate out-of-network rate must be the offer that the certified IDR entity determines best represents the value of the qualified IDR item or service. For non-air ambulance items and services, the additional information to be considered includes information related to the following factors: 1. the level of training, experience, and quality and outcomes measurements of the provider or facility that furnished the qualified IDR item or service (such as those endorsed by the consensus-based entity authorized in section 1890 of the Social Security Act); 2. the market share held by the provider or facility or that of the plan or issuer in the geographic region in which the qualified IDR item or service was provided; 3. the acuity of the participant, beneficiary, or enrollee receiving the qualified IDR item or service, or the complexity of furnishing the qualified IDR item or service to the participant, beneficiary, or enrollee; 4. the teaching status, case mix, and scope of services of the facility that furnished the qualified IDR item or service, if applicable; and 5. the demonstration of good faith efforts (or lack thereof) made by the provider or facility or the plan or issuer to enter into network agreements with each other, and, if applicable, contracted rates between the provider or facility, as applicable, and the plan or issuer, as applicable, during the previous 4 plan years. Under these final rules, the certified IDR entity must also consider information related to the offer provided in response to a request from the certified IDR entity under 26 CFR 54.9816–8T(c)(4)(i)(A)(2), 29 CFR 2590.716–8(c)(4)(i)(A)(2), and 45 CFR 149.510(c)(4)(i)(A)(2). 36 For this purpose, credible information is information that upon critical analysis is worthy of belief and is trustworthy. 26 CFR 54.9816– 8T(a)(2)(v), 29 CFR 2590.716–8(a)(2)(v), and 45 CFR 149.510(a)(2)(v). PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 2. Avoidance of Double-Counting Information When considering the additional information under 26 CFR 54.9816– 8(c)(4)(iii), 29 CFR 2590.716–8(c)(4)(iii), and 45 CFR 149.510(c)(4)(iii), the certified IDR entity should evaluate the information and should not give weight to that information if it is already accounted for by any of the other information submitted by the parties. The certified IDR entity should consider whether the additional information is already accounted for in the QPA and should not give weight to information related to a factor if the certified IDR entity determines the information was already accounted for in the calculation of the QPA, to avoid weighting the same information twice. In addition, if the parties submit information related to more than one of the additional factors, the certified IDR entity should also consider whether the information submitted regarding those factors is already accounted for by information submitted relating to other credible information submitted to the certified IDR entity in relation to another factor and, if so, should not weigh this information more than once. Numerous comments received on the October 2021 interim final rules highlighted that, in many cases, certain factors, such as patient acuity or the complexity of furnishing the qualified IDR item or service to the participant, beneficiary, or enrollee, will already be accounted for in the calculation of the QPA and should therefore not receive additional weight. For example, because the plan or issuer is required to calculate the QPA using median contracted rates for service codes, as well as modifiers (if applicable), and because service codes and modifiers in many cases reflect patient acuity and the complexity of the service provided, these factors will often already be reflected in the QPA. Commenters also acknowledged that there could be instances in which the QPA would not adequately account for the acuity of the patient or complexity of the service: for example, if the complexity of a case is an outlier such that the time or intensity of care exceeds what is typical for a service code. A certified IDR entity may also conclude that the QPA does not already account for patient acuity or the complexity of furnishing the qualified IDR item or service in instances where the parties disagree on what service code or modifier accurately describes the qualified IDR item or service, such as when a plan or issuer has downcoded a claim and the QPA is based on the E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 downcoded service code or modifier, rather than the billed service code or modifier. The Departments agree with the commenters that, in many cases, the additional factors for the certified IDR entity to consider other than the QPA will already be reflected in the QPA. The QPA is generally calculated to include characteristics that affect costs, including medical specialty, geographic region, and patient acuity and case severity, all captured in different billing codes or the QPA calculation methodology.37 Therefore, in the Departments’ view, giving additional weight to information that is already incorporated into the calculation of the QPA would be redundant, possibly resulting in the selection of an offer that does not best represent the value of the qualified IDR item or service and potentially over time contributing to higher health care costs. As noted earlier in this preamble, the Departments are also aware that there are instances when certain factors related to the qualified IDR item or service may not be adequately reflected in the QPA. Under these final rules, certified IDR entities are required to consider the QPA and then must consider all additional information submitted by the parties relating to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination, but each factor should be weighted only once in the evaluation of each party’s payment offer. To the extent a factor is not already reflected in the QPA, the certified IDR entity should accord that factor appropriate weight based on information related to it provided by the parties. For example, some providers and facilities that provide high-acuity care, such as level 1 trauma or neonatal care, may contend that additional factors such as their case mix and the scope of services offered were not accounted for in the QPA and could justify the selection of a higher amount as the out-of-network payment amount. 3. Examples Provided These final rules also include examples to illustrate the consideration of factors when making a payment determination, including whether and how to give weight to additional information submitted by a party. Each example assumes that the Federal IDR process applies for purposes of 37 Plans and issuers are required to calculate separate QPAs for the same service code by provider specialty if the plan or issuer has contracted rates for the service code that vary based on provider specialty. See 26 CFR 54.9816–6T(b)(3), 29 CFR 2590.716–6(b)(3), and 45 CFR 149.140(b)(3). VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 determining the out-of-network rate, that both parties have submitted the information parties are required to submit as part of the Federal IDR process, including the applicable QPA(s), and the submitted information does not include information on the prohibited factors. In the first new example, a level 1 trauma center that is a nonparticipating emergency facility submits an offer that is higher than the QPA. Along with the offer, the nonparticipating emergency facility submits additional written information showing that the scope of services available at the nonparticipating emergency facility was critical to the delivery of care for the qualified IDR item or service provided, given the particular patient’s acuity, and the information is determined to be credible by the certified IDR entity. The nonparticipating emergency facility also submits information showing that the contracted rates used to calculate the QPA were based on a level of service that is typical in cases in which the services are delivered by a facility that is not a level 1 trauma center and that does not have the capability to provide the scope of services provided by a level 1 trauma center. This information is also determined to be credible by the certified IDR entity. The issuer submits an offer equal to the QPA. No additional information is submitted by either party. The certified IDR entity determines that the information submitted by the nonparticipating emergency facility relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. If the certified IDR entity determines that it is appropriate to give weight to the additional credible information submitted by the nonparticipating emergency facility and that this information demonstrates that the facility’s offer best represents the value of the qualified IDR item or service, the certified IDR entity should select the facility’s offer. In the second new example, a nonparticipating provider submits an offer that is higher than the QPA. Along with the offer, the nonparticipating provider submits additional written information regarding the level of training and experience of the provider, and the information is determined to be credible by the certified IDR entity, but the certified IDR entity finds that the provider does not demonstrate that the level of training and experience relates to the offer for the appropriate payment amount for the qualified IDR item or service that is the subject of the payment determination (for example, PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 52629 the information does not show that the level of training and experience was necessary to provide the qualified IDR service or that the training or experience made an impact on the care that was provided). The nonparticipating provider does not submit any additional information. The issuer submits an amount equal to the QPA as its offer, with no additional information. Even if the certified IDR entity determines that the additional information regarding the level of training and experience is credible, if the certified IDR entity determines that the information does not relate to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination, the certified IDR entity should not give weight to the additional information. In the absence of any other credible information that relates to a party’s offer, the certified IDR entity should select the issuer’s offer as the offer that best represents the value of the qualified IDR service. In the third new example, in connection with an emergency department visit for the evaluation and management of a patient, a nonparticipating provider submits an offer that is higher than the QPA. Along with the offer, the nonparticipating provider submits additional written information showing that the acuity of the patient’s condition and the complexity of the qualified IDR service required the taking of a comprehensive history, a comprehensive examination, and medical decision making of high complexity, and the information is determined to be credible by the certified IDR entity. The issuer submits an offer equal to the QPA for Current Procedural Terminology (CPT) code 99285, which is the CPT code for an emergency department visit for the evaluation and management of a patient requiring a comprehensive history, a comprehensive examination, and medical decision making of high complexity. The issuer also submits additional written information showing that this CPT code accounts for the acuity of the patient’s condition, and the information is determined to be credible by the certified IDR entity. The certified IDR entity determines that this information relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. Neither party submits any additional information. If the certified IDR entity determines the information on the acuity of the patient and complexity of the service is already accounted for in the calculation of the QPA, the certified IDR entity should not E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 52630 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations give weight to the additional information provided by the nonparticipating provider. If, after evaluating the information submitted by the parties, the IDR entity determines that the issuer’s offer best represents the value of the qualified IDR service, then the certified IDR entity should select the issuer’s offer. In the fourth new example, the issuer submits an offer that is higher than the QPA and that is equal to the nonparticipating emergency facility’s prior contracted rate (adjusted for inflation) with the issuer for the previous year for the qualified IDR service. Although the facility is not participating in the issuer’s network this year, it was a participating facility in the issuer’s network in the previous 4 plan years. Along with the offer, the issuer submits additional written information showing that the contracted rates between the nonparticipating facility and the issuer during the previous 4 plan years were higher than the QPA, and that these prior contracted rates took into account the case mix and scope of services typically furnished at the facility. The certified IDR entity determines that the information is credible and that it relates to the offer submitted by the facility for the payment amount for the qualified IDR service that is the subject of the payment determination. The nonparticipating emergency facility submits an offer that is higher than both the QPA and the prior contracted rate (adjusted for inflation) and submits additional written information intending to show that the case mix and scope of services available at the facility that furnished the qualified IDR service were integral to the services provided. The certified IDR entity determines this information is credible and relates to the offer submitted by the facility for the payment amount for the qualified IDR service that is the subject of the payment determination. If the certified IDR entity determines that the information submitted by the facility regarding the case mix and scope of services available at the facility includes information that is also accounted for in the information that the issuer submitted regarding prior contracted rates, then that same information that has been submitted twice should be weighted only once by the certified IDR entity. The certified IDR entity also should not give weight to the same information provided by the nonparticipating emergency facility in relation to any other factor. If the certified IDR entity determines that the issuer’s offer best represents the value of VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 the qualified IDR service, the certified IDR entity should select the issuer’s offer. In the fifth new example, regarding a qualified IDR service for which the issuer downcoded the service code that the provider billed, the issuer submits an offer equal to the QPA (which was calculated using the downcoded service code). The issuer also submits the additional written information that it was required to disclose to the nonparticipating provider at the time of the initial payment. The certified IDR entity determines the additional information to be credible and that it relates to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. The nonparticipating provider submits an offer equal to the amount that would have been the QPA had the service code not been downcoded. The nonparticipating provider submits additional written information that includes the same documentation provided by the issuer, as well as information that explains why the billed service code was more appropriate than the downcoded service code, as evidence that the provider’s offer best represents the value of the service furnished, given its complexity. Neither party submits any additional information. The certified IDR entity determines that the information submitted by the provider is credible and that it is related to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. If the certified IDR entity determines that it is appropriate to give weight to the additional credible information submitted by the provider and that this information demonstrates that the provider’s offer best represents the value of the qualified IDR service, the certified IDR entity should select the provider’s offer. The Departments note that the statute and the October 2021 interim final rules continue to provide that when making a payment determination, a certified IDR entity must not consider information on the prohibited factors, such as the usual and customary charges (including payment or reimbursement rates expressed as a proportion of usual and customary charges); the amount that would have been billed by the provider, facility, or provider of air ambulance services with respect to the qualified IDR item or service had the balance billing provisions of 45 CFR 149.410, 149.420, and 149.440 (as applicable) not applied; or the payment or reimbursement rate for items and services furnished by the provider, PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 facility, or provider of air ambulance services payable by a public payor.38 39 In considering all the permissible information submitted by the parties, the Departments expect that the certified IDR entity will conduct a thorough review of the information submitted to evaluate whether the information includes any of the prohibited factors, so as to ensure that prohibited factors are not considered in any payment determinations. In conducting this review, the certified IDR entity may request additional information from the disputing parties, including confirmation that information submitted does not include information on the prohibited factors. The Departments are committed to establishing a fair, cost-effective, and reasonable IDR payment determination process that does not have an inflationary impact on health care costs. To that end, the Departments will monitor the effects of these payment determination requirements and make appropriate adjustments as necessary to achieve the intended goals articulated in this preamble. C. Payment Determinations Under the Federal IDR Process for Air Ambulance Services As discussed in section I.C of this preamble, the process for a certified IDR entity to select an offer in a dispute 38 Contracted rates are frequently based on a percentage of rates payable by a public payor, such as Medicare. In these cases, because contracting parties have chosen to set their rates in this way, the contracted rates represent an independent decision by contracting parties. Thus, if a party submits information on such rates to a certified IDR entity, consideration of these contracted rates does not violate the prohibition on considering the factors described in 26 CFR 54.9816–8T(c)(4)(v), 29 CFR 2590.716–8(c)(4)(v), and 45 CFR 149.510(c)(4)(v). In contrast, if a party submits evidence showing that its offer was a percentage of the rates paid by Medicare, a certified IDR entity is prohibited from considering such information. 39 Under 5 U.S.C. 8904(b), in the case of a retired individual who is over age 65 and enrolled in the Federal Employees Health Benefits (FEHB) Program but not covered by Medicare part A or B, fee-forservice FEHB carriers may not pay a charge imposed by a hospital provider for inpatient services or a physician to the extent that charge exceeds applicable Medicare limits. The Departments, after consulting with OPM, clarify that a certified IDR entity is not considered to violate the prohibition on considering the payment or reimbursement rate for items and services furnished by the provider, facility, or provider of air ambulance services payable by a public payor to the extent the certified IDR entity’s selection of an offer is made to allow compliance with 5 U.S.C. 8904(b) and 5 CFR part 890, subpart I. That is, if 5 U.S.C. 8904(b) applies, and either offer exceeds the applicable Medicare limit referenced in 5 U.S.C. 8904(b), the certified IDR entity must ensure that the payment determination does not exceed the applicable Medicare limit. A certified IDR entity would not be considered to violate the prohibition on considering Medicare reimbursement rates when it selects an offer on this basis. E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations related to qualified IDR services that are air ambulance services is generally the same as the process applicable to disputes related to qualified IDR items or services that are not air ambulance services. However, section 9817(b)(5)(C) of the Code, section 717(b)(5)(C) of ERISA, section 2799A–2(b)(5)(C) of the PHS Act, and the October 2021 interim final rules specify different additional circumstances, in addition to the QPA, that the certified IDR entity must consider in making the payment determination for air ambulance services. Upon review of the comments the Departments received on the Federal IDR process, and in light of the District Court’s memorandum opinions and orders in Texas Medical Association and LifeNet, the Departments have determined that it is appropriate to issue the final rules under the Federal IDR process for air ambulance services. As for non-air ambulance items and services, these final rules provide that in determining which offer to select in a dispute related to air ambulance services, the certified IDR entity must consider certain additional information submitted by a party. Also, for non-air ambulance items and services, these final rules for air ambulance services provide that the certified IDR entity must consider the QPA for the applicable year for the same or similar service and then consider all additional permissible information to determine the appropriate out-of-network rate. For air ambulance services, this information includes information related to the following factors: 1. quality and outcomes measurements of the provider that furnished the services; 2. the acuity of the condition of the participant, beneficiary, or enrollee receiving the service, or the complexity of furnishing the service to the participant, beneficiary, or enrollee; 3. training, experience, and quality of the medical personnel that furnished the air ambulance service; 4. ambulance vehicle type, including the clinical capability level of the vehicle; 5. population density of the point of pick-up; and 6. demonstrations of good faith efforts (or lack thereof) by the disputing parties to enter into network agreements with each other, as well as, if applicable, contracted rates between the parties during the previous 4 plan years. Additionally, as with non-air ambulance disputes, the certified IDR entity must also consider information related to the offer provided in a response to the certified IDR entity’s request under 26 CFR 54.9816– VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 8T(c)(4)(i)(A)(2), 29 CFR 2590.716– 8(c)(4)(i)(A)(2), and 45 CFR 149.510(c)(4)(i)(A)(2). The certified IDR entity must also consider other information provided by the parties under 26 CFR 54.9816–8(c)(4)(iii)(D), 29 CFR 2590.716–8(c)(4)(iii)(D), and 45 CFR 149.510(c)(4)(iii)(D). As with non-air ambulance disputes, the certified IDR entity should evaluate whether each piece of submitted information is credible, relates to the offer for the payment amount for the qualified IDR service submitted by either party, and does not include information on factors described in 26 CFR 54.9816–8T(c)(4)(v), 29 CFR 2590.716–8(c)(4)(v), or 45 CFR 149.510(c)(4)(v) (regarding prohibited considerations). When considering the additional information listed above, the certified IDR entity should not give weight to the information to the extent it is not credible, does not relate to either party’s offer for the payment amount for the qualified IDR service, or is included in the QPA calculation or other credible information. The Departments note that these final rules do not require certified IDR entities to default to the offer closest to the QPA or to apply a presumption in favor of that offer. Rather, these final rules specify that certified IDR entities should select the offer that best represents the value of the air ambulance service under dispute after considering the QPA and all permissible information submitted by the parties. D. The Certified IDR Entity’s Written Decision Under section 9816(c)(7) of the Code, section 716(c)(7) of ERISA, and section 2799A–1(c)(7) of the PHS Act, the Departments are required to publish a variety of information relating to the Federal IDR process, including the number of times a payment amount determined or agreed to under this process exceeds the QPA; the amount of each offer submitted in the Federal IDR process expressed as a percentage of the QPA; and any other information specified by the Departments. The statute also instructs certified IDR entities to submit to the Departments such information as the Departments determine necessary to carry out the provisions of section 9816(c) of the Code, section 716(c) of ERISA, and section 2799A–1(c) of the PHS Act, which include these reporting requirements as well as the Departments’ obligations to establish and oversee the Federal IDR process. The Departments have determined it is necessary under this provision to require certified IDR entities to submit PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 52631 certain information, including a written statement of the certified IDR entity’s reasons for a particular determination of an out-of-network rate. Under the October 2021 interim final rules, the certified IDR entity must explain its payment determination and the underlying rationale in a written decision submitted to the parties and the Departments, in a form and manner specified by the Departments. The October 2021 interim final rules also required the certified IDR entity to include in its written decision an explanation of the credible information that the certified IDR entity determined demonstrated that the QPA was materially different from the appropriate out-of-network rate if the certified IDR entity did not choose the offer closest to the QPA. As stated earlier in this preamble, on February 23, 2022, the District Court in Texas Medical Association issued a memorandum opinion and order that invalidated the requirement to provide an explanation of the credible information that the certified IDR entity determined demonstrated that the QPA was materially different from the appropriate out-of-network rate (but not the general requirement that a certified IDR entity issue a written decision). The Departments are of the view that, in all cases, a written decision with a comprehensive discussion of the rationale for the decision is important to ensure that the parties understand the outcome of a payment determination under the Federal IDR process. The Departments note that commenters generally supported the requirement that certified IDR entities provide a written rationale for determinations. The Departments agree with commenters’ assertions that the certified IDR entity should be required to provide an explanation for its decision in all cases, and not only when the offer furthest from the QPA is determined to best represent the value of the qualified IDR item or service. This requirement will ensure that all parties understand the certified IDR entity’s payment determination and how the various information was considered. The Departments are finalizing standards for the written decision that are intended to achieve transparency and consistency in the Federal IDR process. Accordingly, similar to the October 2021 interim final rules these final rules require that the certified IDR entity explain in all cases its determination in a written decision provided to the parties and the Departments, in a form and manner specified by the Departments in separate guidance. Additionally, these final rules E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 52632 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations continue to require that the rationale be included in the written decision. In response to comments requesting additional transparency and explanation, these final rules also provide that the certified IDR entity’s written decision must include an explanation of its determination, including what information the certified IDR entity determined demonstrated that the offer selected as the out-ofnetwork rate is the offer that best represents the value of the qualified IDR item or service, including the weight given to the QPA and any additional credible information submitted in accordance with these final rules. This requirement will help ensure that certified IDR entities carefully evaluate all credible information and promote transparency with respect to payment determinations. These final rules also provide that, if the certified IDR entity relies on additional information or additional circumstances in selecting an offer, its written decision must include an explanation of why the certified IDR entity concluded that this information was not already reflected in the QPA. The Departments are of the view that, in these cases, the certified IDR entity should provide this additional explanation so that the Departments may fulfill their statutory functions to monitor and to report on how often, and why, an offer that is selected exceeds the QPA for a given qualified IDR item or service. Additionally, this requirement will provide the Departments with valuable information to inform future policy making, in particular, policy making related to the QPA methodology. As stated elsewhere in this preamble, the Departments are committed to establishing a reasonable and fair Federal IDR process. Finally, the Departments are also including two technical corrections to address a regulatory cross-references in the provisions that set forth the requirements for the certified IDR entity to include a rationale for its written decision for both air ambulance and non-air ambulance qualified IDR items and services in monthly reporting to the Departments, and to clarify that the certified IDR entity should report to the Departments the extent to which the decision relied on 26 CFR 54.9816– 8(c)(4)(iii)(B)–(D), 29 CFR 2590.716– 8(c)(4)(iii)(B)–(D), and 45 CFR 149.510(c)(4)(iii)(B)–(D). This requirement aligns the reporting requirement with the requirement for the written decision, and with the intent of the October 2021 interim final rules to gather such information. VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 III. Applicability of the Final Rules These rules finalize certain provisions of the July 2021 and October 2021 interim final rules and address the decisions in Texas Medical Association and LifeNet. The July 2021 and October 2021 interim final rules apply for plan years (in the individual market, policy years) beginning on or after January 1, 2022, except to the extent provided below. The final rules that implement the requirements related to the additional information that must be provided with each initial payment or notice of denial of payment if the QPA is based on a downcoded service code or modifier are applicable with respect to items or services furnished on or after October 25, 2022, for plan years (in the individual market, policy years) beginning on or after January 1, 2022. With respect to the additional information that must be provided with each initial payment or notice of denial of payment if a QPA is based on a downcoded service code or modifier, the Departments recognize that plans and issuers often provide these notices through an automated or other streamlined system for efficiency and that plans and issuers may need additional time to update their operating systems to amend the notices that are currently generated to satisfy the QPA disclosure requirements under the July 2021 interim final rules. Plans and issuers may use reasonable methods to provide this additional disclosure with the initial payment or notice of denial of payment while plan or issuer systems and procedures are updated to provide the additional notice in a more streamlined and automated manner. Even when using other reasonable methods, plans and issuers must provide the required information starting on the date these final rules are applicable to the relevant plan or policy and in accordance with the timeframes specified in the July 2021 interim final rules. The Departments expect that plans and issuers will work to make sure that systems are updated in a timely fashion, and the Departments may provide additional guidance, as warranted. For requirements that finalize certain provisions of the October 2021 interim final rules, the final rules addressing the payment determination standards for certified IDR entities, written decisions, and reporting are applicable with respect to items or services provided or furnished on or after October 25, 2022, for plan years (in the individual market, policy years) beginning on or after January 1, 2022. This approach will PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 ensure uniformity and predictability in standards for qualified IDR items and services (including between non-air ambulance items and services and air ambulance services, to the extent applicable), and will allow time for the Departments to provide updated guidance to certified IDR entities and stakeholders. If any provision in this rulemaking is held to be invalid or unenforceable facially, or as applied to any person, plaintiff, or circumstance, the provision shall be severable from the remainder of this rulemaking, and shall not affect the remainder thereof, and the invalidation of any specific application of a provision shall not affect the application of the provision to other persons or circumstances. IV. Regulatory Impact Analysis A. Summary The Departments have examined the effects of these final rules as required by Executive Order 12866,40 Executive Order 13563,41 the Paperwork Reduction Act of 1995,42 the Regulatory Flexibility Act,43 section 202 of the Unfunded Mandates Reform Act of 1995,44 Executive Order 13132,45 and the Congressional Review Act.46 B. Executive Orders 12866 and 13563 Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects; distributive impacts; and equity). Executive Order 13563 emphasizes the importance of quantifying costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Under Executive Order 12866, ‘‘significant’’ regulatory actions are subject to review by the Office of Management and Budget (OMB). Section 3(f) of the Executive order defines a ‘‘significant regulatory action’’ as an action that is likely to result in a rule: (1) having an annual effect on the economy of $100 million or more, or adversely and materially affecting a sector of the economy, productivity, 40 Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993). 41 Improving Regulation and Regulatory Review, 76 FR 3821 (Jan. 18, 2011). 42 44 U.S.C. 3506(c)(2)(A) (1995). 43 5 U.S.C. 601 et seq. (1980). 44 2 U.S.C. 1501 et seq. (1995). 45 Federalism, 64 FR 153 (Aug. 4, 1999). 46 5 U.S.C. 804(2) (1996). E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations final rules.50 The October 2021 interim final rules build on the July 2021 interim final rules and implement the Federal IDR process.51 The October 2021 interim final rules generally apply to group health plans and health insurance issuers offering group or individual health insurance coverage (including grandfathered health plans) with respect to plan years (in the individual market, policy years) beginning on or after January 1, 2022; and to health care providers and facilities, providers of air ambulance services, and certified IDR entities beginning on January 1, 2022 with respect to items and services furnished during a plan year (in the individual market, policy year) beginning on or after January 1, 2022. On February 23, 2022, the District Court in Texas Medical Association issued a memorandum opinion and order that vacated portions of the October 2021 interim final rules governing aspects of the Federal IDR process, as discussed earlier in this preamble. On July 26, 2022, the District Court in LifeNet issued a memorandum opinion and order that vacated additional portions of the October 2021 C. Need for Regulatory Action interim final rules, as discussed earlier in this preamble. On December 27, 2020, the CAA, In response to the decisions in Texas which includes the No Surprises Act, Medical Association and LifeNet and was enacted.48 The No Surprises Act comments received on the October 2021 provides Federal protections against interim final rules and July 2021 interim surprise billing by limiting out-offinal rules, these final rules address network cost sharing and prohibiting certain issues critical to the balance billing in many of the implementation and effective operation circumstances in which surprise bills of the Federal IDR process, including arise most frequently. the disclosure requirements relating to On July 13, 2021, the Departments information that group health plans and published the July 2021 interim final health insurance issuers offering group rules.49 The July 2021 interim final rules or individual health insurance coverage implemented provisions of the No must share about the QPA, and certain Surprises Act to protect participants, requirements related to consideration of beneficiaries, and enrollees in group information when a certified IDR entity health plans and group and individual makes a payment determination under health insurance coverage from surprise the Federal IDR process. medical bills when they receive i. Final Rules on Information To Be emergency services, non-emergency Shared About the Qualifying Payment services furnished by nonparticipating Amount providers with respect to patient visits As described earlier in this preamble, to certain participating facilities, and air the July 2021 interim final rules require ambulance services provided by plans and issuers to make certain nonparticipating providers of air disclosures with each initial payment or ambulance services. notice of denial of payment in cases in On October 7, 2021, the Departments which the recognized amount with published the October 2021 interim competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities (also referred to as ‘‘economically significant’’); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the Executive order. Based on the Departments’ estimates, OMB’s Office of Information and Regulatory Affairs has determined this rulemaking is ‘‘economically significant’’ under section 3(f)(1) of Executive Order 12866 as measured by the $100 million threshold.47 Therefore, the Departments have prepared a Regulatory Impact Analysis that presents the costs, benefits, and transfers associated with this rulemaking. Pursuant to the Congressional Review Act, OMB has designated these final rules as a ‘‘major rule,’’ as defined by 5 U.S.C. 804(2). lotter on DSK11XQN23PROD with RULES2 47 This rulemaking builds on the July 2021 and October 2021 interim final rules described in this preamble. The interim final rules were deemed to be economically significant. The economic analyses for each of these interim final rules can be found in the Federal Register at 86 FR 36872 and 86 FR 55980. 48 Pub. L. 116–260 (Dec. 27, 2020). 49 86 FR 36872 (July 13, 2021). VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 50 86 FR 55980 (October 7, 2021). July 2021 and October 2021 interim final rules also include interim final regulations under 5 U.S.C. 8902(p) issued by OPM that specify how certain provisions of the No Surprises Act apply to health benefit plans offered by carriers under the Federal Employees Health Benefits Act. The rules apply to carriers in the FEHB Program with respect to contract years beginning on or after January 1, 2022. 51 The PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 52633 respect to an item or service furnished by a nonparticipating provider or nonparticipating emergency facility, or the amount upon which cost sharing is based for air ambulance services furnished by a nonparticipating provider of air ambulance services, is the QPA. After review of the comments on the July 2021 interim final rules and October 2021 interim final rules, the Departments are finalizing parts of the July 2021 interim final rules to add a new definition and make changes to require additional information about the QPA that is provided by a plan or issuer with an initial payment or notice of denial of payment in certain cases. These disclosures are required in cases in which the recognized amount with respect to an item or service furnished by a nonparticipating provider or nonparticipating emergency facility, or the amount upon which cost sharing is based for air ambulance services furnished by a nonparticipating provider of air ambulance services, is the QPA. Specifically, these final rules provide a definition of the term ‘‘downcode’’ to mean the alteration by a plan or issuer of a 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. These final rules also specify that when a QPA is calculated based on a downcoded service code or modifier, in addition to the information already required to be provided with an initial payment or notice of denial of payment under the July 2021 interim final rules, a plan or issuer must provide a statement that the claim was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if applicable, and a description of which modifiers were altered, added, or removed, if applicable; and the amount that would have been the QPA had the service code or modifier not been downcoded. The Departments are of the view that this additional disclosure of information about the QPA will be helpful to ensure that providers, facilities, and providers of air ambulance services receive the information regarding the QPA that may assist in their meaningful participation in open negotiation and in the Federal IDR process in all payment disputes that involve qualified items or services that have been subject to downcoding. In particular, in cases in which the plan or issuer has downcoded the billed claim, it is of particular importance that the E:\FR\FM\26AUR2.SGM 26AUR2 52634 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 provider, facility, or provider of air ambulance services has information regarding both the QPA (based on the downcoded service code or modifier) and the amount that would have been the QPA had the service code or modifier not been downcoded in order to ascertain what information will demonstrate that the provider’s, facility’s, or provider of air ambulance services’ offer best represents the value of the item or service and aid the certified IDR entity in selecting an offer that best represents the value of the item or service provided. ii. Final Rules on Payment Determinations Under the Federal IDR Process As discussed earlier in this preamble, the October 2021 interim final rules provided that, not later than 30 business days after the selection of the certified IDR entity, the certified IDR entity must select one of the offers submitted by the plan or issuer or the provider, facility, or provider of air ambulance services to be the out-of-network rate for the qualified IDR item or service. In determining which offer to select, the October 2021 interim final rules provided that the certified IDR entity must select the offer closest to the QPA unless the certified IDR entity were to determine that additional permissible information demonstrated that the QPA is materially different from the appropriate out-of-network rate, or if the offers are equally distant from the QPA but in opposing directions. A key goal in facilitating consistency in the Federal IDR process through the October 2021 interim final rules was to ensure a level of predictability in outcomes in the Federal IDR process. In the Departments’ view, greater predictability in the Federal IDR process would encourage parties to settle disputes through open negotiation or earlier through the offer and acceptance of an adequate initial payment, which would increase efficiencies in how disputes are handled and ultimately lead to lower administrative costs associated with health care. As articulated earlier in this preamble, in light of the Texas Medical Association and LifeNet decisions, and in response to comments received on these provisions, the Departments are finalizing standards for making payment determinations that are intended to lead to greater predictability and regularity in the Federal IDR process. Accordingly, these final rules require that, in determining which offer to select during the Federal IDR process, the certified IDR entity must consider the QPA for the applicable year for the same or VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 similar item or service. The certified IDR entity must then consider all additional information submitted by a party to determine which offer best reflects the appropriate out-of-network rate, provided that the information relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination and does not include information that the certified IDR entity is prohibited from weighing in making the payment determination. In considering this additional information, the certified IDR entity should evaluate whether information that is offered is credible and should not give weight to information that is not credible. The appropriate out-ofnetwork rate must be the offer that the certified IDR entity determines best represents the value of the qualified IDR item or service. For non-air ambulance items and services, this information includes information related to the following factors: (1) the level of training, experience, and quality and outcomes measurements of the provider or facility that furnished the qualified IDR item or service (such as those endorsed by the consensus-based entity authorized in section 1890 of the Social Security Act); (2) the market share held by the provider or facility or that of the plan or issuer in the geographic region in which the qualified IDR item or service was provided; (3) the acuity of the participant, beneficiary, or enrollee receiving the qualified IDR item or service, or the complexity of furnishing the qualified IDR item or service to the participant, beneficiary, or enrollee; (4) the teaching status, case mix, and scope of services of the facility that furnished the qualified IDR item or service, if applicable; and (5) demonstration of good faith efforts (or lack thereof) made by the provider or facility or the plan or issuer to enter into network agreements with each other, and, if applicable, contracted rates between the provider or facility, as applicable, and the plan or issuer, as applicable, during the previous 4 plan years. Under these final rules, the certified IDR entity must also consider information related to the offer provided in a response to a request from the certified IDR entity. The certified IDR entity must also consider additional information submitted by a party, provided the information relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination and does not include information that the certified IDR entity is prohibited from weighing in making the payment PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 determination under section 9816(c)(5)(D) of the Code, section 716(c)(5)(D) of ERISA, and section 2799A–1(c)(5)(D) of the PHS Act. In considering either form of information, the certified IDR entity should evaluate whether the information is credible and should not give weight to information that is not credible. When considering the additional credible information under 26 CFR 54.9816–8(c)(4)(iii), 29 CFR 2590.716– 8(c)(4)(iii), and 45 CFR 149.510(c)(4)(iii), the certified IDR entity should evaluate whether the information is already accounted for by any of the other credible information submitted by the parties. Because the certified IDR entity must consider the QPA, the certified IDR entity should always consider whether the additional credible information is already accounted for by the QPA and should avoid giving weight to information related to a factor if the certified IDR entity determines the information was already accounted for in the calculation of the QPA, to avoid weighting the same information twice. In addition, if the parties submit credible information related to more than one of the additional factors, the certified IDR entity should also consider whether the information submitted regarding those factors is already accounted for by information submitted relating to other credible information already before the certified IDR entity in relation to another factor and, if so, should not weigh the information more than once. Regarding air ambulance services, these final rules state that the certified IDR entity must consider the QPA for the applicable year for the same or similar service and then consider all additional permissible information to determine the appropriate out-ofnetwork rate. In considering this additional information, the certified IDR entity should evaluate whether information that is offered is credible and should not give weight to information that is not credible. For air ambulance services, this information includes information related to the following factors: (1) quality and outcomes measurements of the provider that furnished the air ambulance services; (2) the acuity of the condition of the participant or beneficiary receiving the air ambulance service, or the complexity of furnishing the service to the participant or beneficiary; (3) training, experience, and quality of the medical personnel that furnished the air ambulance services; (4) ambulance vehicle type, including the clinical capability level of the vehicle; (5) population density of the point of pick- E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations up; and (6) demonstrations of good faith efforts (or lack thereof) by the disputing parties to enter into network agreements with each other, as well as, if applicable, contracted rates between the parties during the previous 4 plan years. After the certified IDR entity has reviewed and selected the offer it determines best represents the value of the qualified IDR item or service as the out-of-network rate, the certified IDR entity must explain its determination in a written decision submitted to the parties and the Departments, in a form and manner specified by the Departments. These final rules require that the certified IDR entity’s written decision must include an explanation of what information the certified IDR entity determined demonstrated that the offer selected as the out-of-network rate is the offer that best represents the value of the qualified IDR item or service, including the weight given to the QPA and any additional credible information submitted in accordance with these final rules. If the certified IDR entity relies on any additional information in selecting an offer, the written decision must include an explanation of why the certified IDR entity concluded that this information was not already reflected in the QPA. iii. Summary of Impacts Plans, issuers, third-party administrators (TPAs), Federal Employees Health Benefits (FEHB) Program carriers, health care providers, facilities, providers of air ambulance services, and certified IDR entities will incur costs to comply with the requirements in these final rules. However, these final rules will help ensure that the payment determination in the Federal IDR process is a more consistent process for providers, facilities, providers of air ambulance services, plans, and issuers. These final rules will improve transparency in the Federal IDR process. This increased transparency will aid in the open negotiation process, the decision whether to initiate the Federal IDR process, and the determination of the amount a provider, facility, or provider of air ambulance services submits as an offer. Therefore, the Departments have determined the benefits of these final rules justify the costs. This regulatory action finalizes certain provisions in the July 2021 interim final rules and the October 2021 interim final rules, including changes to remove the language vacated by the District Court in Texas Medical Association and LifeNet. This costbenefit analysis focuses on the incremental costs of complying with the requirements that are included in these final rules. One baseline assumption for this analysis is the existence of the requirements of the July 2021 and October 2021 interim final rules, with a second baseline assumption being the use of a comparison with a hypothetical state of the world absent those interim final rules. As discussed in the analysis of the July 2021 interim final rules, the total annualized cost associated with the July 2021 interim final rules is $2,252 million, using the 7 percent discount rate.52 As discussed in the analysis of the October 2021 interim final rules, the total annualized cost associated with the October 2021 interim final rules is $517 million, using the 7 percent discount rate.53 The Departments consider these cost estimates to be reflected in the analytic baseline of these final rules and to form a subset of total costs of these 52635 final rules for the purposes of this costbenefit analysis relative to the hypothetical state of the world absent the July 2021 and October 2021 interim final rules.54 As noted in Table 1 (Accounting Statement) the Departments estimate the additional total annualized cost associated with the parts these final rules to be $5.9 million, using the 7 percent discount rate. To avoid repeating the analysis of the July 2021 and October 2021 interim final rules, only a short summary of the benefits and costs is provided, and readers are directed to the analysis in the July 2021 and October 2021 interim final rules for more detail. Numbers in this analysis may not match numbers in the analysis for the July 2021 and October 2021 interim final rules because the estimates have been updated with the most current data. However, the methodology remains the same, except for the calculation of the burden to prepare the certified IDR entity’s written decision for payment determinations, as explained later in this section. The Departments also discuss the impacts of changes made by these final rules is this section. In accordance with OMB Circular A– 4, Table 1 depicts an accounting statement summarizing the Departments’ assessment of the benefits, costs, and transfers associated with this regulatory action. The Departments are unable to quantify all benefits, costs, and transfers associated with this regulatory action, but have sought, where possible, to describe these nonquantified impacts. The effects in Table 1 reflect non-quantified impacts and estimated direct monetary costs resulting from the provisions of these final rules. TABLE 1—ACCOUNTING STATEMENT lotter on DSK11XQN23PROD with RULES2 Benefits: • These final rules will increase transparency in the Federal IDR process. • These final rules will help a provider, facility, or provider of air ambulance services ascertain what information will demonstrate that the provider’s, facility’s, or provider of air ambulance services’ offer best represents the value of the item or service and aid the certified IDR entity in selecting an offer that best represents the value of the item or service. • These final rules will promote more consistent payment determinations in the Federal IDR process for providers, facilities, providers of air ambulance services, plans, and issuers. • These final rules will promote transparency with respect to the certified IDR entity’s payment determination and will help to ensure that the determination of a total payment amount for a particular item or service is based on the facts and circumstances of the dispute at issue in each case. 52 As discussed in the analysis of the July 2021 interim final rules, the total annualized cost associated with the July 2021 interim final rules is $2,177 million, using the 3 percent discount rate. The Departments note that these cost estimates have not been updated. VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 53 As discussed in the analysis of the October 2021 interim final rules, the total annualized cost associated with the October 2021 interim final rules is $491 million, using the 3 percent discount rate. The Departments note that these cost estimates have not been updated. PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 54 The Departments are accounting for the additional costs associated with these final rules due to parts of the July 2021 interim final rules and October 2021 interim final rules being finalized. For those parts being finalized, the Texas Medical Association and LifeNet decisions do not impact the quantified costs. E:\FR\FM\26AUR2.SGM 26AUR2 52636 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations TABLE 1—ACCOUNTING STATEMENT—Continued Costs Estimate Annualized Monetized ($million/Year) ....................................................... Year dollar $5.9 5.9 Discount rate (%) 2021 2021 Period covered 7 3 2022–2031 2022–2031 Quantified Costs: The Departments estimate the total annual cost associated with these final rules to be $5.9 million, with $4.3 million annually attributable to the additional information plans and issuers will be required to provide related to the QPAs, $1.2 million annually attributable to the preparation of IDR payment determination notices by certified IDR entities for nonparticipating providers or emergency facility claims, and $0.3 million annually attributable to the preparation of IDR payment determination notices by certified IDR entities for nonparticipating air ambulance providers’ claims. Transfers: These final rules make no changes that impact the transfers as described in the July 2021 and October 2021 interim final rules. lotter on DSK11XQN23PROD with RULES2 D. Affected Entities These final rules will affect health care providers, health care facilities, providers of air ambulance services, group health plans, issuers, TPAs, FEHB carriers, and certified IDR entities. Based on data from 2020, CMS estimated that there were 1,477 issuers in the U.S. health insurance market, of which 1,212 served the individual market, 6 served the student health insurance market, 623 served the small group market, and 784 served the large group market.55 Further, of the plans that filed a Form 5500 in 2019, 30,181 plans were self-insured.56 Additionally, in the October 2021 interim final rules, the Departments previously estimated that there are 205 TPAs.57 The Departments also estimate that there are 44 FEHB carriers. While there is a significant amount of research that demonstrates the prevalence of surprise billing, the Departments do not have data on the percentage of surprise bills covered by health insurance issuers and self-insured plans. However, given the size of health insurance issuers and the scope of their activities, the Departments assume that all health insurance issuers, TPAs, and FEHB carriers will be affected by these final rules. In 2019, 183 million individuals had employer-sponsored coverage and 33.2 million had other private insurance, including individual market insurance.58 The Departments do not 55 Centers for Medicare and Medicaid Services. ‘‘Medical Loss Ratio Data and System Resources’’ (2020). https://www.cms.gov/CCIIO/Resources/ Data-Resources/mlr. 56 Employee Benefits Security Administration. ‘‘Group Health Plans Report.’’ (July 2021). https:// www.dol.gov/sites/dolgov/files/EBSA/researchers/ statistics/retirement-bulletins/annual-report-onself-insured-group-health-plans-2022-appendixa.pdf. 57 Non-issuer TPAs based on data derived from the 2016 Benefit Year reinsurance program contributions. 58 Employee Benefits Security Administration. ‘‘Health Insurance Coverage Bulletin.’’ (March 2020). https://www.dol.gov/sites/dolgov/files/EBSA/ researchers/data/health-and-welfare/healthinsurance-coverage-bulletin-2020.pdf. VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 expect that these final rules will directly affect individuals with private health coverage who visit an emergency room, visit a health care facility,59 or are transported by an air ambulance, as these final rules contain only provisions that affect the relationships among plans and issuers; providers, facilities, and providers of air ambulance services; and certified IDR entities. However, the Departments estimate that these final rules will indirectly affect covered individuals, as the outcomes of payment disputes will have implications for premiums. In the October 2021 interim final rules, the Departments estimated that there are 16,992 emergency and other health care facilities, including 6,090 hospitals,60 29,227 diagnostic and medical laboratories,61 270 independent freestanding emergency departments,62 9,280 ambulatory surgical centers,63 and 1,352 critical access hospitals.64 These entities will also be affected by these final rules. In the October 2021 interim final rules, the Departments also estimated that in 2018, the current year for which data are available, there were 1,114 air ambulance bases in the United States.65 59 Health care facility is defined in the July 2021 interim final rules. See 26 CFR 54.9816–3T; 29 CFR 2590.716–3; and 45 CFR 149.30. 60 American Hospital Association. ‘‘Fast Facts on U.S. Hospitals, 2021.’’ (January 2021). https:// www.aha.org/statistics/fast-facts-us-hospitals. 61 IBIS World. Definitive Healthcare. ‘‘Diagnostic & Medical Laboratories Industry in the US—Market Research Report?’’ (May 2021). https:// www.ibisworld.com/industry-statistics/number-ofbusinesses/diagnostic-medical-laboratories-unitedstates/. 62 Emergency Medicine Network. ‘‘2018 National Emergency Department Inventory.’’ (2021). https:// www.emnet-usa.org/research/studies/nedi/ nedi2018/. 63 Definitive Healthcare. ‘‘How Many Ambulatory Surgery Centers are in the US?’’ (April 2019). https://www.definitivehc.com/blog/how-many-ascsare-in-the-us. 64 Flex Monitoring Team. ‘‘Historical CAH Data.’’ https://www.flexmonitoring.org/historical-cah-data65 Assistant Secretary for Planning and Evaluation (ASPE) Office of Health Policy. ‘‘Air Ambulance Use and Surprise Billing’’ (September 2021). https://aspe.hhs.gov/sites/default/files/2021-09/ aspe-air-ambulance-ib-09-10-2021.pdf. PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 The Departments do not have data on the number of providers of air ambulance services that submit out-ofnetwork claims; however, given the prevalence of out-of-network billing among providers of air ambulance services, the Departments assume that all businesses in the industry will be affected by these final rules. Furthermore, in the October 2021 interim final rules, the Departments estimated that 140,270 physicians, on average, bill on an out-of-network basis and will be affected by these final rules.66 These final rules are also expected to affect non-physician providers who bill on an out-of-network basis. The Departments lack data on the number of non-physician providers who would be impacted. Finally, there are currently 11 certified IDR entities that will be affected by these final rules.67 The number of certified IDR entities may increase or decrease due to new IDR entities applying for certification or the Departments revoking certification because of noncompliance with the certification requirements or a certified IDR entity’s inability to handle its caseload. E. Benefits These final rules will require plans and issuers to provide additional information about the QPA with an initial payment or notice of denial of payment in cases involving downcoding, without the provider, facility, or provider of air ambulance services having to ask for this information. These final rules will be helpful to the provider, facility, or provider of air ambulance services in developing an offer or submitting information if it believes that the QPA 66 Please see the October 2021 interim final rules for more information on how these estimates were obtained. 67 As of July 31, 2022, there are 11 certified IDR entities. Center for Medicare and Medicaid Services. ‘‘List of Certified Independent Dispute Resolution Entities.’’ https://www.cms.gov/ nosurprises/Help-resolve-payment-disputes/ certified-IDRE-list. E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations calculated by the plan or issuer does not best represent the value of the item or service. Furthermore, the requirement to disclose this additional information will increase transparency in the Federal IDR process. This increased transparency will aid in the open negotiation process, the decision whether to initiate the Federal IDR process, and the determination of the amount a provider, facility, or provider of air ambulance services submits as an offer. Further, these final rules will help a provider, facility, or provider of air ambulance services ascertain what information will demonstrate that the provider’s, facility’s, or provider of air ambulance services’ offer best represents the value of the item or service and aid the certified IDR entity in selecting an offer that best represents the value of the item or service. In addition, these final rules require that certified IDR entities must consider the QPA and then must consider all additional permissible information submitted by a party to determine which offer best reflects the appropriate out-of-network rate, provided the information relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination and does not include information that the certified IDR entity is prohibited from weighing in making the payment determination under section 9816(c)(5)(D) of the Code, section 716(c)(5)(D) of ERISA, and section 2799A–1(c)(5)(D) of the PHS Act. In considering this additional information, the certified IDR entity should evaluate whether information that is offered is credible and should not give weight to information that is not credible. The appropriate out-ofnetwork rate must be the offer that the certified IDR entity determines best represents the value of the qualified IDR item or service. Because the certified IDR entity must consider the QPA, the certified IDR entity should always consider whether the additional credible information is already accounted for by the QPA and should not give weight to information related to a factor if the certified IDR entity determines the information was already accounted for in the calculation of the QPA, to avoid weighting the same information twice. In addition, if the parties submit credible information related to more than one of the additional factors, the certified IDR entity should also consider whether the information submitted regarding each of those factors is already accounted for by information submitted relating to other credible information already before the certified IDR entity in relation to VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 another factor and, if so, should not weigh such information more than once. These final rules will help ensure that the payment determination in the Federal IDR process is a consistent process for providers, facilities, providers of air ambulance services, plans, and issuers. The certified IDR entity’s written decision must include an explanation of what information the certified IDR entity determined demonstrated that the offer selected as the out-of-network rate is the offer that best represents the value of the qualified IDR item or service, including the weight given to the QPA and any additional credible information submitted in accordance with these final rules. If the certified IDR entity relies on any additional information in selecting an offer, the written decision must include an explanation of why the certified IDR entity concluded that this information was not already reflected in the qualifying payment amount. These final rules will help ensure that certified IDR entities carefully evaluate all credible non-duplicative information. These final rules will also promote transparency with respect to the certified IDR entity’s payment determination. F. Costs This regulatory action seeks to minimize costs to providers, facilities, providers of air ambulance services, plans, issuers, TPAs, and certified IDR entities. i. Federal IDR Process for Nonparticipating Providers or Nonparticipating Emergency Facilities As explained in the analysis provided in the October 2021 interim final rules, the Departments estimate that there will be approximately 17,435 claims submitted to the Federal IDR process each year.68 After the selected certified IDR entity has reviewed the offers, the certified IDR entity must notify the provider or facility and the plan, issuer, or FEHB carrier and the Departments of the payment determination and the reason for such determination, in a form and manner specified by the Departments.69 The Departments estimate that the annual cost to prepare the notice of the certified IDR entity’s determination is $1.2 million. For more information on this calculation, please refer to the 68 For more details, please refer to the Paperwork Reduction Act analysis, found in section V of this preamble. 69 IDR Payment Determination Notification (section 716(c)(5)(A) of ERISA). PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 52637 Paperwork Reduction Act analysis, found in section V of this preamble. In addition to the information already required to be provided with an initial payment or notice of denial of payment under the July 2021 interim final rules, including the QPA, these final rules require that a plan or issuer must provide, if applicable, an acknowledgement if all or any portion of the claim was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and a description of any modifiers that were altered, added, or removed, if any; and the amount that would have been the QPA had the service code or modifier not been downcoded. In the July 2021 interim final rules, the Departments estimated that plans and issuers will be required to provide documents related to the QPA along with the initial payment or notice of denial of payment for approximately 5,068,512 claims annually from nonparticipating providers or facilities.70 The Departments assume that approximately 10 percent of those claims will involve downcoding and estimate that the annual cost to prepare the required documentation and attach it to each initial payment or notice of denial of payment sent to the nonparticipating provider or facility is $4.3 million. For more information on this calculation, please refer to the Paperwork Reduction Act analysis, found in section V of this preamble. In total, the Departments estimate that certified IDR entities, TPAs, and issuers will incur costs of approximately $5.5 million annually to provide, as applicable, payment determination notifications and the additional QPA information required under these rules. ii. Federal IDR Process for Nonparticipating Providers of Air Ambulance Services As explained in the October 2021 interim final rules, the Departments assume that 10 percent of out-ofnetwork claims for air ambulance services will be submitted to the Federal IDR process,71 which would result in nearly 5,000 annual air ambulance payment determinations via the Federal IDR process.72 70 See 86 FR 36872 for more information on this estimate. 71 The Departments utilize 10 percent as an assumption to estimate the overall number of providers of air ambulance services billing out-ofnetwork at least once in a year. 72 The Departments estimate that of the 216.2 million individuals with employer-sponsored and other private health coverage (183 million E:\FR\FM\26AUR2.SGM Continued 26AUR2 52638 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 After the certified IDR entity has reviewed and selected the offer, the certified IDR entity must notify the provider of air ambulance services and the plan, issuer, or FEHB carrier and the Departments of the payment determination and include the written decision explaining such determination.73 The Departments estimate that the annual cost to prepare this notice of the certified IDR entity’s determination for air ambulance claims is $0.3 million. For more details, please refer to the Paperwork Reduction Act analysis, found in section V of this document. Similar to these final rules’ provisions related to the disclosure of downcoded claims for nonparticipating providers and nonparticipating emergency facilities, these final rules require that a plan or issuer must provide, if applicable, an acknowledgement if all or any portion of the claim pertaining to air ambulance services was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and a description of any modifiers that were altered, added, or removed, if any; and the amount that would have been the QPA had the service code or modifier not been downcoded. The Departments estimate that plans and issuers will be required to provide these documents for approximately 49,676 claims annually from providers of air ambulance services.74 The Departments assume that approximately 10 percent of those claims will involve downcoding and estimate that the annual cost to prepare the required documentation and attach it to each initial payment or notice of denial of payment sent to the providers of air ambulance service is approximately $42,000. For more details, please refer to the Paperwork Reduction Act analysis, found in section V of this preamble. In total, the Departments estimate that certified IDR entities, TPAs, and issuers will incur costs of approximately $0.4 individuals with employer-sponsored health coverage and 33.2 million individuals with other private coverage), there are 33.3 air transports per 100,000 individuals, of which 69 percent result in out-of-network bills. The Departments assume that 10 percent of the out-of-network bills will end up in the Federal IDR process. This is calculated as: 216,200,000 individuals × 0.000333 air transports per individual × 69% × 10%= 4,968. 73 IDR Payment Determination Notification (section 716(c)(5)(A) of ERISA). 74 The Departments estimate that of the 216.2 million individuals with employer-sponsored and other private health coverage, there are 33.3 air transports per 100,000 individuals, of which 69 percent result in an out-of-network bill. The number of air ambulance claims is estimated as: 216,200,000 individuals × 0.000333 air transports per individual × 69% = 49,676. VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 million annually to provide payment determination notifications and the additional QPA information required under these final rules. iii. Summary The Departments estimate the total annual cost associated with these final rules to be $5.9 million with $4.3 million annually attributable to the additional information related to the QPAs, $1.2 million annually attributable to the certified IDR entity’s payment determination for nonparticipating provider and emergency facility claims, and $0.3 million annually attributable to the certified IDR entity’s payment determination notification for nonparticipating provider of air ambulance service claims. G. Transfers These final rules make no changes that impact the transfers as described in the July 2021 and October 2021 interim final rules. H. Uncertainty These final rules make no changes that impact the uncertainties as described in the July 2021 and October 2021 interim final rules. I. Regulatory Alternatives Section 6(a)(3)(C)(iii) of Executive Order 12866 requires an economically significant regulation, and encourages other regulations, to include an assessment of the costs and benefits of potentially effective and reasonable alternatives to the planned regulation. A discussion of the regulatory alternatives is included in this section. As described in Section I.E. of this preamble, the District Court in Texas Medical Association and LifeNet vacated provisions in the October 2021 interim final rules addressing how certified IDR entities were to weigh the QPA and the additional factors. The Departments considered the possibility of not replacing the provisions vacated by the District Court. However, in the Departments’ view, this would have resulted in uncertainty regarding the Federal IDR process, because certain aspects of the process would be governed by the October 2021 interim final rules as published in the Federal Register, while others would not. This approach could result in confusion on the part of the public and certified IDR entities, likely making the decisions of certified IDR entities less predictable, adding to the uncertainty and the costs of the Federal IDR process. Therefore, the Departments are of the view that it is more appropriate to make changes to the Federal IDR process for both non-air PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 ambulance and air ambulance items and services in these final rules. The Departments considered finalizing the additional factors other than the QPA that a certified IDR entity may consider when submitted by one of the disputing parties without addressing the possibility that these factors may already have been accounted for in the QPA. Numerous comments received on the October 2021 interim final rules highlighted that in many cases, certain factors, such as patient acuity or the complexity of furnishing the qualified IDR item or service to the participant, beneficiary, or enrollee, will already be accounted for in the calculation of the QPA. Commenters acknowledged, however, that there could be instances in which the QPA would not adequately account for the acuity of the patient or complexity of the service: for example, if the complexity of a case is an outlier such that the time or intensity of care exceeds what is typical for the service code. The Departments are of the view that, in many cases, factors that a certified IDR entity may consider other than the QPA will already be reflected in the QPA. The QPA is generally calculated to include characteristics that can affect costs, including medical specialty, geographic region, and patient acuity and case severity, all captured in different billing codes or aspects of the methodology that plans and issuers are required to follow in calculating the QPA. Therefore, weighting additional information that is already taken into account in the calculation of the QPA would be redundant and in the Departments’ view, would result in increased administrative burden to the certified IDR entity, potentially resulting in the selection of an offer that does not best reflect the most appropriate value insofar as additional weight would be given to information related to a factor that is already accounted for in the QPA, effectively weighting that information twice. Under these final rules, certified IDR entities must consider the QPA and then must consider all additional information submitted by the parties. To help ensure that the Federal IDR process results in determinations that accurately reflect the fair value of a given item or service, the certified IDR entity should consider all additional information submitted by the parties but should not give weight to information if it is already accounted for by any of the other information submitted by the parties. J. Conclusion and Summary of Economic Impacts The Departments are of the view that these final rules will promote E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations transparency, consistency, and predictability in the Federal IDR process. These final rules provide a market-based approach that will help encourage plans and issuers, and providers, facilities, and providers of air ambulance services to arrive at reasonable payment rates. The Departments estimate that these final rules will impose incremental annual costs of approximately $5.9 million. Over 10 years, the associated costs will be approximately $44.1 million with an annualized cost of $5.9 million, using a 7 percent discount rate.75 lotter on DSK11XQN23PROD with RULES2 V. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44 U.S.C. 3506(c)(2)(A)), the Departments solicited comments concerning the information collection requirements (ICRs) included in the July 2021 and October 2021 interim final rules. At the same time, the Departments also submitted ICRs to OMB, in accordance with 44 U.S.C. 3507(d). The Departments received comments that specifically addressed the paperwork burden analysis of the information collection requirements contained in the July 2021 and October 2021 interim final rules. The Departments reviewed these public comments in developing the paperwork burden analysis discussed here. The changes made by these final rules affect the existing OMB control number, 1210–0169. A copy of the ICR for OMB Control Number 1210–0169 may be obtained by contacting the PRA addressee listed in the following sentence or at www.RegInfo.gov. For additional information, contact James Butikofer, Office of Research and Analysis, U.S. Department of Labor, Employee Benefits Security Administration, 200 Constitution Avenue NW, Room N–5718, Washington, DC 20210; or sent to ebsa.opr@dol.gov. The OMB will consider all written comments that they receive on or before September 26, 2022. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to www.reginfo.gov/public/do/ PRAMain. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. 75 The costs would be $51.5 million over 10-year period with an annualized cost of $5.9 million, applying a 3 percent discount rate. VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 Comments are invited on: (1) whether the collection of information is necessary for the proper performance of the functions of the Departments, including whether the information will have practical utility; (2) if the information will be processed and used in a timely manner; (3) the accuracy of the Departments’ estimates of the burden and cost of the collection of information, including the validity of the methodology and assumptions used; (4) ways to enhance the quality, utility, and clarity of the information collection; and (5) ways to minimize the burden of the collection of information on those who are to respond, including the use of automated collection techniques or other forms of information technology. Group health plans, health insurance issuers, FEHB carriers, and certified IDR entities are responsible for ensuring compliance with these final rules. Accordingly, the Departments refer to costs incurred by plans, issuers, FEHB carriers, and certified IDR entities. However, it is expected that most selfinsured group health plans will work with a TPA to meet the requirements of these final rules. The Departments recognize the potential that some of the largest self-insured plans may seek to meet the requirements of these final rules in-house and not use a TPA or other third party. In these cases, those plans will incur the estimated hour burden and cost directly. These final rules add additional burdens to the ICR presented in the October 2021 interim final rules. The following discussion covers the changes being made to the ICR and the additional burden these changes impose, followed by a summary of the ICR. Copies of the ICR may be obtained by contacting the PRA addressee. A. ICRs Regarding Additional Information To Be Shared With the Initial Payment or Notice of Denial of Payment (26 CFR 54.9816–6(d), 29 CFR 2590.716–6(d), and 45 CFR 149.140(d); OMB Control Number: 1210–0169) These final rules specify that where a QPA is calculated based on a downcoded service code, in addition to the information already required to be provided with an initial payment or notice of denial of payment under the July 2021 interim final rules, a plan or issuer must provide, if applicable, a statement that all or a portion of the claim was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and a description of any modifiers that were altered or added, if any; and the amount that would have been the QPA had the PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 52639 service codes or modifiers not been downcoded. The Departments assume that TPAs will provide this information on behalf of self-insured plans. In addition, the Departments assume that issuers and TPAs will automate the process of preparing and providing this information in a format similar to an explanation of benefits as part of the system to calculate the QPA. The Departments estimate that a total of 1,477 issuers and 205 TPAs will incur a burden to comply with this provision. In the July 2021 interim final rules, the Departments estimated that plans and issuers will be required to provide documents related to QPAs along with the initial payment or notice of denial of payment for approximately 5,068,512 claims annually from nonparticipating providers or facilities.76 Additionally, the Departments estimated that plans and issuers will be required to provide these documents for approximately 49,676 claims annually from nonparticipating providers of air ambulance services.77 In the absence of data, the Departments assume that approximately 10 percent, or 511,819, of claims from nonparticipating providers, facilities, and nonparticipating providers of air ambulance services will involve downcoding and that it will take a medical secretary 10 minutes (at an hourly rate of $50.76 78) to prepare the required documentation and include it with each initial payment or notice of denial of payment sent to the nonparticipating provider, facility, or provider of air ambulance services. The Departments estimate the additional QPA information will be provided for approximately 506,851 claims from nonparticipating providers or facilities. The annual burden to prepare the required documentation and attach it to each initial payment or notice of denial of payment sent to the nonparticipating providers or facilities will be approximately 84,475 hours annually, with an associated equivalent 76 See 86 FR 36872 for more information on this estimate. 77 The Departments estimate that of the 216.2 million individuals with employer-sponsored and other private health coverage, there are 33.3 air transports per 100,000 individuals, of which 69 percent result in an out-of-network bill. The number of air ambulance claims is estimated as: 216,200,000 individuals × 0.000333 air transports per individual × 0.69% = 49,676 claims. 78 Internal DOL calculation based on 2021 labor cost data. For a description of DOL’s methodology for calculating wage rates, see https://www.dol.gov/ sites/dolgov/files/EBSA/laws-and-regulations/rulesand-regulations/technical-appendices/labor-costinputs-used-in-ebsa-opr-ria-and-pra-burdencalculations-june-2019.pdf E:\FR\FM\26AUR2.SGM 26AUR2 52640 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations cost of $4.3 million.79 The Departments estimate that the additional QPA information will be provided for approximately 4,968 claims from providers of air ambulance services. The annual burden to prepare the required documentation and attach it to each initial payment or notice of denial of payment sent to providers of air ambulance services will be approximately 828 hours annually, with an associated equivalent cost of $42,029.80 Thus, the total estimated burden to provide the additional QPA information with initial payments or notices of denial of payment sent to the nonparticipating providers, facilities, and providers of air ambulance services, for all issuers and TPAs, will be approximately 85,303 hours annually, with an associated equivalent cost of approximately $4.3 million.81 As shown in Table 2, the Departments share jurisdiction, and it is estimated that 50 percent of the burden will be accounted for by HHS, 25 percent of the burden will be accounted for by DOL, and 25 percent will be accounted for by Department of the Treasury. Thus, HHS will account for approximately 42,652 hours with an equivalent cost of approximately $2,164,990. DOL and the Department of the Treasury will each account for approximately 21,326 hours with an equivalent cost of approximately $1,082,495. TABLE 2—SUMMARY ANNUAL COST AND BURDEN REGARDING INFORMATION TO BE SHARED ABOUT QPA STARTING IN 2022 Estimated number of responses Department lotter on DSK11XQN23PROD with RULES2 HHS ............................................................................................................................................. DOL .............................................................................................................................................. Treasury ....................................................................................................................................... 255,910 127,955 127,955 Total annual burden (hours) Estimated dollar value of labor hours 42,652 21,326 21,326 $2,164,990 1,082,495 1,082,495 B. ICRs Regarding the Certified IDR Entity’s Payment Determination Written Decision in the Federal IDR Process for Nonparticipating Providers or Nonparticipating Emergency Facilities (26 CFR 54.9816–8T, 26 CFR 54.9816–8, 29 CFR 2590.716–8, and 45 CFR 149.510; OMB Control Number: 1210– 0169) The Departments estimate that 17,435 claims will be submitted as part of the Federal IDR process each year.82 After the certified IDR entity has reviewed the offers and credible information submitted by the parties and selected an offer, the certified IDR entity must notify the provider, facility, or provider of air ambulance services and the plan, issuer, or FEHB carrier and the Departments of the payment determination and the reason for such determination, in a form and manner specified by the Departments.83 The certified IDR entity’s written decision must include an explanation of the additional non-prohibited information that the certified IDR entity determined demonstrated that the offer selected is the out-of-network rate that best represents the value of the qualified IDR item or service, including the weight given to the QPA and any additional credible information submitted in accordance with these final rules. If the certified IDR entity relies on any additional information in selecting an offer, the written decision must include an explanation of why the certified IDR entity concluded that this information was not already reflected in the qualifying payment amount. The Departments estimate that, on average, it will take a physician and medical billing specialist 0.5 hours to prepare the notice at a composite hourly wage rate of $136.81.84 The burden for each certified IDR entity will be 0.5 hours, with an equivalent cost of approximately $69.24. Thus, the total cost burden for all certified IDR entities to prepare this notice for Federal IDR claims will be $1.2 million.85 The total annual cost burden for certified IDR entities to provide the payment determination notices regarding Federal IDR claims will be $1,192,641. As shown in Table 3, the Departments and OPM share jurisdiction, and it is estimated that 45 percent of the burden will be accounted for by HHS, 25 percent will be accounted for by DOL, 25 percent of the burden will be accounted for by the Department of the Treasury, and 5 percent will be accounted for by OPM. Thus, HHS will account for a cost burden of $536,689. DOL and the Department of the Treasury will each account for a cost burden of $298,160. OPM will account for a cost burden of $59,632. 79 This is calculated as: (5,068,512 documents for nonparticipating providers or facilities) × (10%) × (10 minutes) = 84,475 hours. 84,475 hours × $50.76 = $4,287,951. 80 This is calculated as: (49,676 documents for nonparticipating providers of air ambulance services) × (10%) × (10 minutes) = 828 hours. 828 hours × $50.76 = $42,029. 81 This is calculated as: (5,068,512 documents for nonparticipating providers or facilities + 49,676 documents for nonparticipating providers of air ambulance services) × (10%) × (10 minutes) = 85,303 hours. 85,303 hours × $50.76 = $4,329,980. 82 In 2020, 10.7 million individuals had employer-sponsored coverage and 1.7 million individuals had other private coverage in New York State, while 183 million individuals had employersponsored coverage and 33.2 million individuals had other private coverage nationally. The Departments estimate that New York accounts for 5.7 percent of the private insurance market ((10.7 + 1.7)/(183 + 33.2) = 5.7 percent). (See Employee Benefits Security Administration. ‘‘Health Insurance Coverage Bulletin.’’ (March 2020).) In 2018, New York State had 1,014 IDR decisions, up from 650 in 2017 and 396 in 2016. (See Adler, Loren. ‘‘Experience with New York’s Arbitration Process for Surprise Out-of-Network Bills.’’ U.S.C.Brookings Schaeffer on Health Policy. (October 2019).) For purposes of this analysis, the Departments assume that, going forward, New York State will continue to see 1,000 IDR cases each year and that the number of Federal IDR cases will be proportional to that in New York State by share of covered individuals in the private health coverage market. The number of claims in the Federal IDR process is calculated in the following manner: 1,000/0.057= 17,435. 83 IDR Payment Determination Notification (section 716(c)(5)(A) of ERISA). 84 The Departments use a composite wage rate because different professionals will review different types of claims and groups of individuals. The wage rate of a physician is $192.37, and the wage rate of a medical billing specialist is $109.03. (Internal DOL calculation based on 2021 labor cost data. For a description of DOL’s methodology for calculating wage rates, see https://www.dol.gov/sites/dolgov/ files/EBSA/laws-and-regulations/rules-andregulations/technical-appendices/labor-cost-inputsused-in-ebsa-opr-ria-and-pra-burden-calculationsjune-2019.pdf.) The composite wage rate is estimated in the following manner: ($192.37 × (1⁄3) + $109.03 × (2⁄3) = $136.81). 85 17,453 claims × 0.5 hours × $136.81 as the composite wage rate for a physician and medical billing specialist = $1,192,641. VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations The Departments estimate that, on average, it will take a physician and medical billing specialist working for the certified IDR entity 0.5 hour to prepare the notice of the certified IDR entity’s determination at a composite hourly wage rate of $136.81.88 The burden for each certified IDR entity will be 0.5 hours, with an equivalent cost of approximately $69.24. Thus, the total Department cost burden for certified IDR entities to provide this notice for air ambulance HHS ............................................ $536,689 claims will be $0.3 million.89 DOL ............................................ 298,160 The total annual cost burden for the Treasury ...................................... 298,160 certified IDR entities to provide the OPM ............................................ 59,632 payment determination notices regarding air ambulance claims will be C. ICRs Regarding the Certified IDR $339,836. As shown in Table 4, the Entity’s Payment Determination Written Departments and OPM share Decision in the Federal IDR Process for jurisdiction, and it is estimated that 45 Nonparticipating Providers of Air percent of the burden will be accounted Ambulance Services (26 CFR 54.9817– for by HHS, 25 percent will be 2T, 26 CFR 54.9817–2, 29 CFR accounted for by DOL, 25 percent of the 2590.717–2, and 45 CFR 149.520; OMB burden will be accounted for by the Control Number: 1210–0169) Department of the Treasury, and 5 percent will be accounted for by OPM. The Departments estimate there will Thus, HHS will account for a cost be 4,968 claims for air ambulance burden of $152,926. DOL and the services submitted to the Federal IDR Department of the Treasury will each process each year.86 After the certified account for a cost burden of $84,959. IDR entity has reviewed the offers and any submitted credible information, and OPM will account for a cost burden of selected an offer, the certified IDR entity $16,992. must notify the provider of air TABLE 4—SUMMARY ANNUAL COST ambulance services and the plan, issuer, or FEHB carrier and the Departments of AND BURDEN STARTING IN 2022 REthe payment determination and include GARDING CERTIFIED IDR ENTITY’S the written decision explaining such PAYMENT DETERMINATION WRITTEN determination.87 The certified IDR DECISION IN THE FEDERAL IDR entity’s written decision must include PROCESS FOR AIR AMBULANCE an explanation of what information that C LAIMS the certified IDR entity determined demonstrated that the offer selected is Estimated Total Department number of estimated the out-of-network rate that best responses cost represents the value of the qualified IDR service. This explanation must include HHS ................................. 2,235 $152,926 DOL ................................. 1,242 84,959 the weight given to the QPA and any Treasury .......................... 1,242 84,959 additional non-prohibited, credible OPM ................................ 248 16,992 information submitted in accordance with these final rules. If the certified Summary IDR entity relies on any additional The total annual cost burden for information in selecting an offer, the certified IDR entities to provide written decision must include an payment determination notices explanation of why the certified IDR regarding non-air ambulance and air entity concluded that this information was not already reflected in the 88 The Departments use a composite wage rate qualifying payment amount. because different professionals will review different TABLE 3—SUMMARY ANNUAL COST AND BURDEN STARTING IN 2022 REGARDING CERTIFIED IDR ENTITY’S PAYMENT DETERMINATION WRITTEN DECISION IN THE FEDERAL IDR PROCESS FOR NONPARTICIPATING PROVIDERS OR NONPARTICIPATING EMERGENCY FACILITIES CLAIMS lotter on DSK11XQN23PROD with RULES2 86 The Departments estimate that of the 183 million individuals with employment-related health insurance and 33.2 million individuals with other private coverage, there are 33.3 air transports per 100,000 individuals, of which 69 percent result in an out-of-network bill. The Departments assume that 10 percent of the out-of-network bills will end up in the Federal IDR process. The number of air ambulance service claims is calculated in the following manner: (183,000,000 individuals + 33,200,000 individuals) × 0.000333 air transports per individual × 69% × 10%= 4,968 claims. 87 IDR Payment Determination Notification (section 716(c)(5)(A) of ERISA). VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 types of claims and groups of individuals. The wage rate of a physician is $192.37, and the wage rate of a medical billing specialist is $109.03. (Internal DOL calculation based on 2021 labor cost data. For a description of DOL’s methodology for calculating wage rates, see https://www.dol.gov/sites/dolgov/ files/EBSA/laws-and-regulations/rules-andregulations/technical-appendices/labor-cost-inputsused-in-ebsa-opr-ria-and-pra-burden-calculationsjune-2019.pdf.) The composite wage rate is estimated in the following manner: ($192.37 × (1⁄3) + $109.03 × (2⁄3) = $136.81). 89 4,968 air ambulance claims × 0.5 hours × $136.81 as the composite wage rate for a physician and medical billing specialist = $339,836. PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 52641 ambulance claims will be $1,532,477. As shown in Table 5, HHS will account for a cost burden of approximately $689,615. DOL and the Department of the Treasury will each account for a cost burden of approximately $383,119. OPM will account for a cost burden of approximately $76,624. TABLE 5—SUMMARY ANNUAL COST AND BURDEN STARTING IN 2022 REGARDING CERTIFIED IDR ENTITY’S PAYMENT DETERMINATION WRITTEN DECISION IN THE FEDERAL IDR PROCESS FOR NON-AIR AMBULANCE AND AIR AMBULANCE CLAIMS Department Estimated number of responses HHS ................................. DOL ................................. Treasury .......................... OPM ................................ 10,145 5,636 5,636 1,127 Total estimated cost $689,615 383,119 383,119 76,624 These paperwork burden estimates are summarized as follows: Agency: Employee Benefits Security Administration, Department of Labor. Type of Review: Revision of existing collection. Title: Requirements Related to Surprise Billing: Payment Determination. OMB Control Number: 1210–0169. Affected Public: Private Sector— Businesses or other for-profits; not-forprofit institutions. Estimated Number of Respondents: 22,828 Estimated Number of Annual Responses: 163,542 Frequency of Response: Occasionally. Estimated Total Annual Burden Hours: 89,521 Estimated Total Annual Burden Cost: $555,427 VI. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) 90 imposes certain requirements with respect to Federal rules that are subject to the notice and comment requirements of section 553(b) of the Administrative Procedure Act (APA) and are not likely to have a significant economic impact on a substantial number of small entities. Unless the head of an agency determines that a final rule is not likely to have a significant economic impact on a substantial number of small entities, section 604 91 of the RFA requires the agency to present a final regulatory flexibility analysis of these final rules. The Departments certify that these final rules would not have a significant 90 5 91 5 U.S.C. 601 et seq. (1980). U.S.C. 604 (1980). E:\FR\FM\26AUR2.SGM 26AUR2 52642 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations impact on a substantial number of small entities during the first year. The Departments have prepared a justification for this determination below. A. Affected Small Entities The Small Business Administration (SBA), pursuant to the Small Business Act,92 defines small businesses and issues size standards by industry. These final rules will affect all health insurance issuers, TPAs, and certified IDR entities. For purposes of analysis under the RFA, the Departments consider an employee benefit plan with fewer than 100 participants to be a small entity.93 The basis of this definition is found in section 104(a)(2) of ERISA, which permits the Secretary of Labor to prescribe simplified annual reports for plans that cover fewer than 100 participants. Under section 104(a)(3) of ERISA, the Secretary may also provide for exemptions or simplified annual reporting and disclosure for welfare benefit plans. Pursuant to the authority of section 104(a)(3), DOL has previously issued simplified reporting provisions and limited exemptions from reporting and disclosure requirements for small plans, including unfunded or insured welfare plans, which cover fewer than 100 participants and satisfy certain requirements. See 29 CFR 2520.104–20, 2520.104–21, 2520.104–41, 2520.104– 46, and 2520.104b–10. While some large employers have small plans, small plans are maintained generally by small employers. Thus, the Departments are of the view that assessing the impact of these final rules on small plans is an appropriate substitute for evaluating the effect on small entities. The definition of small entity considered appropriate for this purpose differs, however, from a definition of small business based on size standards promulgated by the SBA 94 pursuant to the Small Business Act.95 As discussed in the regulatory impact analysis, these final rules will affect health insurance issuers and TPAs. In 2020, there were 205 TPAs 96 and 1,477 issuers in the U.S. health insurance market.97 Most TPAs would be 92 15 U.S.C. 631 et seq. Departments consulted with the Small Business Administration Office of Advocacy in making this determination, as required by 5 U.S.C. 603(c) and 13 CFR 121.903(c) in a memo dated June 4, 2020. 94 13 CFR 121.201 (2011). 95 15 U.S.C. 631 et seq. (2011). 96 Non-issuer TPAs based on data derived from the 2016 Benefit Year reinsurance program contributions. 97 Centers for Medicare and Medicaid Services. ‘‘Medical Loss Ratio Data and System Resources’’ lotter on DSK11XQN23PROD with RULES2 93 The VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 classified under the North American Industry Classification System (NAICS) code 524292 (Third Party Administration of Insurance and Pension Funds). According to SBA size standards,98 entities with average annual receipts of $40 million or less are considered small entities. By this standard, the Departments estimate that 63.5 percent of TPAs (130 TPAs) are small under the SBA’s size standards.99 Most health insurance issuers would be classified under the NAICS code 524114 (Direct Health and Medical Insurance Carriers). According to SBA size standards,100 entities with average annual receipts of $41.5 million or less are considered small entities. By this standard, the Departments estimate that 8.5 percent of issuers (125 issuers), are small under the SBA’s size standards.101 This estimate may overstate the actual number of small health insurance issuers that may be affected. The Departments expect that few insurance issuers underwriting comprehensive health insurance coverage fall below these size thresholds. Based on data from medical loss ratio (MLR) annual report 102 submissions for the 2020 MLR reporting year, approximately 78 out of 481 issuers of health insurance coverage nationwide had total premium revenue of $41.5 million or less. This estimate may overstate the actual number of small health insurance issuers that may be affected, since over 72 percent of these small issuers belong to larger holding groups, and many, if not all, of these small issuers are likely to have non-health lines of business that will result in their revenues exceeding $41.5 million. However, to produce a conservative estimate, for the purposes of this analysis, the Departments assume (2020). https://www.cms.gov/CCIIO/Resources/ Data-Resources/mlr. 98 Available at https://www.sba.gov/document/ support—table-size-standards. 99 Based on data from the NAICS Association for NAICS code 524292, the Departments estimate the percent of businesses within the industry of Third Party Administration of Insurance and Pension Funds with less than $40 million in annual sales. (See NAICS Association. ‘‘Market Analysis Profile: NAICS Code & Annual Sales.’’ https:// www.naics.com/business-lists/counts-by-naicscode/.) 100 Available at https://www.sba.gov/document/ support—table-size-standards. 101 Based on data from the NAICS Association for NAICS code 524114, the Departments estimate the percent of businesses within the industry of Direct Health and Medical Insurer Carriers with less than $41.5 million in annual sales. (See NAICS Association. ‘‘Market Analysis Profile: NAICS Code & Annual Sales.’’ https://www.naics.com/businesslists/counts-by-naics-code/.) 102 Available at https://www.cms.gov/CCIIO/ Resources/Data-Resources/mlr.html. PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 8.5 percent, (125 issuers) are considered small entities. These final rules will also affect health care providers because the Departments assume that the cost of preparing and delivering the notice of the certified IDR entity’s determination is included in the certified IDR entity fees paid by providers, facilities, providers of air ambulance services, plans, issuers, and FEHB carriers. The Departments estimate that 140,270 physicians, on average, bill on an outof-network basis. The number of small physicians is estimated based on the SBA’s size standards. The size standard applied for providers is NAICS 62111 (Offices of Physicians), for which a business with less than $14 million in receipts is considered to be small. By this standard, the Departments estimate that 45.8 percent (64,232 physicians) are considered small under the SBA’s size standards.103 These final rules are also expected to affect non-physician providers who bill on an out-of-network basis. The Departments lack data on the number of non-physician providers who would be impacted. The Departments do not have the same level of data for the air ambulance sub-sector. In 2020, the total revenue of providers of air ambulance services is estimated to be $4.2 billion with 1,114 air ambulance bases.104 This results in an industry average of $3.8 million per air ambulance base. Accordingly, the Departments are of the view that most providers of air ambulance services are likely to be small entities. B. Impact of the Final Rules In addition to the information already required to be provided with an initial payment or notice of denial of payment under the July 2021 interim final rules, including the QPA, these final rules require that a plan or issuer must provide, if applicable, an acknowledgement if all or any portion of the claim was downcoded; an explanation of why the claim was 103 Based on data from the NAICS Association for NAICS code 62111, the Departments estimate the percent of businesses within the industry of Offices of Physicians with less than $14 million in annual sales. (See NAICS Association. ‘‘Market Analysis Profile: NAICS Code & Annual Sales.’’ https:// www.naics.com/business-lists/counts-by-naicscode/.) 104 ASPE Office of Health Policy. ‘‘Air Ambulance Use and Surprise Billing’’ (September 2021). https://aspe.hhs.gov/sites/default/files/2021-09/ aspe-air-ambulance-ib-09-10-2021.pdf. U.S. Small Business Administration. ‘‘Table of Small Business Size Standards Matched to North American Industry Classification System Codes.’’ https:// www.naics.com/business-lists/counts-by-naicscode/. https://www.sba.gov/sites/default/files/202205/Table%20of%20Size%20Standards_ Effective%20May%202%202022_Final.pdf. E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations downcoded, including a description of which service codes were altered, if any, and a description of any modifiers that were altered, added, or removed, if any; and the amount that would have been the QPA had the service code or modifier not been downcoded. The total annual burden for all issuers and TPAs for providing the additional information related to the QPA is estimated to be 85,303 hours with an equivalent cost of approximately $4.3 million. For more details, please refer to the Paperwork Reduction Act analysis, found in section VI of this preamble. In addition, after the certified IDR entity has reviewed the offers and selected an offer, the certified IDR entity must explain its determination in a written decision submitted to the parties and the Departments, in a form and manner specified by the Departments. The certified IDR entity’s written decision must include an explanation of what information the certified IDR entity determined demonstrated that the offer selected is the out-of-network rate that best represents the value of the qualified IDR item or service. This explanation must include the weight given to the QPA and any additional non-prohibited, credible information submitted in accordance with these final rules. If the certified IDR entity relies on any additional information in selecting an offer, the written decision must include an explanation of why the certified IDR entity concluded that this information was not already reflected in the qualifying payment amount. The total estimated annual cost burden for certified IDR entities to provide payment determination notices regarding non-air ambulance Federal IDR claims is estimated to be $1.2 million and the total estimated annual cost burden for certified IDR entities to provide payment determination notices regarding air ambulance Federal IDR claims is estimated to be $0.3 million. The Departments assume for this calculation that half of the cost will fall on the providers, providers of air ambulance services, and facilities and the remaining half will fall on plans, issuers, and FEHB carriers. For more details, please refer to the Paperwork Reduction Act analysis, found in section V of this preamble. To estimate the proportion of the total costs that would fall onto small entities, the Departments assume that the proportion of costs is proportional to the industry receipts. The Departments are of the view that this assumption is reasonable because the number of providers, facilities, and providers of air ambulance services that receive initial and additional information about the VerDate Sep<11>2014 18:04 Aug 25, 2022 Jkt 256001 QPA is likely to be proportional to the amount of business in which the entity is involved. Applying data from the Census Bureau of receipts by size for each industry, the Departments estimate that small issuers will incur 0.2 percent of the total costs incurred by all issuers and small providers will incur 37 percent of the total cost by all providers.105 Accordingly, the Departments estimate that small issuers and TPAs will incur an annual cost of $4,330 associated with disclosing additional information about the QPA.106 For each small issuer and TPA, this results in an estimated annual cost of $16.98.107 For the payment determination notice regarding disputes involving non-air ambulance claims, the Departments estimate that the total annual cost for all small issuers will be $1,193 and the total annual cost for small providers will be $219,446.108 This results in a per-entity annual cost of $9.54 for small issuers and a per-entity annual cost of $3.42 for small providers that are not providers of air ambulance services.109 For the payment determination notice regarding a dispute involving air ambulance claims, the Departments estimate that the total annual cost for small issuers will be $344 and the total annual cost for all small providers of air ambulance services will be $62,530.110 This results in a per-entity annual cost of $2.72 for small issuers and a perentity annual cost of $56.13 for small providers of air ambulance services.111 The number of impacted small health plans is not a significant number of plans compared to the total universe of 1.9 million small health plans. Assuming that 17,435 non-air ambulance claims and 4,968 air 105 Census Bureau. ‘‘2017 SUSB Annual Data Tables by Establishment Industry, Data by Enterprise Receipt Size.’’ (May 2021). https:// www.census.gov/data/tables/2017/econ/susb/2017susb-annual.html. 106 The annual cost is estimated as: $4,329,980 × 0.5 × 0.2% = $4,330. 107 The cost is estimated as: $4,330/(125 Issuers + 130 TPAs) = $16.98. 108 The annual cost for issuers is estimated as: $1,192,641 × 0.5 × 0.2% = $1,193. The annual cost for small physicians is estimated as: $1,192,641 × 0.5 × 36.8% = $219,446. 109 The annual per-claim cost for issuers is estimated as: $1,193/125 Issuers = $9.54. The annual per-claim cost for small physicians is estimated as: $219,446/64,232 small physicians = $3.42. 110 The annual cost for issuers is estimated as: $339,836 × 0.5 × 0.2% = $340. The annual cost for small providers of air ambulance services is estimated as: $339,836 × 0.5 × 36.8% = $62,530. 111 The annual per-claim cost for issuers is estimated as: $340/125 Issuers = $2.72. The annual per-claim cost for small providers of air ambulance services is estimated as: $62,530/1,114 providers of air ambulance services = $56.13. PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 52643 ambulance claims are submitted to the Federal IDR process each year, only one percent of small health plans will be impacted.112 The number of impacted plans and issuers may be even smaller, if some plans and issuers have multiple disputes that are batched in the Federal IDR process. By batching qualified IDR items and services, there may be a reduction in the per-service cost of the Federal IDR process, and potentially the aggregate administrative costs, because the Federal IDR process is likely to exhibit at least some economies of scale.113 VII. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed agency rule, or a finalization of such a proposal, that may result in an expenditure of $100 million or more (adjusted annually for inflation with the base year 1995) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector.114 In 2022, that threshold is approximately $165 million. For purposes of the UMRA, these final rules do not include any Federal mandate that the Departments expect to result in such expenditures by State, local, or tribal governments. VIII. Federalism Statement Executive Order 13132 outlines fundamental principles of federalism and requires Federal agencies to adhere to specific criteria when formulating and implementing policies that have ‘‘substantial direct effects’’ on the States, the relationship between the National Government and States, or on the distribution of power and responsibilities among the various levels of government. Federal agencies promulgating regulations that have federalism implications must consult with State and local officials and describe the extent of their consultation and the nature of the concerns of State and local officials in the preamble to these final rules. In the Departments’ view, these final rules have federalism implications 112 (17,435 claims + 4,968 air ambulance claims)/ 1,927,786 ERISA health plans = 1% (Source: 2020 Medical Expenditure Panel Survey-Insurance Component). 113 Matthew Fiedler, Loren Adler, and Benedic Ippolito. ‘‘Recommendations for Implementing the No Surprises Act.’’ U.S.C.-Brookings Schaeffer on Health Policy. (March 2021). https:// www.brookings.edu/blog/usc-brookings-schaefferon-health-policy/2021/03/16/recommendations-forimplementing-the-no-surprises-act/. 114 2 U.S.C. 1501 et seq. (1995). E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 52644 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations because they have direct effects on the States, the relationship between the National Government and the States, or the distribution of power and responsibilities among various levels of government. State and local government providers, facilities, and health plans may be subject to the Federal IDR process or an All-Payer Model Agreement or a specified State law. Additionally, the No Surprises Act authorizes States to enforce the new requirements, including those related to balance billing, with respect to issuers, providers, facilities, and providers of air ambulance services, with HHS enforcing only in cases in which the State has notified HHS that the State does not have the authority to enforce or is otherwise not enforcing, or HHS has made a determination that a State has failed to substantially enforce the requirements. However, in the Departments’ view, the federalism implications of these final rules are substantially mitigated because the Departments expect that some States will have their own process for determining the total amount payable under a plan or coverage. Where a State does not have an applicable All-Payer Model Agreement, but does have such a specified State law, the State law, rather than the Federal IDR process, will apply. The Departments anticipate that some States with their own IDR processes or other mechanism for determining the out-of-network rate may want to change their laws or adopt new laws in response to these final rules. The Departments anticipate that these States will incur a small incremental cost when making changes to their laws. In general, section 514 of ERISA preempts state laws to the extent that they relate to any private covered employee benefit plan, including covered group health plans, and preserves State laws that regulate insurance, banking, or securities. While ERISA prohibits States from regulating a plan as an insurance or investment company or bank, the preemption provisions of section 731 of ERISA and section 2724 of the PHS Act (implemented in 29 CFR 2590.731(a) and 45 CFR 146.143(a)) apply so that requirements of Part 7 of ERISA and title XXVII of the PHS Act (including those of the No Surprises Act) are not to be ‘‘construed to supersede any provision of State law which establishes, implements, or continues in effect any standard or requirement solely relating to health insurance issuers in connection with group health insurance coverage except to the extent that such standard or requirement VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 prevents the application of a requirement’’ of a Federal standard. The conference report accompanying the Health Insurance Portability and Accountability Act of 1996 (HIPAA) indicates that this is intended to be the ‘‘narrowest’’ preemption of State laws.115 Additionally, the No Surprises Act requires that when a State law determines the total amount payable under such a plan, coverage, or issuer for emergency services or to nonparticipating providers related to patient visits to participating facilities for nonemergency services, the State law will apply, rather than the Federal IDR process specified in these final rules. In compliance with the requirement of Executive Order 13132 that agencies examine closely any policies that may have federalism implications or limit the policy-making discretion of the States, the Departments engaged in efforts to consult with and work cooperatively with affected States, including participating in conference calls with and attending conferences of the NAIC and consulting with State insurance officials on a state-by-state basis. In addition, the Departments consulted with the NAIC, as required by the No Surprises Act, to establish the geographic regions to be used in the methodology for calculating the QPA as detailed in the July 2021 interim final rules. In developing these final rules, the Departments attempted to balance the States’ interests in regulating health insurance issuers, providers, and facilities with the need to ensure at least the minimum Federal consumer protections in every State. By doing so, the Departments complied with the requirements of Executive Order 13132. List of Subjects 26 CFR Part 54 Excise taxes, Health care, Health insurance, Pensions, Reporting and recordkeeping requirements. 29 CFR Part 2590 Continuation coverage, Disclosure, Employee benefit plans, Group health plans, Health care, Health insurance, Medical child support, Reporting and recordkeeping requirements. 45 CFR Part 149 Balance billing, Health care, Health insurance, Reporting and recordkeeping requirements, Surprise billing, State 115 See House Conf. Rep. No. 104–736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News 2018. PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 regulation of health insurance, Transparency in coverage. Douglas W. O’Donnell, Deputy Commissioner for Services and Enforcement, Internal Revenue Service. Lily L. Batchelder, Assistant Secretary of the Treasury (Tax Policy). Ali Khawar, Acting Assistant Secretary, Employee Benefits Security Administration, U.S. Department of Labor. Xavier Becerra, Secretary, Department of Health and Human Services. Department of the Treasury Internal Revenue Service Adoption of the Amendments to the Regulations Accordingly, the Treasury Department and the IRS adopts as final the temporary regulations adding 26 CFR 54.9816–6T and 54.9817–2T, published at 86 FR 36872 (July 13, 2021), and 26 CFR 54.9816–8T, published at 86 FR 55980 (October 7, 2021), with the following changes to 26 CFR part 54: PART 54—PENSION EXCISE TAXES 1. The authority citation for part 54 continues to read in part as follows: ■ Authority: 26 U.S.C. 7805, unless otherwise noted. * * * * * 2. Section 54.9816–6 is added to read as follows: ■ § 54.9816–6 Methodology for calculating qualifying payment amount. (a) For further guidance see § 54.9816–6T(a) introductory text through (a)(17). (1)–(17) [Reserved] (18) Downcode means the alteration by a plan or issuer of a 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 qualifying payment amount than the service code or modifier billed by the provider, facility, or provider of air ambulance services. (b)–(c) For further guidance see § 54.9816–6T(b) and (c). (d) For further guidance see § 54.9816–6T(d) introductory text through (d)(1)(i). (1) [Reserved] (i) [Reserved] (ii) If the qualifying payment amount is based on a downcoded service code or modifier— (A) A statement that the service code or modifier billed by the provider, E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations facility, or provider of air ambulance services was downcoded; (B) An explanation of why the claim was downcoded, which must include a description of which service codes were altered, if any, and a description of which modifiers were altered, added, or removed, if any; and (C) The amount that would have been the qualifying payment amount had the service code or modifier not been downcoded. (iii)–(v) For further guidance see § 54.9816–6T(d)(1)(iii) through (v). (2) For further guidance see § 54.9816–6T(d)(2). (e)–(f) For further guidance see § 54.9816–6T(e) and (f). (g) Applicability date. The provisions of this section are applicable for plan years beginning on or after January 1, 2022, except that paragraph (a)(18) of this section regarding the definition of the term ‘‘downcode’’ and paragraph (d)(1)(ii) of this section regarding additional information that must be provided if the qualifying payment amount is based on a downcoded service code or modifier are applicable with respect to items or services provided or furnished on or after October 25, 2022, for plan years beginning on or after January 1, 2022. ■ 3. Section 54.9816–6T is amended by: ■ a. Adding paragraph (a)(18); ■ b. Redesignating paragraphs (d)(1)(ii) through and (iv) as paragraphs (d)(1)(iii) through (v), respectively; and ■ c. Adding a new paragraph (d)(1)(ii). The additions read as follows: § 54.9816–6T Methodology for calculating qualifying payment amount (temporary). (a) * * * (18) For further guidance see § 54.9816–6(a)(18). * * * * * (d) * * * (1) * * * (ii) For further guidance see § 54.9816–6(d)(1)(ii); * * * * * ■ 4. Section 54.9816–8 is added to read as follows: lotter on DSK11XQN23PROD with RULES2 § 54.9816–8 Independent dispute resolution process. (a)–(b) For further guidance see § 54.9816–8T(a) and (b). (c) For further guidance see § 54.9816–8T(c) introductory text through (c)(3). (1)–(3) [Reserved] (4) For further guidance see § 54.9816–8T(c)(4) introductory text through (c)(4)(ii) introductory text. (i) [Reserved] (ii) [Reserved] VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 (A) Select as the out-of-network rate for the qualified IDR item or service one of the offers submitted under § 54.9816– 8T(c)(4)(i), weighing only the considerations specified in paragraph (c)(4)(iii) of this section (as applied to the information provided by the parties pursuant to § 54.9816–8T(c)(4)(i)). The certified IDR entity must select the offer that the certified IDR entity determines best represents the value of the qualified IDR item or service as the out-ofnetwork rate. (B) For further guidance see § 54.9816–8T(c)(4)(ii)(B). (iii) Considerations in determination. In determining which offer to select: (A) The certified IDR entity must consider the qualifying payment amount(s) for the applicable year for the same or similar item or service. (B) The certified IDR entity must then consider information submitted by a party that relates to the following circumstances: (1) The level of training, experience, and quality and outcomes measurements of the provider or facility that furnished the qualified IDR item or service (such as those endorsed by the consensus-based entity authorized in section 1890 of the Social Security Act). (2) The market share held by the provider or facility or that of the plan or issuer in the geographic region in which the qualified IDR item or service was provided. (3) The acuity of the participant or beneficiary receiving the qualified IDR item or service, or the complexity of furnishing the qualified IDR item or service to the participant or beneficiary. (4) The teaching status, case mix, and scope of services of the facility that furnished the qualified IDR item or service, if applicable. (5) Demonstration of good faith efforts (or lack thereof) made by the provider or facility or the plan or issuer to enter into network agreements with each other, and, if applicable, contracted rates between the provider or facility, as applicable, and the plan or issuer, as applicable, during the previous 4 plan years. (C) The certified IDR entity must also consider information provided by a party in response to a request by the certified IDR entity under § 54.9816– 8T(c)(4)(i)(A)(2) that relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination and that does not include information on factors described in § 54.9816– 8T(c)(4)(v). (D) The certified IDR entity must also consider additional information submitted by a party that relates to the PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 52645 offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination and that does not include information on factors described in § 54.9816– 8T(c)(4)(v). (E) In weighing the considerations described in paragraphs (c)(4)(iii)(B) through (D) of this section, the certified IDR entity should evaluate whether the information is credible and relates to the offer submitted by either party for the payment amount for the qualified IDR item or service that is the subject of the payment determination. The certified IDR entity should not give weight to information to the extent it is not credible, it does not relate to either party’s offer for the payment amount for the qualified IDR item or service, or it is already accounted for by the qualifying payment amount under paragraph (c)(4)(iii)(A) of this section or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. (iv) Examples. The rules of paragraph (c)(4)(iii) of this section are illustrated in the following paragraphs. Each example assumes that the Federal IDR process applies for purposes of determining the out-of-network rate, that both parties have submitted the information parties are required to submit as part of the Federal IDR process, and that the submitted information does not include information on factors described in paragraph (c)(4)(v) of this section: (A) Example 1—(1) Facts. A level 1 trauma center that is a nonparticipating emergency facility and an issuer are parties to a payment determination in the Federal IDR process. The facility submits an offer that is higher than the qualifying payment amount. The facility also submits additional written information showing that the scope of services available at the facility was critical to the delivery of care for the qualified IDR item or service provided, given the particular patient’s acuity. This information is determined to be credible by the certified IDR entity. Further, the facility submits additional information showing the contracted rates used to calculate the qualifying payment amount for the qualified IDR item or service were based on a level of service that is typical in cases in which the services are delivered by a facility that is not a level 1 trauma center and that does not have the capability to provide the scope of services provided by a level 1 trauma center. This information is also determined to be credible by the certified IDR entity. The issuer submits an offer equal to the qualifying payment amount. No additional information is submitted by E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 52646 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations either party. The certified IDR entity determines that all the information submitted by the nonparticipating emergency facility relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. (2) Conclusion. In this paragraph (c)(4)(iv)(A) (Example 1), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity then must consider the additional information submitted by the nonparticipating emergency facility, provided the information relates to circumstances described in paragraphs (c)(4)(iii)(B) through (D) of this section and relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. If the certified IDR entity determines that it is appropriate to give weight to the additional credible information submitted by the nonparticipating emergency facility and that the additional credible information submitted by the facility demonstrates that the facility’s offer best represents the value of the qualified IDR item or service, the certified IDR entity should select the facility’s offer. (B) Example 2—(1) Facts. A nonparticipating provider and an issuer are parties to a payment determination in the Federal IDR process. The provider submits an offer that is higher than the qualifying payment amount. The provider also submits additional written information regarding the level of training and experience the provider possesses. This information is determined to be credible by the certified IDR entity, but the certified IDR entity finds that the information does not demonstrate that the provider’s level of training and experience relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination (for example, the information does not show that the provider’s level of training and experience was necessary for providing the qualified IDR service that is the subject of the payment determination to the particular patient, or that the training or experience made an impact on the care that was provided). The nonparticipating provider does not submit any additional information. The issuer submits an offer equal to the qualifying payment amount, with no additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(B) (Example 2), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity must then consider the additional information submitted by the VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 nonparticipating provider, provided the information relates to circumstances described in paragraphs (c)(4)(iii)(B) through (D) of this section and relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. In addition, the certified IDR entity should not give weight to information to the extent it is already accounted for by the qualifying payment amount or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity determines that the additional information submitted by the provider is credible but does not relate to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination, and determines that the issuer’s offer best represents the value of the qualified IDR service, in the absence of any other credible information that relates to either party’s offer, the certified IDR entity should select the issuer’s offer. (C) Example 3—(1) Facts. A nonparticipating provider and an issuer are parties to a payment determination in the Federal IDR process involving an emergency department visit for the evaluation and management of a patient. The provider submits an offer that is higher than the qualifying payment amount. The provider also submits additional written information showing that the acuity of the patient’s condition and complexity of the qualified IDR service furnished required the taking of a comprehensive history, a comprehensive examination, and medical decision making of high complexity. This information is determined to be credible by the certified IDR entity. The issuer submits an offer equal to the qualifying payment amount for CPT code 99285, which is the CPT code for an emergency department visit for the evaluation and management of a patient requiring a comprehensive history, a comprehensive examination, and medical decision making of high complexity. The issuer also submits additional written information showing that this CPT code accounts for the acuity of the patient’s condition. This information is determined to be credible by the certified IDR entity. The certified IDR entity determines that the information provided by the provider and issuer relates to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. Neither party submits any additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(C) (Example 3), the certified IDR entity must consider the qualifying PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 payment amount. The certified IDR entity then must consider the additional information submitted by the parties, but the certified IDR entity should not give weight to information to the extent it is already accounted for by the qualifying payment amount or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity determines the additional information on the acuity of the patient and complexity of the service is already accounted for in the calculation of the qualifying payment amount, the certified IDR entity should not give weight to the additional information provided by the provider. If the certified IDR entity determines that the issuer’s offer best represents the value of the qualified IDR service, the certified IDR entity should select the issuer’s offer. (D) Example 4—(1) Facts. A nonparticipating emergency facility and an issuer are parties to a payment determination in the Federal IDR process. Although the facility is not participating in the issuer’s network during the relevant plan year, it was a participating facility in the issuer’s network in the previous 4 plan years. The issuer submits an offer that is higher than the qualifying payment amount and that is equal to the facility’s contracted rate (adjusted for inflation) for the previous year with the issuer for the qualified IDR service. The issuer also submits additional written information showing that the contracted rates between the facility and the issuer during the previous 4 plan years were higher than the qualifying payment amount submitted by the issuer, and that these prior contracted rates account for the case mix and scope of services typically furnished at the nonparticipating facility. The certified IDR entity determines this information is credible and that it relates to the offer submitted by the issuer for the payment amount for the qualified IDR service that is the subject of the payment determination. The facility submits an offer that is higher than both the qualifying payment amount and the contracted rate (adjusted for inflation) for the previous year with the issuer for the qualified IDR service. The facility also submits additional written information, with the intent to show that the case mix and scope of services available at the facility were integral to the service provided. The certified IDR entity determines this information is credible and that it relates to the offer submitted by the facility for the payment amount for the qualified IDR service that is the subject of the E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations payment determination. Neither party submits any additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(D) (Example 4), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity then must consider the additional information submitted by the parties, but should not give weight to information to the extent it is already accounted for by the qualifying payment amount or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity determines that the information submitted by the facility regarding the case mix and scope of services available at the facility includes information that is also accounted for in the information the issuer submitted regarding prior contracted rates, then the certified IDR entity should give weight to that information only once. The certified IDR entity also should not give weight to the same information provided by the nonparticipating emergency facility in relation to any other factor. If the certified IDR entity determines that the issuer’s offer best represents the value of the qualified IDR service, the certified IDR entity should select the issuer’s offer. (E) Example 5—(1) Facts. A nonparticipating provider and an issuer are parties to a payment determination in the Federal IDR process regarding a qualified IDR service for which the issuer downcoded the service code that the provider billed. The issuer submits an offer equal to the qualifying payment amount (which was calculated using the downcoded service code). The issuer also submits additional written information that includes the documentation disclosed to the nonparticipating provider under § 54.9816–6(d)(1)(ii) at the time of the initial payment (which describes why the service code was downcoded). The certified IDR entity determines this information is credible and that it relates to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. The provider submits an offer equal to the amount that would have been the qualifying payment amount had the service code not been downcoded. The provider also submits additional written information that includes the documentation disclosed to the nonparticipating provider under § 54.9816–6(d)(1)(ii) at the time of the initial payment. Further, the provider submits additional written information that explains why the billed service code was more appropriate than the downcoded service code, as evidence that the provider’s offer, which is equal VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 to the amount the qualifying payment amount would have been for the service code that the provider billed, best represents the value of the service furnished, given its complexity. The certified IDR entity determines this information to be credible and that it relates to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. Neither party submits any additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(E) (Example 5), the certified IDR entity must consider the qualifying payment amount, which is based on the downcoded service code. The certified IDR entity then must consider whether to give weight to additional information submitted by the parties. If the certified IDR entity determines that the additional credible information submitted by the provider demonstrates that the nonparticipating provider’s offer, which is equal to the qualifying payment amount for the service code that the provider billed, best represents the value of the qualified IDR service, the certified IDR entity should select the nonparticipating provider’s offer. (v) For further guidance see § 54.9816–8T(c)(4)(v) through (c)(4)(vi)(A). (vi) [Reserved] (A) [Reserved] (B) The certified IDR entity’s written decision must include an explanation of their determination, including what information the certified IDR entity determined demonstrated that the offer selected as the out-of-network rate is the offer that best represents the value of the qualified IDR item or service, including the weight given to the qualifying payment amount and any additional credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity relies on information described under paragraphs (c)(4)(iii)(B) through (D) of this section in selecting an offer, the written decision must include an explanation of why the certified IDR entity concluded that this information was not already reflected in the qualifying payment amount. (vii)–(ix) For further guidance see § 54.9816–8T(c)(4)(vii) through (ix). (d)–(e) For further guidance see § 54.9816–8T(d) through (e). (f) For further guidance see § 54.9816– 8T(f) introductory text through (f)(1)(iv). (1) [Reserved] (i)–(iv) [Reserved] (v) For further guidance see § 54.9816–8T(f)(1)(v) introductory text through (f)(1)(v)(E). (A)–(E) [Reserved] PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 52647 (F) The rationale for the certified IDR entity’s decision, including the extent to which the decision relied on the criteria in paragraphs (c)(4)(iii)(B) through (D) of this section. (G)–(I) For further guidance see § 54.9816–8T(f)(1)(v)(G) through (I). (vi) For further guidance see § 54.9816–8T(f)(1)(vi). (2) [Reserved] (g) For further guidance see § 54.9816–8T(g). (h) Applicability date. The provisions of this section are applicable with respect to plan years beginning on or after January 1, 2022, except that paragraphs (c)(4)(ii) through (iv) of this section regarding payment determinations, paragraph (c)(4)(vi)(B) of this section regarding written decisions, and paragraph (f)(1)(v)(F) of this section regarding reporting of information relating to the Federal IDR process are applicable with respect to items or services provided or furnished on or after October 25, 2022, for plan years beginning on or after January 1, 2022. ■ 5. Section 54.9816–8T is amended by: ■ a. Removing paragraph (a)(2)(viii); ■ b. Redesignating paragraphs (a)(2)(ix) through (xiii) as paragraphs (a)(2)(viii) through (xii), respectively; and ■ c. Revising paragraphs (c)(4)(ii)(A), (c)(4)(iii) and (iv), (c)(4)(vi)(B), (f)(1)(v)(F), and (h). The revisions read as follows: § 54.9816–8T Independent dispute resolution process (temporary). * * * * * (c) * * * (4) * * * (ii) * * * (A) For further guidance see § 54.9816–8(c)(4)(ii)(A). * * * * * (iii) For further guidance see § 54.9816–8(c)(4)(iii). (iv) For further guidance see § 54.9816–8(c)(4)(iv). * * * * * (vi) * * * (B) For further guidance see § 54.9816–8(c)(4)(vi)(B). * * * * * (f) * * * (1) * * * (v) * * * (F) For further guidance see § 54.9816–8(f)(1)(v)(F); * * * * * (h) Applicability date. The provisions of this section are applicable with respect to plan years beginning on or after January 1, 2022, except that the provisions regarding IDR entity certification at paragraphs (a) and (e) of E:\FR\FM\26AUR2.SGM 26AUR2 52648 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations this section are applicable beginning on October 7, 2021; and paragraphs (c)(4)(ii) through (iv) of this section regarding payment determinations, paragraph (c)(4)(vi)(B) of this section regarding written decisions, and paragraph (f)(1)(v)(F) of this section regarding reporting of information relating to the Federal IDR process are applicable with respect to items or services provided or furnished on or after October 25, 2022, for plan years beginning on or after January 1, 2022. ■ 6. Section 54.9817–2 is added to read as follows: lotter on DSK11XQN23PROD with RULES2 § 54.9817–2 Independent dispute resolution process for air ambulance services (a) For further guidance see § 54.9817–2T(a). (b) For further guidance see § 54.9817–2T(b) introductory text. (1) In general. Except as provided in paragraphs (b)(2) and (3) of this section and § 54.9817–2T(b)(2) and (4), in determining the out-of-network rate to be paid by group health plans and health insurance issuers offering group health insurance coverage for out-ofnetwork air ambulance services, plans and issuers must comply with the requirements of §§ 54.9816–8T and 54.9816–8, except that references in §§ 54.9816–8T and 54.9816–8 to the additional circumstances in § 54.9816– 8(c)(4)(iii)(B) shall be understood to refer to paragraph (b)(2) of this section and § 54.9817–2T(b)(2). (2) Considerations for air ambulance services. In determining which offer to select, in addition to considering the applicable qualifying payment amount(s), the certified IDR entity must consider information submitted by a party that relates to the following circumstances: (i)–(vi) For further guidance see § 54.9817–2T(b)(2)(i) through (vi). (3) Weighing considerations. In weighing the considerations described in paragraph (b)(2) of this section and § 54.9817–2T(b)(2), the certified IDR entity should evaluate whether the information is credible and relates to the offer submitted by either party for the payment amount for the qualified IDR service that is the subject of the payment determination. The certified IDR entity should not give weight to information to the extent it is not credible, it does not relate to either party’s offer for the payment amount for the qualified IDR service, or it is already accounted for by the qualifying payment amount under § 54.9816–8(c)(4)(iii)(A) or other credible information under § 54.9816–8(c)(4)(iii)(B) through (D), except that the additional circumstances VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 in § 54.9816–8(c)(4)(iii)(B) shall be understood to refer to paragraph (b)(2) of this section and § 54.9817–2T(b)(2). (4) For further guidance see § 54.9817–2T(b)(4) introductory text through (b)(4)(iii). (i)–(iii) [Reserved] (iv) For further guidance see § 54.9817–2T(b)(4)(iv) introductory text through (b)(4)(iv)(E). (A)–(E) [Reserved] (F) The rationale for the certified IDR entity’s decision, including the extent to which the decision relied on the criteria in paragraph (b)(2) of this section and § 54.9816–8(c)(4)(iii)(C) and (D). (G)–(I) For further guidance see § 54.9817–2T(b)(4)(iv)(G) through (I). (c) Applicability date. The provisions of this section are applicable with respect to plan years beginning on or after January 1, 2022, except that paragraphs (b)(1), (2), and (3) and (b)(4)(iv)(F) of this section regarding payment determinations are applicable with respect to services provided or furnished on or after October 25, 2022, for plan years beginning on or after January 1, 2022. ■ 7. Section 54.9817–2T is amended by: ■ a. Revising paragraphs (b)(1) and (2); ■ b. Redesignating paragraph (b)(3) as paragraph (b)(4); ■ c. Adding a new paragraph (b)(3); and ■ d. Revising newly redesignated paragraph (b)(4)(iv)(F) and paragraph (c). The revisions and addition read as follows: § 54.9817–2T Independent dispute resolution process for air ambulance services (temporary). * * * * * (b) * * * (1) For further guidance see § 54.9817–2(b)(1). (2) For further guidance see § 54.9817–2(b)(2). (3) For further guidance see § 54.9817–2(b)(3). (4) * * * (iv) * * * (F) For further guidance see § 54.9817–2(b)(4)(iv)(F); * * * * * (c) Applicability date. The provisions of this section are applicable with respect to plan years beginning on or after January 1, 2022, except that paragraphs (b)(1), (2), and (3) and (b)(4)(iv)(F) of this section regarding payment determinations are applicable with respect to services provided or furnished on or after October 25, 2022, for plan years beginning on or after January 1, 2022. PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 Department of Labor Employee Benefits Security Administration 29 CFR Chapter XXV For the reasons set forth in the preamble, the Department of Labor adopts as final the interim rules adding 29 CFR 2590.716–6, published at 86 FR 36872 (July 13, 2021), and 29 CFR 2590.716–8 and 2590.717–2, published at 86 FR 55980 (October 7, 2021), with the following changes: PART 2590—RULES AND REGULATIONS FOR GROUP HEALTH PLANS 8. The authority citation for part 2590 continues to read as follows: ■ Authority: 29 U.S.C. 1027, 1059, 1135, 1161–1168, 1169, 1181–1183, 1181 note, 1185, 1185a–n, 1191, 1191a, 1191b, and 1191c; sec. 101(g), Pub. L.104–191, 110 Stat. 1936; sec. 401(b), Pub. L. 105–200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 110–343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111–148, 124 Stat. 119, as amended by Pub. L. 111–152, 124 Stat. 1029; Division M, Pub. L. 113–235, 128 Stat. 2130; Pub. L. 116–260 134 Stat. 1182; Secretary of Labor’s Order 1–2011, 77 FR 1088 (Jan. 9, 2012). 9. Section 2590.716–6 is amended by: a. Adding paragraph (a)(18); b. Redesignating paragraphs (d)(1)(ii) through (iv) as paragraphs (d)(1)(iii) through (v), respectively; ■ c. Adding a new paragraph (d)(1)(ii); and ■ d. Revising paragraph (f). The revisions and additions read as follows: ■ ■ ■ § 2590.716–6 Methodology for calculating qualifying payment amount. (a) * * * (18) Downcode means the alteration by a plan or issuer of a 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 qualifying payment amount than the service code or modifier billed by the provider, facility, or provider of air ambulance services. * * * * * (d) * * * (1) * * * (ii) If the qualifying payment amount is based on a downcoded service code or modifier— (A) A statement that the service code or modifier billed by the provider, facility, or provider of air ambulance services was downcoded; (B) An explanation of why the claim was downcoded, which must include a E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations description of which service codes were altered, if any, and a description of which modifiers were altered, added, or removed, if any; and (C) The amount that would have been the qualifying payment amount had the service code or modifier not been downcoded; * * * * * (f) Applicability date. The provisions of this section are applicable for plan years beginning on or after January 1, 2022, except that paragraph (a)(18) of this section regarding the definition of the term ‘‘downcode’’ and paragraph (d)(1)(ii) of this section regarding additional information that must be provided if the qualifying payment amount is based on a downcoded service code or modifier are applicable with respect to items or services provided or furnished on or after October 25, 2022, for plan years beginning on or after January 1, 2022. ■ 10. Section 2590.716–8 is amended by: ■ a. Removing paragraph (a)(2)(viii); ■ b. Redesignating paragraphs (a)(2)(ix) through (xiii) as paragraphs (a)(2)(viii) through (xii), respectively; and ■ c. Revising paragraphs (c)(4)(ii)(A), (c)(4)(iii) and (iv), (c)(4)(vi)(B), (f)(1)(v)(F), and (h). The revisions read as follows: § 2590.716–8 Independent dispute resolution process. lotter on DSK11XQN23PROD with RULES2 * * * * * (c) * * * (4) * * * (ii) * * * (A) Select as the out-of-network rate for the qualified IDR item or service one of the offers submitted under paragraph (c)(4)(i) of this section, weighing only the considerations specified in paragraph (c)(4)(iii) of this section (as applied to the information provided by the parties pursuant to paragraph (c)(4)(i) of this section). The certified IDR entity must select the offer that the certified IDR entity determines best represents the value of the qualified IDR item or service as the out-of-network rate. * * * * * (iii) Considerations in determination. In determining which offer to select: (A) The certified IDR entity must consider the qualifying payment amount(s) for the applicable year for the same or similar item or service. (B) The certified IDR entity must then consider information submitted by a party that relates to the following circumstances: (1) The level of training, experience, and quality and outcomes VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 measurements of the provider or facility that furnished the qualified IDR item or service (such as those endorsed by the consensus-based entity authorized in section 1890 of the Social Security Act). (2) The market share held by the provider or facility or that of the plan or issuer in the geographic region in which the qualified IDR item or service was provided. (3) The acuity of the participant or beneficiary receiving the qualified IDR item or service, or the complexity of furnishing the qualified IDR item or service to the participant or beneficiary. (4) The teaching status, case mix, and scope of services of the facility that furnished the qualified IDR item or service, if applicable. (5) Demonstration of good faith efforts (or lack thereof) made by the provider or facility or the plan or issuer to enter into network agreements with each other, and, if applicable, contracted rates between the provider or facility, as applicable, and the plan or issuer, as applicable, during the previous 4 plan years. (C) The certified IDR entity must also consider information provided by a party in response to a request by the certified IDR entity under paragraph (c)(4)(i)(A)(2) of this section that relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination and that does not include information on factors described in paragraph (c)(4)(v) of this section. (D) The certified IDR entity must also consider additional information submitted by a party that relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination and that does not include information on factors described in paragraph (c)(4)(v) of this section. (E) In weighing the considerations described in paragraphs (c)(4)(iii)(B) through (D) of this section, the certified IDR entity should evaluate whether the information is credible and relates to the offer submitted by either party for the payment amount for the qualified IDR item or service that is the subject of the payment determination. The certified IDR entity should not give weight to information to the extent it is not credible, it does not relate to either party’s offer for the payment amount for the qualified IDR item or service, or it is already accounted for by the qualifying payment amount under paragraph (c)(4)(iii)(A) of this section or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 52649 (iv) Examples. The rules of paragraph (c)(4)(iii) of this section are illustrated in the following paragraphs. Each example assumes that the Federal IDR process applies for purposes of determining the out-of-network rate, that both parties have submitted the information parties are required to submit as part of the Federal IDR process, and that the submitted information does not include information on factors described in paragraph (c)(4)(v) of this section: (A) Example 1—(1) Facts. A level 1 trauma center that is a nonparticipating emergency facility and an issuer are parties to a payment determination in the Federal IDR process. The facility submits an offer that is higher than the qualifying payment amount. The facility also submits additional written information showing that the scope of services available at the facility was critical to the delivery of care for the qualified IDR item or service provided, given the particular patient’s acuity. This information is determined to be credible by the certified IDR entity. Further, the facility submits additional information showing the contracted rates used to calculate the qualifying payment amount for the qualified IDR item or service were based on a level of service that is typical in cases in which the services are delivered by a facility that is not a level 1 trauma center and that does not have the capability to provide the scope of services provided by a level 1 trauma center. This information is also determined to be credible by the certified IDR entity. The issuer submits an offer equal to the qualifying payment amount. No additional information is submitted by either party. The certified IDR entity determines that all the information submitted by the nonparticipating emergency facility relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. (2) Conclusion. In this paragraph (c)(4)(iv)(A) (Example 1), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity then must consider the additional information submitted by the nonparticipating emergency facility, provided the information relates to circumstances described in paragraphs (c)(4)(iii)(B) through (D) of this section and relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. If the certified IDR entity determines that it is appropriate to give weight to the additional credible information submitted by the nonparticipating emergency facility and that the E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 52650 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations additional credible information submitted by the facility demonstrates that the facility’s offer best represents the value of the qualified IDR item or service, the certified IDR entity should select the facility’s offer. (B) Example 2—(1) Facts. A nonparticipating provider and an issuer are parties to a payment determination in the Federal IDR process. The provider submits an offer that is higher than the qualifying payment amount. The provider also submits additional written information regarding the level of training and experience the provider possesses. This information is determined to be credible by the certified IDR entity, but the certified IDR entity finds that the information does not demonstrate that the provider’s level of training and experience relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination (for example, the information does not show that the provider’s level of training and experience was necessary for providing the qualified IDR service that is the subject of the payment determination to the particular patient, or that the training or experience made an impact on the care that was provided). The nonparticipating provider does not submit any additional information. The issuer submits an offer equal to the qualifying payment amount, with no additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(B) (Example 2), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity must then consider the additional information submitted by the nonparticipating provider, provided the information relates to circumstances described in paragraphs (c)(4)(iii)(B) through (D) of this section and relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. In addition, the certified IDR entity should not give weight to information to the extent it is already accounted for by the qualifying payment amount or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity determines that the additional information submitted by the provider is credible but does not relate to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination, and determines that the issuer’s offer best represents the value of the qualified IDR service, in the absence of any other credible information that relates to either party’s offer, the certified IDR entity should select the issuer’s offer. VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 (C) Example 3—(1) Facts. A nonparticipating provider and an issuer are parties to a payment determination in the Federal IDR process involving an emergency department visit for the evaluation and management of a patient. The provider submits an offer that is higher than the qualifying payment amount. The provider also submits additional written information showing that the acuity of the patient’s condition and complexity of the qualified IDR service furnished required the taking of a comprehensive history, a comprehensive examination, and medical decision making of high complexity. This information is determined to be credible by the certified IDR entity. The issuer submits an offer equal to the qualifying payment amount for CPT code 99285, which is the CPT code for an emergency department visit for the evaluation and management of a patient requiring a comprehensive history, a comprehensive examination, and medical decision making of high complexity. The issuer also submits additional written information showing that this CPT code accounts for the acuity of the patient’s condition. This information is determined to be credible by the certified IDR entity. The certified IDR entity determines that the information provided by the provider and issuer relates to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. Neither party submits any additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(C) (Example 3), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity then must consider the additional information submitted by the parties, but the certified IDR entity should not give weight to information to the extent it is already accounted for by the qualifying payment amount or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity determines the additional information on the acuity of the patient and complexity of the service is already accounted for in the calculation of the qualifying payment amount, the certified IDR entity should not give weight to the additional information provided by the provider. If the certified IDR entity determines that the issuer’s offer best represents the value of the qualified IDR service, the certified IDR entity should select the issuer’s offer. (D) Example 4—(1) Facts. A nonparticipating emergency facility and an issuer are parties to a payment determination in the Federal IDR PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 process. Although the facility is not participating in the issuer’s network during the relevant plan year, it was a participating facility in the issuer’s network in the previous 4 plan years. The issuer submits an offer that is higher than the qualifying payment amount and that is equal to the facility’s contracted rate (adjusted for inflation) for the previous year with the issuer for the qualified IDR service. The issuer also submits additional written information showing that the contracted rates between the facility and the issuer during the previous 4 plan years were higher than the qualifying payment amount submitted by the issuer, and that these prior contracted rates account for the case mix and scope of services typically furnished at the nonparticipating facility. The certified IDR entity determines this information is credible and that it relates to the offer submitted by the issuer for the payment amount for the qualified IDR service that is the subject of the payment determination. The facility submits an offer that is higher than both the qualifying payment amount and the contracted rate (adjusted for inflation) for the previous year with the issuer for the qualified IDR service. The facility also submits additional written information, with the intent to show that the case mix and scope of services available at the facility were integral to the service provided. The certified IDR entity determines this information is credible and that it relates to the offer submitted by the facility for the payment amount for the qualified IDR service that is the subject of the payment determination. Neither party submits any additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(D) (Example 4), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity then must consider the additional information submitted by the parties, but should not give weight to information to the extent it is already accounted for by the qualifying payment amount or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity determines that the information submitted by the facility regarding the case mix and scope of services available at the facility includes information that is also accounted for in the information the issuer submitted regarding prior contracted rates, then the certified IDR entity should give weight to that information only once. The certified IDR entity also should not give weight to the same information provided by the nonparticipating emergency facility in E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations relation to any other factor. If the certified IDR entity determines that the issuer’s offer best represents the value of the qualified IDR service, the certified IDR entity should select the issuer’s offer. (E) Example 5—(1) Facts. A nonparticipating provider and an issuer are parties to a payment determination in the Federal IDR process regarding a qualified IDR service for which the issuer downcoded the service code that the provider billed. The issuer submits an offer equal to the qualifying payment amount (which was calculated using the downcoded service code). The issuer also submits additional written information that includes the documentation disclosed to the nonparticipating provider under § 2590.716–6(d)(1)(ii) at the time of the initial payment (which describes why the service code was downcoded). The certified IDR entity determines this information is credible and that it relates to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. The provider submits an offer equal to the amount that would have been the qualifying payment amount had the service code not been downcoded. The provider also submits additional written information that includes the documentation disclosed to the nonparticipating provider under § 2590.716–6(d)(1)(ii) at the time of the initial payment. Further, the provider submits additional written information that explains why the billed service code was more appropriate than the downcoded service code, as evidence that the provider’s offer, which is equal to the amount the qualifying payment amount would have been for the service code that the provider billed, best represents the value of the service furnished, given its complexity. The certified IDR entity determines this information to be credible and that it relates to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. Neither party submits any additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(E) (Example 5), the certified IDR entity must consider the qualifying payment amount, which is based on the downcoded service code. The certified IDR entity then must consider whether to give weight to additional information submitted by the parties. If the certified IDR entity determines that the additional credible information submitted by the provider demonstrates that the nonparticipating provider’s offer, which is equal to the qualifying payment amount for the service code VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 that the provider billed, best represents the value of the qualified IDR service, the certified IDR entity should select the nonparticipating provider’s offer. * * * * * (vi) * * * (B) The certified IDR entity’s written decision must include an explanation of their determination, including what information the certified IDR entity determined demonstrated that the offer selected as the out-of-network rate is the offer that best represents the value of the qualified IDR item or service, including the weight given to the qualifying payment amount and any additional credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity relies on information described under paragraphs (c)(4)(iii)(B) through (D) of this section in selecting an offer, the written decision must include an explanation of why the certified IDR entity concluded that this information was not already reflected in the qualifying payment amount. * * * * * (f) * * * (1) * * * (v) * * * (F) The rationale for the certified IDR entity’s decision, including the extent to which the decision relied on the criteria in paragraphs (c)(4)(iii)(B) through (D) of this section; * * * * * (h) Applicability date. The provisions of this section are applicable with respect to plan years beginning on or after January 1, 2022, except that the provisions regarding IDR entity certification at paragraphs (a) and (e) of this section are applicable beginning on October 7, 2021; and paragraphs (c)(4)(ii) through (iv) of this section regarding payment determinations, paragraph (c)(4)(vi)(B) of this section regarding written decisions, and paragraph (f)(1)(v)(F) of this section regarding reporting of information relating to the Federal IDR process are applicable with respect to items or services provided or furnished on or after October 25, 2022, for plan years beginning on or after January 1, 2022. ■ 11. Section 2590.717–2 is amended by: ■ a. Revising paragraphs (b)(1) and (b)(2) introductory text; ■ b. Redesignating paragraph (b)(3) as paragraph (b)(4); ■ c. Adding a new paragraph (b)(3); and ■ d. Revising newly redesignated paragraph (b)(4)(iv)(F) and paragraph (c). The addition and revisions read as follows: PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 52651 § 2590.717–2 Independent dispute resolution process for air ambulance services. * * * * * (b) * * * (1) In general. Except as provided in paragraphs (b)(2) and (3) of this section, in determining the out-of-network rate to be paid by group health plans and health insurance issuers offering group health insurance coverage for out-ofnetwork air ambulance services, plans and issuers must comply with the requirements of § 2590.716–8, except that references in § 2590.716–8 to the additional circumstances in § 2590.716– 8(c)(4)(iii)(B) shall be understood to refer to paragraph (b)(2) of this section. (2) Considerations for air ambulance services. In determining which offer to select, in addition to considering the applicable qualifying payment amount(s), the certified IDR entity must consider information submitted by a party that relates to the following circumstances: * * * * * (3) Weighing considerations. In weighing the considerations described in paragraph (b)(2) of this section, the certified IDR entity should evaluate whether the information is credible and relates to the offer submitted by either party for the payment amount for the qualified IDR service that is the subject of the payment determination. The certified IDR entity should not give weight to information to the extent it is not credible, it does not relate to either party’s offer for the payment amount for the qualified IDR service, or it is already accounted for by the qualifying payment amount under § 2590.716–8(c)(4)(iii)(A) or other credible information under § 2590.716–8(c)(4)(iii)(B) through (D), except that the additional circumstances in § 2590.716–8(c)(4)(iii)(B) shall be understood to refer to paragraph (b)(2) of this section. (4) * * * (iv) * * * (F) The rationale for the certified IDR entity’s decision, including the extent to which the decision relied on the criteria in paragraph (b)(2) of this section and § 2590.716–8(c)(4)(iii)(C) and (D); * * * * * (c) Applicability date. The provisions of this section are applicable with respect to plan years beginning on or after January 1, 2022, except that paragraphs (b)(1), (2), and (3) and (b)(4)(iv)(F) of this section regarding payment determinations are applicable with respect to services provided or furnished on or after October 25, 2022, for plan years beginning on or after January 1, 2022. E:\FR\FM\26AUR2.SGM 26AUR2 52652 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations Department of Health and Human Services 45 CFR Subtitle A, Subchapter B For the reasons set forth in the preamble, the Department of Health and Human Services adopts as final the interim rules adding 45 CFR 149.140, published at 86 FR 36872 (July 13, 2021), and 45 CFR 149.510 and 149.520, published at 86 FR 55980 (October 7, 2021), with the following changes to 45 CFR part 149: PART 149—SURPRISE BILLING AND TRANSPARENCY REQUIREMENTS 12. The authority citation for part 149 continues to read as follows: ■ Authority: 42 U.S.C. 300gg–92 and 300gg– 111 through 300gg–139, as amended. 13. Section 149.140 is amended by: a. Adding paragraph (a)(18); b. Redesignating paragraphs (d)(1)(ii) through (iv) as paragraphs (d)(1)(iii) through (v), respectively; ■ c. Adding a new paragraph (d)(1)(ii); and ■ d. Revising paragraph (g). The revisions and additions read as follows: ■ ■ ■ lotter on DSK11XQN23PROD with RULES2 § 149.140 Methodology for calculating qualifying payment amount. (a) * * * (18) Downcode means the alteration by a plan or issuer of a 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 qualifying payment amount than the service code or modifier billed by the provider, facility, or provider of air ambulance services. * * * * * (d) * * * (1) * * * (ii) If the qualifying payment amount is based on a downcoded service code or modifier— (A) A statement that the service code or modifier billed by the provider, facility, or provider of air ambulance services was downcoded; (B) An explanation of why the claim was downcoded, which must include a description of which service codes were altered, if any, and a description of which modifiers were altered, added, or removed, if any; and (C) The amount that would have been the qualifying payment amount had the service code or modifier not been downcoded; * * * * * (g) Applicability date. The provisions of this section are applicable for plan years or in the individual market, policy VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 years beginning on or after January 1, 2022, except that paragraph (a)(18) of this section regarding the definition of the term ‘‘downcode’’ and paragraph (d)(1)(ii) of this section regarding additional information that must be provided if the qualifying payment amount is based on a downcoded service code or modifier are applicable with respect to items or services provided or furnished on or after October 25, 2022, for plan years or in the individual market, policy years beginning on or after January 1, 2022. ■ 14. Section 149.510 is amended by: ■ a. Removing paragraph (a)(2)(viii); ■ b. Redesignating paragraphs (a)(2)(ix) through (xiii) as paragraphs (a)(2)(viii) through (xii), respectively; and ■ c. Revising paragraphs (c)(4)(ii)(A), (c)(4)(iii) and (iv), (c)(4)(vi)(B), (f)(1)(v)(F), and (h). The revisions read as follows: § 149.510 process. Independent dispute resolution * * * * * (c) * * * (4) * * * (ii) * * * (A) Select as the out-of-network rate for the qualified IDR item or service one of the offers submitted under paragraph (c)(4)(i) of this section, weighing only the considerations specified in paragraph (c)(4)(iii) of this section (as applied to the information provided by the parties pursuant to paragraph (c)(4)(i) of this section). The certified IDR entity must select the offer that the certified IDR entity determines best represents the value of the qualified IDR item or service as the out-of-network rate. * * * * * (iii) Considerations in determination. In determining which offer to select: (A) The certified IDR entity must consider the qualifying payment amount(s) for the applicable year for the same or similar item or service. (B) The certified IDR entity must then consider information submitted by a party that relates to the following circumstances: (1) The level of training, experience, and quality and outcomes measurements of the provider or facility that furnished the qualified IDR item or service (such as those endorsed by the consensus-based entity authorized in section 1890 of the Social Security Act). (2) The market share held by the provider or facility or that of the plan or issuer in the geographic region in which the qualified IDR item or service was provided. (3) The acuity of the participant, beneficiary, or enrollee receiving the PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 qualified IDR item or service, or the complexity of furnishing the qualified IDR item or service to the participant, beneficiary, or enrollee. (4) The teaching status, case mix, and scope of services of the facility that furnished the qualified IDR item or service, if applicable. (5) Demonstration of good faith efforts (or lack thereof) made by the provider or facility or the plan or issuer to enter into network agreements with each other, and, if applicable, contracted rates between the provider or facility, as applicable, and the plan or issuer, as applicable, during the previous 4 plan years. (C) The certified IDR entity must also consider information provided by a party in response to a request by the certified IDR entity under paragraph (c)(4)(i)(A)(2) of this section that relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination and that does not include information on factors described in paragraph (c)(4)(v) of this section. (D) The certified IDR entity must also consider additional information submitted by a party that relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination and that does not include information on factors described in paragraph (c)(4)(v) of this section. (E) In weighing the considerations described in paragraphs (c)(4)(iii)(B) through (D) of this section, the certified IDR entity should evaluate whether the information is credible and relates to the offer submitted by either party for the payment amount for the qualified IDR item or service that is the subject of the payment determination. The certified IDR entity should not give weight to information to the extent it is not credible, it does not relate to either party’s offer for the payment amount for the qualified IDR item or service, or it is already accounted for by the qualifying payment amount under paragraph (c)(4)(iii)(A) of this section or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. (iv) Examples. The rules of paragraph (c)(4)(iii) of this section are illustrated in the following paragraphs. Each example assumes that the Federal IDR process applies for purposes of determining the out-of-network rate, that both parties have submitted the information parties are required to submit as part of the Federal IDR process, and that the submitted information does not include information on factors described in paragraph (c)(4)(v) of this section: E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations (A) Example 1—(1) Facts. A level 1 trauma center that is a nonparticipating emergency facility and an issuer are parties to a payment determination in the Federal IDR process. The facility submits an offer that is higher than the qualifying payment amount. The facility also submits additional written information showing that the scope of services available at the facility was critical to the delivery of care for the qualified IDR item or service provided, given the particular patient’s acuity. This information is determined to be credible by the certified IDR entity. Further, the facility submits additional information showing the contracted rates used to calculate the qualifying payment amount for the qualified IDR item or service were based on a level of service that is typical in cases in which the services are delivered by a facility that is not a level 1 trauma center and that does not have the capability to provide the scope of services provided by a level 1 trauma center. This information is also determined to be credible by the certified IDR entity. The issuer submits an offer equal to the qualifying payment amount. No additional information is submitted by either party. The certified IDR entity determines that all the information submitted by the nonparticipating emergency facility relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. (2) Conclusion. In this paragraph (c)(4)(iv)(A) (Example 1), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity then must consider the additional information submitted by the nonparticipating emergency facility, provided the information relates to circumstances described in paragraphs (c)(4)(iii)(B) through (D) of this section and relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. If the certified IDR entity determines that it is appropriate to give weight to the additional credible information submitted by the nonparticipating emergency facility and that the additional credible information submitted by the facility demonstrates that the facility’s offer best represents the value of the qualified IDR item or service, the certified IDR entity should select the facility’s offer. (B) Example 2—(1) Facts. A nonparticipating provider and an issuer are parties to a payment determination in the Federal IDR process. The provider submits an offer that is higher than the qualifying payment amount. The VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 provider also submits additional written information regarding the level of training and experience the provider possesses. This information is determined to be credible by the certified IDR entity, but the certified IDR entity finds that the information does not demonstrate that the provider’s level of training and experience relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination (for example, the information does not show that the provider’s level of training and experience was necessary for providing the qualified IDR service that is the subject of the payment determination to the particular patient, or that the training or experience made an impact on the care that was provided). The nonparticipating provider does not submit any additional information. The issuer submits an offer equal to the qualifying payment amount, with no additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(B) (Example 2), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity must then consider the additional information submitted by the nonparticipating provider, provided the information relates to circumstances described in paragraphs (c)(4)(iii)(B) through (D) of this section and relates to the offer for the payment amount for the qualified IDR item or service that is the subject of the payment determination. In addition, the certified IDR entity should not give weight to information to the extent it is already accounted for by the qualifying payment amount or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity determines that the additional information submitted by the provider is credible but does not relate to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination, and determines that the issuer’s offer best represents the value of the qualified IDR service, in the absence of any other credible information that relates to either party’s offer, the certified IDR entity should select the issuer’s offer. (C) Example 3—(1) Facts. A nonparticipating provider and an issuer are parties to a payment determination in the Federal IDR process involving an emergency department visit for the evaluation and management of a patient. The provider submits an offer that is higher than the qualifying payment amount. The provider also submits additional written information showing that the acuity of the patient’s condition and complexity of the qualified IDR PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 52653 service furnished required the taking of a comprehensive history, a comprehensive examination, and medical decision making of high complexity. This information is determined to be credible by the certified IDR entity. The issuer submits an offer equal to the qualifying payment amount for CPT code 99285, which is the CPT code for an emergency department visit for the evaluation and management of a patient requiring a comprehensive history, a comprehensive examination, and medical decision making of high complexity. The issuer also submits additional written information showing that this CPT code accounts for the acuity of the patient’s condition. This information is determined to be credible by the certified IDR entity. The certified IDR entity determines that the information provided by the provider and issuer relates to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. Neither party submits any additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(C) (Example 3), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity then must consider the additional information submitted by the parties, but the certified IDR entity should not give weight to information to the extent it is already accounted for by the qualifying payment amount or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity determines the additional information on the acuity of the patient and complexity of the service is already accounted for in the calculation of the qualifying payment amount, the certified IDR entity should not give weight to the additional information provided by the provider. If the certified IDR entity determines that the issuer’s offer best represents the value of the qualified IDR service, the certified IDR entity should select the issuer’s offer. (D) Example 4—(1) Facts. A nonparticipating emergency facility and an issuer are parties to a payment determination in the Federal IDR process. Although the facility is not participating in the issuer’s network during the relevant plan year, it was a participating facility in the issuer’s network in the previous 4 plan years. The issuer submits an offer that is higher than the qualifying payment amount and that is equal to the facility’s contracted rate (adjusted for inflation) for the previous year with the issuer for the qualified IDR service. The issuer also submits additional written E:\FR\FM\26AUR2.SGM 26AUR2 lotter on DSK11XQN23PROD with RULES2 52654 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations information showing that the contracted rates between the facility and the issuer during the previous 4 plan years were higher than the qualifying payment amount submitted by the issuer, and that these prior contracted rates account for the case mix and scope of services typically furnished at the nonparticipating facility. The certified IDR entity determines this information is credible and that it relates to the offer submitted by the issuer for the payment amount for the qualified IDR service that is the subject of the payment determination. The facility submits an offer that is higher than both the qualifying payment amount and the contracted rate (adjusted for inflation) for the previous year with the issuer for the qualified IDR service. The facility also submits additional written information, with the intent to show that the case mix and scope of services available at the facility were integral to the service provided. The certified IDR entity determines this information is credible and that it relates to the offer submitted by the facility for the payment amount for the qualified IDR service that is the subject of the payment determination. Neither party submits any additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(D) (Example 4), the certified IDR entity must consider the qualifying payment amount. The certified IDR entity then must consider the additional information submitted by the parties, but should not give weight to information to the extent it is already accounted for by the qualifying payment amount or other credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity determines that the information submitted by the facility regarding the case mix and scope of services available at the facility includes information that is also accounted for in the information the issuer submitted regarding prior contracted rates, then the certified IDR entity should give weight to that information only once. The certified IDR entity also should not give weight to the same information provided by the nonparticipating emergency facility in relation to any other factor. If the certified IDR entity determines that the issuer’s offer best represents the value of the qualified IDR service, the certified IDR entity should select the issuer’s offer. (E) Example 5—(1) Facts. A nonparticipating provider and an issuer are parties to a payment determination in the Federal IDR process regarding a qualified IDR service for which the issuer downcoded the service code that the provider billed. The issuer submits VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 an offer equal to the qualifying payment amount (which was calculated using the downcoded service code). The issuer also submits additional written information that includes the documentation disclosed to the nonparticipating provider under § 149.140(d)(1)(ii) at the time of the initial payment (which describes why the service code was downcoded). The certified IDR entity determines this information is credible and that it relates to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. The provider submits an offer equal to the amount that would have been the qualifying payment amount had the service code not been downcoded. The provider also submits additional written information that includes the documentation disclosed to the nonparticipating provider under § 149.140(d)(1)(ii) at the time of the initial payment. Further, the provider submits additional written information that explains why the billed service code was more appropriate than the downcoded service code, as evidence that the provider’s offer, which is equal to the amount the qualifying payment amount would have been for the service code that the provider billed, best represents the value of the service furnished, given its complexity. The certified IDR entity determines this information to be credible and that it relates to the offer for the payment amount for the qualified IDR service that is the subject of the payment determination. Neither party submits any additional information. (2) Conclusion. In this paragraph (c)(4)(iv)(E) (Example 5), the certified IDR entity must consider the qualifying payment amount, which is based on the downcoded service code. The certified IDR entity then must consider whether to give weight to additional information submitted by the parties. If the certified IDR entity determines that the additional credible information submitted by the provider demonstrates that the nonparticipating provider’s offer, which is equal to the qualifying payment amount for the service code that the provider billed, best represents the value of the qualified IDR service, the certified IDR entity should select the nonparticipating provider’s offer. * * * * * (vi) * * * (B) The certified IDR entity’s written decision must include an explanation of their determination, including what information the certified IDR entity determined demonstrated that the offer selected as the out-of-network rate is the PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 offer that best represents the value of the qualified IDR item or service, including the weight given to the qualifying payment amount and any additional credible information under paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified IDR entity relies on information described under paragraphs (c)(4)(iii)(B) through (D) of this section in selecting an offer, the written decision must include an explanation of why the certified IDR entity concluded that this information was not already reflected in the qualifying payment amount. * * * * * (f) * * * (1) * * * (v) * * * (F) The rationale for the certified IDR entity’s decision, including the extent to which the decision relied on the criteria in paragraphs (c)(4)(iii)(B) through (D) of this section; * * * * * (h) Applicability date. The provisions of this section are applicable with respect to plan years or in the individual market policy years beginning on or after January 1, 2022, except that the provisions regarding IDR entity certification at paragraphs (a) and (e) of this section are applicable beginning on October 7, 2021; and paragraphs (c)(4)(ii) through (iv) of this section regarding payment determinations, paragraph (c)(4)(vi)(B) of this section regarding written decisions, and paragraph (f)(1)(v)(F) of this section regarding reporting of information relating to the Federal IDR process are applicable with respect to items or services provided or furnished on or after October 25, 2022, for plan years or in the individual market policy years beginning on or after January 1, 2022. ■ 15. Section 149.520 is amended by: ■ a. Revising paragraphs (b)(1) and (b)(2) introductory text; ■ b. Redesignating paragraph (b)(3) as paragraph (b)(4); ■ c. Adding a new paragraph (b)(3); and ■ d. Revising newly redesignated paragraph (b)(4)(iv)(F) and paragraph (c). The addition and revisions read as follows: § 149.520 Independent dispute resolution process for air ambulance services. * * * * * (b) * * * (1) In general. Except as provided in paragraphs (b)(2) and (3) of this section, in determining the out-of-network rate to be paid by group health plans and health insurance issuers offering group E:\FR\FM\26AUR2.SGM 26AUR2 Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 or individual health insurance coverage for out-of-network air ambulance services, plans and issuers must comply with the requirements of § 149.510, except that references in § 149.510 to the additional circumstances in § 149.510(c)(4)(iii)(B) shall be understood to refer to paragraph (b)(2) of this section. (2) Considerations for air ambulance services. In determining which offer to select, in addition to considering the applicable qualifying payment amount(s), the certified IDR entity must consider information submitted by a party that relates to the following circumstances: * * * * * (3) Weighing considerations. In weighing the considerations described in paragraph (b)(2) of this section, the VerDate Sep<11>2014 17:33 Aug 25, 2022 Jkt 256001 certified IDR entity should evaluate whether the information is credible and relates to the offer submitted by either party for the payment amount for the qualified IDR service that is the subject of the payment determination. The certified IDR entity should not give weight to information to the extent it is not credible, it does not relate to either party’s offer for the payment amount for the qualified IDR service, or it is already accounted for by the qualifying payment amount under § 149.510(c)(4)(iii)(A) or other credible information under § 149.510(c)(4)(iii)(B) through (D), except that the additional circumstances in § 149.510(c)(4)(iii)(B) shall be understood to refer to paragraph (b)(2) of this section. (4) * * * (iv) * * * PO 00000 Frm 00039 Fmt 4701 Sfmt 9990 52655 (F) The rationale for the certified IDR entity’s decision, including the extent to which the decision relied on the criteria in paragraph (b)(2) of this section and § 149.510(c)(4)(iii)(C) and (D); * * * * * (c) Applicability date. The provisions of this section are applicable with respect to plan years, or in the individual market, policy years, beginning on or after January 1, 2022, except that paragraphs (b)(1), (2), and (3) and (b)(4)(iv)(F) of this section regarding payment determinations are applicable with respect to services provided or furnished on or after October 25, 2022, for plan years or in the individual market policy years beginning on or after January 1, 2022. [FR Doc. 2022–18202 Filed 8–24–22; 11:15 am] BILLING CODE 4830–01–4510–29–4120–01–P E:\FR\FM\26AUR2.SGM 26AUR2

Agencies

[Federal Register Volume 87, Number 165 (Friday, August 26, 2022)]
[Rules and Regulations]
[Pages 52618-52655]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18202]



[[Page 52617]]

Vol. 87

Friday,

No. 165

August 26, 2022

Part II





Department of The Treasury





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Internal Revenue Service





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26 CFR Part 54





Department of Labor





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Employee Benefits Security Administration





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29 CFR Part 2590





Department of Health and Human Services





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45 CFR Part 149





Requirements Related to Surprise Billing; Final Rule

Federal Register / Vol. 87, No. 165 / Friday, August 26, 2022 / Rules 
and Regulations

[[Page 52618]]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[TD 9965]
RIN 1545-BQ01 and 1545-BQ02

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AB99 and 1210-AC00

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 149

[CMS-9909-F and CMS-9908-F]
RIN 0938-AU62 and RIN 0938-AU63


Requirements Related to Surprise Billing

AGENCY: Internal Revenue Service, Department of the Treasury; Employee 
Benefits Security Administration, Department of Labor; Centers for 
Medicare & Medicaid Services, Department of Health and Human Services.

ACTION: Final rules.

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SUMMARY: This document includes final rules under the No Surprises Act, 
which was enacted as part of the Consolidated Appropriations Act, 2021 
(CAA). The document finalizes certain disclosure requirements relating 
to information that group health plans, and health insurance issuers 
offering group or individual health insurance coverage, must share 
about the qualifying payment amount (QPA) under the interim final rules 
issued in July 2021, titled Requirements Related to Surprise Billing; 
Part I (July 2021 interim final rules). Additionally, this document 
finalizes select provisions under the October 2021 interim final rules, 
titled Requirements Related to Surprise Billing; Part II (October 2021 
interim final rules), to address certain requirements related to 
consideration of information when a certified independent dispute 
resolution (IDR) entity makes a payment determination under the Federal 
IDR process.

DATES: Effective date: These final rules are effective on October 25, 
2022.
    Applicability date: See Section III of the SUPPLEMENTARY 
INFORMATION section for information on the applicability dates.

FOR FURTHER INFORMATION CONTACT: Shira McKinlay, Internal Revenue 
Service, Department of the Treasury, at 202-317-5500; Elizabeth 
Schumacher or David Sydlik, Employee Benefits Security Administration, 
Department of Labor, at 202-693-8335; Deborah Bryant, Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
at 301-492-4293; Lindsey Murtagh, Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, at 301-492-4106.

Customer Service Information

    Individuals interested in obtaining information from the Department 
of Labor (DOL) concerning employment-based health coverage laws may 
call the Employee Benefits Security Administration (EBSA) Toll-Free 
Hotline at 1-866-444-EBSA (3272) or visit the DOL's website 
(www.dol.gov/agencies/ebsa).
    In addition, information from the Department of Health and Human 
Services (HHS) on private health insurance coverage, coverage provided 
by non-Federal governmental group health plans, and requirements that 
apply to health care providers, health care facilities, and providers 
of air ambulance services can be found on the Centers for Medicare & 
Medicaid Services (CMS) website (www.cms.gov/cciio), and information on 
surprise medical bills can be found at www.cms.gov/nosurprises.

SUPPLEMENTARY INFORMATION:

I. Background

A. Preventing Surprise Medical Bills Under the CAA

    On December 27, 2020, the CAA, which includes the No Surprises Act, 
was enacted.\1\ The No Surprises Act provides Federal protections 
against surprise billing by limiting out-of-network cost sharing and 
prohibiting ``balance billing,'' in many of the circumstances in which 
surprise bills arise most frequently. Balance billing refers to the 
practice of out-of-network providers billing patients for the 
difference between: (1) the provider's billed charges, and (2) the 
amount collected from the plan or issuer plus the amount collected from 
the patient in the form of cost sharing (such as a copayment, 
coinsurance, or amounts paid toward a deductible). In particular, the 
No Surprises Act added new provisions applicable to group health plans 
and health insurance issuers offering group or individual health 
insurance coverage to Subchapter B of chapter 100 of the Internal 
Revenue Code (Code), Part 7 of the Employee Retirement Income Security 
Act (ERISA), and Part D of title XXVII of the Public Health Service Act 
(PHS Act). Section 102 of the No Surprises Act added section 9816 of 
the Code, section 716 of ERISA, and section 2799A-1 of the PHS Act,\2\ 
which contain limitations on cost sharing and requirements regarding 
the timing of initial payments and notices of denial of payment for 
emergency services furnished by nonparticipating providers and 
emergency facilities, and for non-emergency services furnished by 
nonparticipating providers with respect to patient visits to 
participating health care facilities, defined as hospitals, hospital 
outpatient departments, critical access hospitals, and ambulatory 
surgical centers. Section 103 of the No Surprises Act amended section 
9816 of the Code, section 716 of ERISA, and section 2799A-1 of the PHS 
Act to establish a Federal IDR process that allows plans and issuers 
and nonparticipating providers and facilities to resolve disputes 
regarding out-of-network rates. Section 105 of the No Surprises Act 
added section 9817 of the Code, section 717 of ERISA, and section 
2799A-2 of the PHS Act. These sections contain limitations on cost 
sharing and requirements for the timing of initial payments and notices 
of denial of payment for air ambulance services furnished by 
nonparticipating providers of air ambulance services, and allow plans 
and issuers and nonparticipating providers of air ambulance services to 
access the Federal IDR process described in section 9816 of the Code, 
section 716 of ERISA, and section 2799A-1 of the PHS Act.
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    \1\ Public Law 116-260 (December 27, 2020).
    \2\ Section 102(d)(1) of the No Surprises Act amended the 
Federal Employees Health Benefits Act, 5 U.S.C. 8901 et seq., by 
adding a new subsection (p) to 5 U.S.C. 8902. Under this new 
provision, each Federal Employees Health Benefits (FEHB) Program 
contract must require a carrier to comply with requirements 
described in sections 9816 and 9817 of the Code, sections 716 and 
717 of ERISA, and sections 2799A-1 and 2799A-2 of the PHS Act (as 
applicable) in the same manner as these provisions apply with 
respect to a group health plan or health insurance issuer offering 
group or individual health insurance coverage.
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    The No Surprises Act provisions that apply to health care 
providers, facilities, and providers of air ambulance services, such as 
prohibitions on balance billing for certain items and services and 
requirements related to disclosures about balance billing protections, 
were added to title XXVII of the PHS Act in a new part E.
    The Departments of the Treasury, Labor, and Health and Human 
Services

[[Page 52619]]

(the Departments) previously issued interim final rules implementing 
provisions of sections 9816 and 9817 of the Code, sections 716 and 717 
of ERISA, and sections 2799A-1 and 2799A-2 of the PHS Act to protect 
consumers from surprise medical bills for emergency services, non-
emergency services furnished by nonparticipating providers with respect 
to patient visits to participating facilities in certain circumstances, 
and air ambulance services furnished by nonparticipating providers of 
air ambulance services.\3\ The interim final rules also implement 
provisions requiring the Departments to create a Federal IDR process to 
determine payment amounts when there is a dispute between payers and 
providers or facilities over the out-of-network rate due for emergency 
services, non-emergency services furnished by nonparticipating 
providers with respect to patient visits to participating facilities in 
certain circumstances, and air ambulance services furnished by 
nonparticipating providers of air ambulance services.\4\ To implement 
these provisions, the Departments published in the Federal Register the 
July 2021 interim final rules on July 13, 2021 (86 FR 36872), and the 
October 2021 interim final rules on October 7, 2021 (86 FR 55980).\5\ 
The July 2021 interim final rules and October 2021 interim final rules 
generally apply to group health plans and health insurance issuers 
offering group or individual health insurance coverage (including 
grandfathered health plans) with respect to plan years (in the 
individual market, policy years) beginning on or after January 1, 2022; 
and to health care providers and facilities, and providers of air 
ambulance services with respect to items and services provided during 
plan years (in the individual market, policy years) beginning on or 
after January 1, 2022.\6\
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    \3\ 86 FR 36872 (July 13, 2021) and 86 FR 55980 (October 7, 
2021).
    \4\ The Federal IDR process does not apply if an All-Payer Model 
Agreement under section 1115A of the Social Security Act or a 
specified State law applies.
    \5\ The interim final rules also include interim final 
regulations under 5 U.S.C. 8902(p) issued by the Office of Personnel 
Management that specify how certain provisions of the No Surprises 
Act apply to health benefit plans offered by carriers under the 
Federal Employees Health Benefits Act.
    \6\ 86 FR 36872 (July 13, 2021) and 86 FR 55980 (October 7, 
2021). These provisions apply to carriers in the Federal Employees 
Health Benefits Program with respect to contract years beginning on 
or after January 1, 2022. The disclosure requirements at 45 CFR 
149.430 regarding patient protections against balance billing are 
applicable as of January 1, 2022.
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B. July 2021 Interim Final Rules

    The July 2021 interim final rules implement sections 9816(a)-(b) 
and 9817(a) of the Code, sections 716(a)-(b) and 717(a) of ERISA, and 
sections 2799A-1(a)-(b), 2799A-2(a), 2799A-7, 2799B-1, 2799B-2, 2799B-
3, and 2799B-5 of the PHS Act.
    Among other requirements, the July 2021 interim final rules 
generally prohibit balance billing for items and services subject to 
the requirements in those interim final rules.\7\ The July 2021 interim 
final rules also specify that consumer cost-sharing amounts for 
emergency services furnished by nonparticipating providers or 
facilities, and for non-emergency services furnished by 
nonparticipating providers with respect to patient visits to certain 
participating facilities, must be calculated based on the ``recognized 
amount,'' which is defined as one of the following amounts: (1) an 
amount determined by an applicable All-Payer Model Agreement under 
section 1115A of the Social Security Act; (2) if there is no such 
applicable All-Payer Model Agreement, an amount determined by a 
specified State law; or (3) if there is no such applicable All-Payer 
Model Agreement or specified State law, the lesser of the billed charge 
or the QPA. The July 2021 interim final rules establish the methodology 
for calculating the QPA, which in most circumstances will be the plan's 
or issuer's median contracted rate that was in effect for the 
particular item or service on January 31, 2019, increased for 
inflation. Cost-sharing amounts for air ambulance services provided by 
nonparticipating providers of air ambulance services must be the same 
as the cost-sharing amounts that would apply if the services were 
provided by a participating provider of air ambulance services, and 
these cost-sharing amounts must be calculated using the lesser of the 
billed charge or the QPA.
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    \7\ 45 CFR 149.410(a), 149.420(a), and 149.440(a).
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    The No Surprises Act directs the Departments to specify the 
information that a plan or issuer must share with a nonparticipating 
provider, nonparticipating emergency facility, or nonparticipating 
provider of air ambulance services, as applicable, after determining 
the QPA. Therefore, 26 CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and 45 
CFR 149.140(d) require that plans and issuers make certain disclosures 
about the QPA with each initial payment or notice of denial of payment, 
and that plans and issuers provide certain additional information upon 
request of the provider, facility, or provider of air ambulance 
services. This information must be provided in writing, either on paper 
or electronically, to a nonparticipating provider, facility, or 
provider of air ambulance services, as applicable, when the QPA serves 
as the recognized amount.
    With an initial payment or notice of denial of payment, a plan or 
issuer must provide the QPA for each item or service involved as well 
as a statement certifying that, based on the determination of the plan 
or issuer: (1) the QPA applies for purposes of the recognized amount 
(or, in the case of air ambulance services, for calculating the 
participant's, beneficiary's, or enrollee's cost sharing), and (2) each 
QPA shared with the provider, facility, or provider of air ambulance 
services was determined in compliance with the methodology outlined in 
the July 2021 interim final rules.
    A plan or issuer is also required to provide a statement that, if 
the provider, facility, or provider of air ambulance services wishes to 
initiate a 30-day open negotiation period for purposes of determining 
the amount of total payment, the provider, facility, or provider of air 
ambulance services may contact the appropriate person or office to 
initiate open negotiation, and that if the 30-day open negotiation 
period does not result in an agreement on the payment amount, the 
provider, facility, or provider of air ambulance services typically may 
initiate the Federal IDR process within 4 days after the end of the 
open negotiation period. The Departments note that these time frames 
are measured in business days, and plans and issuers should reflect 
this in the statement. The plan or issuer must provide contact 
information, including a telephone number and email address, for the 
appropriate office or person for the provider, facility, or provider of 
air ambulance services to contact to initiate open negotiation for 
purposes of determining an amount of payment (with the amount including 
cost sharing) for the item or service.
    It has come to the Departments' attention that some plans and 
issuers are requiring nonparticipating providers, nonparticipating 
emergency facilities, and nonparticipating providers of air ambulance 
services to utilize plan- or issuer-owned web systems to initiate an 
open negotiation period. As discussed earlier, the July 2021 interim 
final rules require plans and issuers to provide a telephone number and 
email address for providers, facilities, and providers of air ambulance 
services to initiate the open

[[Page 52620]]

negotiation period. When a party to a payment dispute chooses to 
initiate the open negotiation period, the October 2021 interim final 
rules specify that the party must use the standard notice of initiation 
of open negotiation issued by the Departments and may satisfy the 
requirement to provide notice to the opposing party by sending the 
notice electronically if the party sending the notice has a good faith 
belief that the electronic method is readily accessible to the other 
party and the notice is also provided free of charge in paper form upon 
request.\8\ For example, it is reasonable for a provider, facility, or 
provider of air ambulance services to have a good faith belief that an 
email address provided by a plan or issuer with the initial payment or 
notice of denial of payment is readily accessible to the plan or 
issuer. Thus, if a provider, facility, or provider of air ambulance 
services sends the standard notice of initiation of open negotiation to 
the email address identified by the plan or issuer in the notice of 
denial of payment or initial payment, that transmission would satisfy 
the regulatory requirement to provide notice to the opposing party (so 
long as the provider, facility, or provider of air ambulance services 
also sends the notice free of charge in paper form upon request).\9\ 
Although plans and issuers may encourage the use of an online portal 
for nonparticipating providers, facilities, and providers of air 
ambulance services to submit the information necessary to initiate the 
open negotiation period, or may seek additional information to inform 
good faith open negotiations, such as through use of a supplemental 
open negotiation form, the July 2021 interim final rules require plans 
and issuers to provide a telephone number and email address for 
providers, facilities, and providers of air ambulance services to 
initiate the open negotiation period, and the October 2021 interim 
final rules permit a party to initiate the open negotiation period by 
sending the standard notice of initiation electronically to the email 
address identified in the notice of denial of payment or initial 
payment. Accordingly, a plan or issuer cannot refuse to accept the 
standard notice of initiation of open negotiation from a provider, 
facility, or provider of air ambulance services because the provider or 
facility did not utilize the plan's or issuer's online portal when the 
standard notice of initiation of open negotiation is provided in a 
manner consistent with the requirements of the July 2021 and October 
2021 interim final rules.
---------------------------------------------------------------------------

    \8\ 26 CFR 54.9816-8T(b)(2)(iii)(B), 29 CFR 2590.716-
8(b)(2)(iii)(B), and 45 CFR 149.510(b)(2)(iii)(B).
    \9\ 86 FR 55980, 55990 (Oct. 7, 2021).
---------------------------------------------------------------------------

    In addition, upon request by the provider, facility, or provider of 
air ambulance services, a plan or issuer must provide, in a timely 
manner, information about whether the QPA includes contracted rates 
that were not set on a fee-for-service basis for the specific items and 
services and whether the QPA for those items and services was 
determined using underlying fee schedule rates or a derived amount.\10\ 
If an eligible database was used to determine the QPA, the plan or 
issuer must provide information to identify which database was used. 
Similarly, if a related service code was used to determine the QPA for 
an item or service billed under a new service code, the plan or issuer 
must provide information to identify which related service code was 
used.
---------------------------------------------------------------------------

    \10\ 26 CFR 54.9816-6T(d)(2)(i), 29 CFR 2590.716-6(d)(2)(i), and 
45 CFR 149.140(d)(2)(i). Under the July 2021 interim final rules, 
plans and issuers are required to calculate the QPA using underlying 
fee schedule rates or derived amounts when the plan or issuer has 
sufficient information to calculate the median of its contracted 
rates, but the payments under the contractual agreements are not on 
a fee-for-service basis (such as bundled or capitation payments). 26 
CFR 54.9816-6T(b)(2)(iii), 29 CFR 2590.716-6(b)(2)(iii), 45 CFR 
149.140(b)(2)(iii). Plans and issuers are not otherwise permitted to 
use underlying fee schedule rates or derived amounts to calculate 
the QPA.
---------------------------------------------------------------------------

    Finally, upon request by the provider, facility, or provider of air 
ambulance services, the plan or issuer must provide a statement, if 
applicable, that the plan's or issuer's contracted rates include risk-
sharing, bonus, penalty, or other incentive-based or retrospective 
payments or payment adjustments that were excluded for purposes of 
calculating the QPA for the items and services involved.

C. October 2021 Interim Final Rules

    The October 2021 interim final rules build on the July 2021 interim 
final rules and implement the Federal IDR process under sections 
9816(c) and 9817(b) of the Code, sections 716(c) and 717(b) of ERISA, 
and sections 2799A-1(c) and 2799A-2(b) of the PHS Act.
    The October 2021 interim final rules provide for a Federal IDR 
process that group health plans and health insurance issuers offering 
group or individual health insurance coverage and nonparticipating 
providers, facilities, and providers of air ambulance services may use 
to determine the out-of-network rate for items and services that are 
emergency services, non-emergency services furnished by 
nonparticipating providers with respect to patient visits to 
participating facilities, and air ambulance services furnished by 
nonparticipating providers of air ambulance services, where an All-
Payer Model Agreement or specified State law does not apply. The 
October 2021 interim final rules generally specify rules to implement 
the Federal IDR process, including the requirements governing the open 
negotiation period; the initiation of the Federal IDR process; the 
Federal IDR process following initiation, including the selection of a 
certified IDR entity, submission of offers, payment determinations, and 
written decisions; costs of the Federal IDR process; certification of 
IDR entities, including the denial or revocation of certification of an 
IDR entity; and the collection of information related to the Federal 
IDR process from certified IDR entities to satisfy reporting 
requirements under the statute.
    The October 2021 interim final rules provide that, not later than 
30 business days after selection of a certified IDR entity, the 
certified IDR entity must select one of the offers submitted by the 
plan or issuer and the provider, facility, or provider of air ambulance 
services to be the out-of-network rate for the qualified IDR item or 
service.\11\ For each qualified IDR item or service, the amount by 
which this out-of-network rate exceeds the cost-sharing amount for the 
qualified IDR item or service is the total plan or coverage payment 
(with any initial payment made by the plan or issuer counted towards 
the total plan or coverage payment).
---------------------------------------------------------------------------

    \11\ Qualified IDR item or service has the same meaning as set 
forth in 26 CFR 54.9816-8T(a)(2)(xii), 29 CFR 2590.716-8(a)(2)(xii), 
and 45 CFR 149.510(a)(2)(xii).
---------------------------------------------------------------------------

    The October 2021 interim final rules state that, in selecting the 
offer, the certified IDR entity must consider the QPA for the 
applicable year for the same or similar item or service, or, in the 
case of batched or bundled items or services, the QPA or QPAs for the 
applicable year. The preamble to the July 2021 interim final rules 
provides that if multiple items and services are reimbursed under non-
fee-for-service contractual arrangements, such as a bundled or 
capitated arrangement, and are billed for under a single billing code, 
plans and issuers must calculate a QPA for each item or service using 
the underlying fee schedule rates for the relevant items and services 
if the underlying fee schedule rates are available.\12\ If there is no 
underlying fee schedule rate for an item or service, the plan or issuer 
must calculate the QPA

[[Page 52621]]

using a derived amount.\13\ In addition, the October 2021 interim final 
rules state that the certified IDR entity must also consider 
information requested by, or submitted by the parties to, the certified 
IDR entity relating to the offer, to the extent a party provides 
credible information that is not otherwise prohibited under 26 CFR 
54.9816-8T(c)(4)(v), 29 CFR 2590.716-8(c)(4)(v), and 45 CFR 
149.510(c)(4)(v).
---------------------------------------------------------------------------

    \12\ 86 FR 36893 (July 13, 2021).
    \13\ The Departments also specify an alternative method to 
calculate the QPA when there is insufficient information based on 
contracted rates. See 26 CFR 54.9816-6T(c)(2)-(4), 29 CFR 2590.716-
6(c)(2)-(4), and 45 CFR 149.140(c)(2)-(4).
---------------------------------------------------------------------------

    The October 2021 interim final rules also require the parties to 
provide certain information to the certified IDR entity, including 
practice size and practice specialty or type; geographic region used to 
calculate the QPA; the QPA for the applicable year for the same or 
similar item or service as the qualified IDR item or service; and, if 
applicable, information showing that the Federal IDR process is 
inapplicable to the dispute. In addition, prior to vacatur in the 
United States District Court for the Eastern District of Texas, in the 
cases of Texas Medical Association, et al. v. United States Department 
of Health and Human Services, et al., Case No. 6:21-cv-425 (E.D. Tex.) 
(Texas Medical Association) (February 23, 2022) and LifeNet, Inc. v. 
United States Department of Health and Human Services, et al., Case No. 
6:22-cv-162 (E.D. Tex.) (LifeNet) (July 26, 2022), these interim final 
rules specified that the certified IDR entity may request additional 
information relating to the parties' offers and must consider credible 
additional information submitted, as further described in the next 
paragraph, that relates to the parties' offers and the qualified IDR 
item or service that is the subject of a payment determination to 
determine if the information submitted clearly demonstrates that the 
QPA is materially different from the appropriate out-of-network rate 
(unless the information relates to a factor that the certified IDR 
entity is prohibited from considering). For this purpose, the October 
2021 interim final rules specify that credible information is 
information that upon critical analysis is worthy of belief and is 
trustworthy.\14\ Prior to vacatur in Texas Medical Association, the 
term ``material difference'' was defined to mean a substantial 
likelihood that a reasonable person with the training and 
qualifications of a certified IDR entity making a payment determination 
would consider the information important in determining the out-of-
network rate and view the information as showing that the QPA is not 
the appropriate out-of-network rate.\15\
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    \14\ 26 CFR 54.9816-8T(a)(2)(v), 29 CFR 2590.716-8(a)(2)(v), and 
45 CFR 149.510(a)(2)(v).
    \15\ 26 CFR 54.9816-8T(a)(2)(viii), 29 CFR 2590.716-
8(a)(2)(viii), and 45 CFR 149.510(a)(2)(viii).
---------------------------------------------------------------------------

    For items and services that are not air ambulance services, in 
determining which offer to select, the certified IDR entity must 
consider the following additional information under certain 
circumstances:
    1. The level of training, experience, and quality and outcomes 
measurements of the provider or facility that furnished the qualified 
IDR item or service (such as those endorsed by the consensus-based 
entity authorized in section 1890 of the Social Security Act).
    2. The market share held by the provider or facility or that of the 
plan or issuer in the geographic region in which the qualified IDR item 
or service was provided.
    3. The acuity of the participant, beneficiary, or enrollee who 
received the qualified IDR item or service, or the complexity of 
furnishing the qualified IDR item or service to the participant, 
beneficiary, or enrollee.
    4. The teaching status, case mix, and scope of services of the 
facility that furnished the qualified IDR item or service, if 
applicable.
    5. Demonstration of good faith efforts (or lack thereof) made by 
the provider or facility or the plan or issuer to enter into network 
agreements with each other, and, if applicable, contracted rates 
between the provider or facility and the plan or issuer during the 
previous 4 plan years.
    Under the October 2021 interim final rules, the certified IDR 
entity may only consider this information submitted by the parties if 
the information is credible and relates to the offer submitted by 
either party.\16\ The certified IDR entity may not consider any 
information submitted on the prohibited factors, including usual and 
customary charges (including payment or reimbursement rates expressed 
as a proportion of usual and customary charges); the amount that would 
have been billed if the provider, facility, or provider of air 
ambulance services were not subject to a prohibition on balance 
billing; and payment or reimbursement rates payable by a public payor, 
in whole or in part, for items and services furnished by the providers, 
facilities, or providers of air ambulance services.\17\
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    \16\ This requirement was vacated by the District Court in Texas 
Medical Association.
    \17\ 26 CFR 54.9816-8T(c)(4)(v), 29 CFR 2590.716-8(c)(4)(v), and 
45 CFR 149.510(c)(4)(v). For this purpose, payment or reimbursement 
rates payable by a public payor include payments or reimbursement 
rates under the Medicare program under title XVIII of the Social 
Security Act, the Medicaid program under title XIX of the Social 
Security Act, the Children's Health Insurance Program under title 
XXI of the Social Security Act, the TRICARE program under chapter 55 
of title 10, United States Code, chapter 17 of title 38, United 
States Code, and payment rates for demonstration projects under 
section 1115 of the Social Security Act.
---------------------------------------------------------------------------

    The October 2021 interim final rules also provided, prior to 
vacatur in Texas Medical Association and LifeNet, that after 
considering the QPA, additional information requested by the certified 
IDR entity from the parties, and all of the credible information 
submitted by the parties that is consistent with the requirements and 
is not prohibited information, the certified IDR entity must select the 
offer closest to the QPA, unless the certified IDR entity determined 
that the credible information submitted by the parties clearly 
demonstrates that the QPA is materially different from the appropriate 
out-of-network rate, or if the offers are equally distant from the QPA 
but in opposing directions. In those cases, the October 2021 interim 
final rules required the certified IDR entity to select the offer that 
the certified IDR entity determines best represents the value of the 
item or service, which could be either party's offer.
    Not later than 30 business days after the selection of the 
certified IDR entity, the certified IDR entity must notify parties to 
the dispute of the selection of the offer and provide a written 
decision,\18\ which must be submitted to the parties and the 
Departments through the Federal IDR portal.\19\ The October 2021 
interim final rules also provided that if the certified IDR entity did 
not choose the offer closest to the QPA, this written decision must 
include an explanation of the credible information that the certified 
IDR entity determined demonstrated that the QPA was materially 
different from the appropriate out-of-network rate.
---------------------------------------------------------------------------

    \18\ 26 CFR 54.9816-8T(c)(4)(vi)(A), 29 CFR 2590.716-
8(c)(4)(vi)(A), and 45 CFR 149.510(c)(4)(vi)(A).
    \19\ The Federal IDR portal is available at https://www.nsa-idr.cms.gov and must be used throughout the Federal IDR process to 
maximize efficiency and reduce burden.
---------------------------------------------------------------------------

    The October 2021 interim final rules also implemented the Federal 
IDR process for qualified IDR services that are air ambulance services. 
The process for a certified IDR entity to select an offer in a dispute 
related to qualified IDR services that are air ambulance services is 
essentially the same as that for other qualified IDR items or services. 
As with disputes related to qualified IDR items or services that are 
not air

[[Page 52622]]

ambulance services, in determining which offer to select, the No 
Surprises Act and October 2021 interim final rules provide that the 
certified IDR entity must consider the QPA for the applicable year for 
the qualified IDR services that are air ambulance services. The No 
Surprises Act and the October 2021 interim final rules likewise 
specified additional circumstances, in addition to the QPA, that the 
certified IDR entity must consider in making the payment determination 
for air ambulance services. With respect to air ambulance services, the 
certified IDR entity is required to consider, to the extent the parties 
provide credible information, a different set of additional 
circumstances:
    1. The quality and outcomes measurements of the provider that 
furnished the services.
    2. The acuity of the condition of the participant, beneficiary, or 
enrollee receiving the service, or the complexity of furnishing the 
service to the participant, beneficiary, or enrollee.
    3. The training, experience, and quality of the medical personnel 
that furnished the air ambulance services.
    4. Ambulance vehicle type, including the clinical capability level 
of the vehicle.
    5. Population density of the point of pick-up (as defined in 42 CFR 
414.605) for the air ambulance (such as urban, suburban, rural, or 
frontier).
    6. Demonstrations of good faith efforts (or lack thereof) made by 
the nonparticipating provider of air ambulance services or the plan or 
issuer to enter into network agreements with each other and, if 
applicable, contracted rates between the provider of air ambulance 
services and the plan or issuer during the previous 4 plan years.
    As with qualified IDR items or services that are not air ambulance 
services, the October 2021 interim final rules provide that after 
considering the QPA, additional information requested by the certified 
IDR entity from the parties, and all of the credible information 
submitted by the parties that is consistent with the requirements and 
is not prohibited information, the certified IDR entity must select the 
offer closest to the QPA, unless the certified IDR entity determined 
that the credible information submitted by the parties clearly 
demonstrates that the QPA is materially different from the appropriate 
out-of-network rate, or if the offers are equally distant from the QPA 
but in opposing directions. In those cases, the October 2021 interim 
final rules require the certified IDR entity to select the offer that 
the certified IDR entity determined best represents the value of the 
item or service, which could be either party's offer.

D. Public Comments Received in Response to the July 2021 and October 
2021 Interim Final Rules

    In response to the July 2021 and October 2021 interim final rules, 
the Departments received thousands of comments on many different 
aspects of the rules. In particular, the Departments received many 
comments related to a clarification in the preamble to the October 2021 
interim final rules \20\ stating that the July 2021 interim final rules 
do not require the plan or issuer to calculate the participant's, 
beneficiary's, or enrollee's cost sharing using the QPA for the service 
code submitted by the provider or facility, and that instead the plan 
or issuer could calculate the participant's, beneficiary's, or 
enrollee's cost sharing using the QPA for a downcoded service code that 
the plan or issuer determined was more appropriate. Many of these 
comments addressed the information required by the July 2021 interim 
final rules that must be shared about the QPA, the importance of this 
disclosure, and how additional disclosures related to the QPA would be 
useful in the context of the Federal IDR process, particularly when the 
QPA is based on a service code or modifier that is different than the 
one the provider or facility billed. The Departments also received many 
comments related to the payment determination standards under the 
Federal IDR process, including the provisions that govern the certified 
IDR entity's consideration of the enumerated factors. These final rules 
address only the provisions related to these comments, and they make 
changes in light of the decisions in Texas Medical Association and 
LifeNet. The Departments intend to address comments related to other 
provisions of the July 2021 and October 2021 interim final rules, 
including comments received in response to the July 2021 interim final 
rules related to the disclosure requirements that are not specifically 
related to downcoded service codes, at a later date.
---------------------------------------------------------------------------

    \20\ See 86 FR 55997-98 n.35.
---------------------------------------------------------------------------

1. QPA Disclosure Requirements
    With respect to the information that must be shared about the QPA, 
the Departments received comments on both the July 2021 interim final 
rules and the October 2021 interim final rules supporting the 
disclosure requirement and emphasizing the importance of ensuring that 
the QPA and other information related to the item or service are 
provided to providers, facilities, and providers of air ambulance 
services at the time of the initial payment or notice of denial of 
payment. Many commenters on the July 2021 interim final rules stressed 
that the methodology to calculate the QPA should be transparent, and 
that the Departments should expand the range of information that is 
shared with providers, facilities, and providers of air ambulance 
services with the QPA. Some commenters felt the degree of disclosure 
was insufficient, and that it provided too much power and discretion to 
plans and issuers. Others, however, questioned whether plans, in 
particular, would be able to obtain the information required under the 
July 2021 interim final rules, as much of the information may be in the 
control of vendors or other service providers. In particular, the 
Departments received comments in response to the July 2021 interim 
final rules and the October 2021 interim final rules requesting that 
the disclosures that must be provided with each initial payment or 
notice of denial of payment include additional information about how 
the QPA was determined to ensure that providers, facilities, and 
providers of air ambulance services have sufficient information when 
the Federal IDR process is used for a payment determination. For 
example, commenters requested that plans and issuers be required, 
without a request, to provide information on the number of contracts 
and the geographic region used to calculate the QPA, whether the QPA is 
based on downcoding \21\ of the billed claim, information about the use 
of modifiers in calculating the QPA, the types of specialties and 
subspecialties that have contracted rates included in the data set used 
to determine the QPA, and whether bonuses and supplemental payments 
were paid to in-network providers.
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    \21\ Downcode is defined in these final rules at 26 CFR 54.9816-
6, 29 CFR 2590.716-6, and 45 CFR 149.30, to mean the alteration by a 
plan or issuer of a 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.
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    The manner in which items and services are coded, including the 
concept of downcoding claims was reflected in both the July 2021 
interim final rules and the October 2021 interim final rules. The 
preamble to the July 2021 interim final rules noted that it is 
important that the QPA methodology account for modifiers that affect 
payment rates.\22\ The preamble to the

[[Page 52623]]

October 2021 interim final rules noted that the Departments are aware 
that some plans and issuers review claims and alter the service code or 
modifier submitted by the provider or facility to another service code 
or modifier that the plan or issuer determines to be more appropriate 
(a practice commonly referred to as ``downcoding'' when the adjustment 
results in a lower reimbursement, as noted in the preamble to the 
October 2021 interim final rules).\23\ Some commenters expressed 
concern that plans and issuers may calculate the QPA for a lower level 
service code (and/or modifier) instead of calculating the QPA for the 
particular service code or modifier specified in the claim submitted 
for reimbursement. These commenters stated that it is important for 
providers and facilities to know whether the plan or issuer has 
downcoded a particular claim that is subject to the balance billing 
protections in the No Surprises Act to ensure that providers receive 
information that may be relevant to the open negotiation process and 
that could inform a provider's offer in the Federal IDR process, and 
which the provider has no other means of ascertaining. Several 
commenters requested that these final rules require plans and issuers 
to disclose whether the claim has been downcoded for purposes of 
computing the QPA and include an explanation of why the claim was 
downcoded, as well as what the QPA would have been had the claim not 
been downcoded.
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    \22\ The preamble to the July 2021 interim final rules also 
noted that modifiers affect the payment rate because, for example, 
modifiers can be used to indicate that the work required to provide 
a service in a particular instance was significantly greater--or 
significantly less--than the service typically required. See 86 FR 
36891.
    \23\ See 86 FR 55997-98.
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2. Payment Determination Standards Under the Federal IDR Process
    With respect to the payment determination standards under the 
Federal IDR process, the Departments received numerous comments from 
various stakeholders about the provisions that govern the certified IDR 
entity's consideration of the statutory factors during the payment 
determination process. Many commenters supported the approach set forth 
in the October 2021 interim final rules that directs the certified IDR 
entity to begin with the QPA as a baseline when making a payment 
determination, which those commenters highlighted as an important part 
of the payment determination process that would ensure that the 
surprise billing provisions lead to lower health care costs for all 
consumers. Furthermore, some commenters stated that the approach taken 
in the October 2021 interim final rules is crucial to achieving the 
budget savings the Congressional Budget Office calculated. Those 
commenters stated that the approach taken would shield consumers from 
surprise bills and ever higher insurance premium costs. Commenters 
stated that the October 2021 interim final rules reinforce the 
statutory directive that the QPA is the primary consideration for the 
certified IDR entity. Commenters also stated this use of the QPA 
represents a reasonable, market-based rate and would encourage greater 
participation in health plan networks.
    Commenters noted that there may be circumstances in which the 
appropriate out-of-network rate would exceed the QPA, and that the 
October 2021 interim final rules properly provide a pathway for the 
certified IDR entity to reach that determination when it can be 
justified. These commenters highlighted that nothing in the October 
2021 interim final rules required a certified IDR entity to default to 
the selection of the QPA or the offer closest to it, but rather that 
the rule correctly mandated that all credible information be 
considered. Commenters also stated that it was not unreasonable to 
require a party to document why the QPA is not the appropriate payment 
amount. Other commenters raised concerns about giving the same weight 
to all factors because many of the additional circumstances outlined in 
the rule, such as patient acuity and complexity of care, could already 
be incorporated into the QPA calculation. Commenters also noted that 
the October 2021 interim final rules provide clear guidance to 
certified IDR entities, which would reduce variability in payment 
determinations and better position the parties to settle disputes 
before reaching the Federal IDR process, by giving the parties a better 
sense of how payment determinations would be made.
    Other commenters disagreed with the approach under the October 2021 
interim final rules and expressed opposition to the emphasis placed on 
the QPA during the Federal IDR process. Many of these commenters 
criticized the rule as establishing a rebuttable presumption in favor 
of the QPA as the out-of-network rate while failing to equip the 
parties with the necessary information to rebut the presumption. Some 
commenters stated that the Departments disregarded bipartisan 
Congressional intent and tipped the scales in the Federal IDR process 
in favor of health plans and issuers. Commenters expressed concern that 
emphasizing the QPA ignores the complexity of billing factors, such as 
modifiers and the practice of bundling multiple health care services 
under a single billing code, and creates an incentive for the plan or 
issuer to downcode claims in bad faith. Commenters also expressed 
concern that the prominence of the QPA could drive down reimbursement 
rates for providers that are currently reimbursed above the median 
contracted rate, which they argued could jeopardize network adequacy 
and viability of physician practices and, commenters claimed, further 
drive down the QPA. A number of commenters stated that the emphasis 
given to the QPA would provide an incentive for plans and issuers to 
prefer out-of-network care, potentially resulting in reduced networks, 
because, ultimately, plans and issuers would pay the QPA rather than a 
market rate driven by the particular circumstances of the care 
delivered. Commenters also asserted that showing that the QPA is 
materially different from the appropriate out-of-network rate would 
burden providers and facilities who lack the resources to gather and 
submit this information during the Federal IDR process.
    Commenters who disagreed with the approach set forth in the October 
2021 interim final rules stated that certain provisions created a 
rebuttable presumption that the QPA is the appropriate out-of-network 
rate, and these commenters requested that the Departments remove these 
provisions, and instead issue rulemaking and guidance that instructs 
certified IDR entities to consider all permissible and relevant 
information submitted by the parties. Other commenters suggested 
alternative approaches for the provisions that govern the certified IDR 
entity's consideration of the enumerated factors. Some commenters 
requested that equal weight be given to the QPA and the contracted 
rates between the provider or facility and plan or issuer during the 
previous 4 years. Other commenters requested that the Departments 
replace the QPA as the baseline in the Federal IDR process with a 
different amount, such as the actual amount paid to a particular out-
of-network provider for the same or similar item or service or the 
median contracted rate based on the amount negotiated under each 
contract the provider has with a plan or issuer.
3. Payment Determinations for Air Ambulance Services
    A majority of commenters raised similar points with regard to the 
Federal IDR process for both non-air ambulance items and services and 
air ambulance

[[Page 52624]]

services. Some supported the emphasis on the QPA, while others 
disagreed with the use of the QPA as the baseline in the Federal IDR 
process. These commenters raised concerns about the transparency of the 
calculation of the QPA, and questioned whether the QPA is the 
appropriate out-of-network rate. Several commenters stressed that the 
use of the QPA as a baseline also raises concerns that are unique to 
air ambulance services. Some commenters highlighted the prevalence of 
single-case agreements for air ambulance services, which the commenters 
interpreted as including settlements of post-service claims. The 
commenters asserted that, because of the prevalence of these 
agreements, the QPA does not adequately reflect market rates for air 
ambulance services and the QPA would be lower than appropriate. Other 
commenters argued that hospital-based providers of air ambulance 
services are subsidized by the related hospitals, so including the 
rates of these providers in the QPA calculation with the rates of other 
air ambulance providers would improperly lower the QPA and therefore 
the use of the QPA as a baseline would not be appropriate. Another 
commenter argued that the negotiated rates of the few in-network 
providers for air ambulance services tend to be inflated by their 
disproportionately large market power, leading to artificially high air 
ambulance rates and an inflated QPA value. These commenters proposed 
that the rules should direct the certified IDR entities to take into 
account market concentration and prices charged by non-profit 
affiliated air ambulance providers because air ambulance services owned 
by private equity and publicly-traded companies receive higher payments 
and subsequently generate larger and more frequent surprise bills than 
their non-profit-affiliated counterparts. Other commenters disagreed 
and stated that the Federal IDR process should not make such a 
distinction among providers of air ambulance services. One commenter 
stated that Congress clearly recognized the variation in air ambulance 
services in distinguishing the six ``additional circumstances'' \24\ 
specific to air ambulance services that certified IDR entities should 
consider.
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    \24\ Under section 9817(b)(5)(C) of the Code, section 
717(b)(5)(C) of ERISA, and section 2799A-2(b)(5)(C) of the PHS Act, 
those six additional circumstances are: (1) the quality and outcomes 
measurements of the provider that furnished such services; (2) the 
acuity of the individual receiving such services or the complexity 
of furnishing such services to such individual; (3) the training, 
experience, and quality of the medical personnel that furnished such 
services; (4) the ambulance vehicle type, including the clinical 
capability level of such vehicle; (5) population density of the 
point of pick-up (such as urban, suburban, rural, or frontier); and 
(6) demonstrations of good faith efforts (or lack of good faith 
efforts) made by the nonparticipating provider or nonparticipating 
facility or the plan or issuer to enter into network agreements and, 
if applicable, contracted rates between the provider and the plan or 
issuer, as applicable, during the previous 4 plan years.
---------------------------------------------------------------------------

4. The Certified IDR Entity's Written Decision
    With respect to the certified IDR entity's written decision, 
several commenters supported the requirement for the certified IDR 
entity to provide a written decision, including the explanation of the 
underlying rationale for the certified IDR entity's determination. 
Other commenters stressed, however, that requiring the explanation of 
the rationale only if the certified IDR entity determined that the QPA 
was materially different from the appropriate out-of-network rate could 
discourage certified IDR entities from considering additional factors. 
A few commenters requested an explanation be required when the 
certified IDR entity selected the amount closest to the QPA, including 
how the information about the other required considerations was 
assessed while others stated that a robust explanation should be 
required of the certified IDR entity in all cases. Commenters also 
stated that requiring an explanation in all cases would ensure that 
certified IDR entities considered all information submitted by the 
parties and allow the parties to fully understand the rationale behind 
the certified IDR entity's determination. Commenters asserted that this 
could improve the quality and efficiency of the IDR process over time, 
as parties become better informed as to the types of information 
certified IDR entities find credible and the circumstances in which the 
parties should pursue the IDR process. Other commenters requested the 
Departments either eliminate the requirement for a written decision or 
require a similar analysis in all written decisions.

E. Litigation Regarding Requirements Related to Surprise Billing; Part 
II

    On October 28, 2021, the Texas Medical Association, a trade 
association representing physicians, and a Texas physician filed a 
lawsuit against the Departments and the Office of Personnel Management 
(OPM), asserting that certain provisions of the October 2021 interim 
final rules relating to the certified IDR entities' consideration of 
the QPA, as well as additional factors related to items and services 
that are not air ambulance services, should be vacated. Plaintiffs 
argued that the interim final rules ignored Congress's intent that 
certified IDR entities weigh the QPA and other factors without favoring 
any factor, and they asserted that, as a result, the rules would skew 
IDR results in favor of plans and issuers. On February 23, 2022, the 
United States District Court for the Eastern District of Texas 
(District Court) issued a memorandum opinion and order that vacated 
portions of the October 2021 interim final rules governing aspects of 
the Federal IDR process related to non-air ambulance qualified IDR 
items or services including: (1) the definition of ``material 
difference;'' (2) the requirement that a certified IDR entity must 
select the offer closest to the QPA unless the certified IDR entity 
determines that credible information submitted by either party under 26 
CFR 54.9816-8T(c)(4)(i), 29 CFR 2590.716-8(c)(4)(i), and 45 CFR 
149.510(c)(4)(i) clearly demonstrates that the QPA is materially 
different from the appropriate out-of-network rate for non-air 
ambulance qualified IDR items or services, or if the offers are equally 
distant from the QPA but in opposing directions; (3) the requirement 
that the certified IDR entity may only consider the additional 
information submitted by either party to the extent that the credible 
information related to the circumstances under 26 CFR 54.9816-
8T(c)(4)(i), 29 CFR 2590.716-8(c)(4)(i), and 45 CFR 149.510(c)(4)(i) 
clearly demonstrates that the QPA is materially different from the 
appropriate out-of-network rate for non-air ambulance qualified IDR 
items or services; (4) the dispute resolution examples; and (5) the 
requirement that, if the certified IDR entity does not choose the offer 
closest to the QPA, the certified IDR entity's written decision must 
include an explanation of the credible information that the certified 
IDR entity determined demonstrated that the QPA was materially 
different from the appropriate out-of-network rate, based on the 
factors certified IDR entities are permitted to consider with respect 
to the qualified IDR item or service.\25\
---------------------------------------------------------------------------

    \25\ Tex. Med. Ass'n, et al. v. U.S. Dept. of Health and Human 
Servs., et al., Case No. 6:21-cv-425 (E.D. Tex.).
---------------------------------------------------------------------------

    On April 27, 2022, LifeNet, Inc., a provider of air ambulance 
services, filed a lawsuit against the Departments and OPM seeking the 
vacatur of additional provisions of the October 2021 interim final 
rules applicable to air ambulance services. In particular, LifeNet 
alleged that the requirement codified in the last sentence of 26 CFR 
54.9817-2T(b)(2), 29 CFR 2590.717-2(b)(2), and 45 CFR

[[Page 52625]]

149.520(b)(2) that the certified IDR entity may consider information 
submitted by a party only if the information ``clearly demonstrate[s] 
that the qualifying payment amount is materially different from the 
appropriate out-of-network rate'' should be vacated. On July 26, 2022, 
the District Court issued a memorandum opinion and order vacating this 
language.\26\
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    \26\ LifeNet, Inc. v. United States Department of Health and 
Human Services, et al., Case No. 6:22-cv-162 (E.D. Tex.).
---------------------------------------------------------------------------

F. Scope and Purpose of This Rulemaking

    As discussed in more detail later in this preamble, upon review of 
the comments the Departments received on the information that must be 
shared about the QPA when a service is downcoded and with respect to 
the Federal IDR process, and in light of the District Court's 
memorandum opinions and orders in Texas Medical Association and 
LifeNet, the Departments have determined that it is appropriate to 
issue these final rules to finalize parts of the July 2021 and October 
2021 interim final rules related to the information that must be 
disclosed about the QPA under 26 CFR 54.9816-6T(d), 29 CFR 2590.716-
6(d), and 45 CFR 149.140(d) to address downcoding; related to the 
certified IDR entity's consideration of the statutory factors when 
making a payment determination under the Federal IDR process at 26 CFR 
54.9816-8T(c)(4)(iii)-(iv) and 54.9817T-2(b), 29 CFR 2590.716-
8(c)(4)(iii)-(iv) and 2590.717-2(b), and 45 CFR 149.510(c)(4)(iii)-(iv) 
and 149.520(b); and related to the certified IDR entity's written 
decision at 26 CFR 54.9816-8T(c)(4)(vi)(B), 29 CFR 2590.716-
8(c)(4)(vi)(B), and 45 CFR 149.510(c)(4)(vi)(B). These final rules also 
include changes to remove from the regulations the language vacated by 
the District Court.
    This rulemaking is purposefully narrow in scope and is intended to 
address only certain issues critical to the implementation and 
effective operation of the Federal IDR process. The Departments intend 
to finalize the remaining provisions of the July 2021 and October 2021 
interim final rules after further consideration of comments.

II. Overview of Final Rules

A. Information To Be Shared About the Qualifying Payment Amount

    As described earlier in this preamble, the July 2021 interim final 
rules require plans and issuers to make certain disclosures with each 
initial payment or notice of denial of payment. When the QPA serves as 
the recognized amount, or as the amount upon which cost sharing is 
based with respect to air ambulance services, plans and issuers must 
disclose the QPA and certain information related to the QPA for the 
item or service involved, as well as certain additional information, 
upon request of the provider, facility, or provider of air ambulance 
services for each item or service involved.\27\
---------------------------------------------------------------------------

    \27\ 26 CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and 45 CFR 
149.140(d).
---------------------------------------------------------------------------

    As stated in the preamble to the July 2021 interim final rules, the 
Departments seek to ensure transparent and meaningful disclosure of 
information relating to the calculation of the QPA for providers, 
facilities, and providers of air ambulance services, while at the same 
time minimizing administrative burdens on health plans and issuers and 
on the Federal IDR process. The Departments sought to balance those 
competing interests by, on the one hand, requiring plans and issuers to 
make certain disclosures with each initial payment or notice of denial 
of payment and to provide certain additional information upon request 
by the provider, facility, or provider of air ambulance services and, 
on the other hand, avoiding more wide-reaching disclosure requirements 
that could add to the costs and burdens of adjudicating claims subject 
to the surprise billing protections in the No Surprises Act.
    After review of the comments submitted on the July 2021 interim 
final rules regarding downcoding and on the clarification in the 
preamble to the October 2021 interim final rules stating that, under 
the July 2021 interim final rules, a plan or issuer may calculate the 
QPA using a downcoded service code, including the comments suggesting 
how the disclosure requirements could be modified in light of this 
clarification, the Departments have concluded that additional 
disclosure of information about the QPA is appropriate.\28\ This 
additional disclosure will ensure that providers, facilities, and 
providers of air ambulance services receive information regarding the 
QPA that aids in their meaningful participation in open negotiation and 
the Federal IDR process in all payment disputes that involve qualified 
items or services that have been subject to downcoding.
---------------------------------------------------------------------------

    \28\ 86 FR 55997-98 (October 7, 2021).
---------------------------------------------------------------------------

    Specifically, the Departments are of the view that additional 
information would be helpful in cases in which the plan or issuer has 
downcoded the billed claim to ensure that providers, facilities, and 
providers of air ambulance services receive the relevant information 
from a plan or issuer that is needed to engage in a productive open 
negotiation period. Without information on what the QPA would have been 
had the claim not been downcoded, the provider, facility, or provider 
of air ambulance services may be at a disadvantage compared to the plan 
or issuer. In cases in which the plan or issuer has downcoded the 
billed claim and asserts that the QPA that corresponds with the 
downcoded claim is the correct total payment amount, it is of 
particular importance that the provider, facility, or provider of air 
ambulance services knows that the item or service in question has been 
downcoded and has information regarding both the QPA for the downcoded 
claim and the amount that would have been the QPA had the service code 
or modifier not been downcoded. In the Departments' view, this 
information may be critical to the provider, facility, or provider of 
air ambulance services in developing an offer or submitting information 
if it believes that the QPA calculated by the plan or issuer does not 
best represent the value of the item or service provided.
    Furthermore, the requirement to disclose this additional 
information will increase transparency by ensuring that the provider, 
facility, or provider of air ambulance services has sufficient 
information about the QPA to submit an informed offer, including how it 
relates to the billed claim. This increased transparency will aid in 
the open negotiation process by helping providers, facilities, and 
providers of air ambulance services to understand how the plan or 
issuer arrived at the relevant QPA in relation to the billed claim. 
This increased transparency will inform the provider's, facility's, or 
provider of air ambulance services' decision whether to initiate open 
negotiation and the Federal IDR process, as well as its determination 
of the amount that it submits as its offer.\29\ Further, this 
requirement will help a provider, facility, or provider of air 
ambulance services ascertain what information to provide the certified 
IDR entity to demonstrate that the provider's, facility's, or provider 
of air ambulance

[[Page 52626]]

services' offer best represents the value of the item or service. If 
submitted for the certified IDR entity's consideration, this 
information will also aid the certified IDR entity in selecting the 
offer that best represents the value of the item or service by ensuring 
that the certified IDR entity will have additional pertinent 
information about the item or service. For example, in a dispute that 
concerns a qualified IDR service for which the plan or issuer downcoded 
the billed service code, the provider, facility, or provider of air 
ambulance services may present information showing that the billed 
service code was more appropriate than the downcoded service code. In 
such an instance, the certified IDR entity could determine that the QPA 
based on the downcoded service code does not sufficiently encompass the 
complexity of furnishing the qualified IDR service because it was based 
on a service code for a different service from the one furnished. If 
the certified IDR entity makes such a determination, then the amount 
that would have been the QPA had the service code or modifier not been 
downcoded may be relevant to the certified IDR entity in determining 
which offer best represents the value of the qualified IDR item or 
service.
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    \29\ The Departments understand that many plans and issuers make 
initial payments that are equivalent to or are informed by the 
corresponding QPA for the item or service at issue. As noted in in 
the preamble to the July 2021 interim final rules, the initial 
payment should be an amount that the plan or issuer reasonably 
intends to be payment in full based on the relevant facts and 
circumstances, which may be higher or lower than the QPA, as 
required under the terms of the plan or coverage, prior to the 
beginning of any open negotiation or initiation of the Federal IDR 
process. 86 FR 36872, 36900 (July 13, 2021).
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    Therefore, the Departments are issuing these final rules to add a 
definition for the term ``downcode'' to 26 CFR 54.9816-6, 29 CFR 
2590.716-6, and 45 CFR 149.140; and final rules under 26 CFR 54.9816-
6(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d) to require additional 
information about the QPA that must be provided with an initial payment 
or notice of denial of payment, without a provider, facility, or 
provider of air ambulance services having to make a request for this 
information, in cases in which the plan or issuer has downcoded the 
billed claim. Although ``downcoding'' is being defined for the first 
time in these final rules, the concept was reflected in both sets of 
interim final rules. Though neither set of interim final rules 
specifically defines a term for this practice, the interim final rules 
described the practice and explained that it was permissible under 
certain circumstances. See 86 FR 55997-98 n.35 (clarification in 
October 2021 interim final rules regarding requirements of July 2021 
interim final rules). Indeed, as described previously, the Departments 
received several comments in response to the July 2021 interim final 
rules and the October 2021 interim final rules requesting that the 
disclosures that must be provided with each initial payment or notice 
of denial of payment include additional information about how the QPA 
was calculated to ensure that providers, facilities, and providers of 
air ambulance services have sufficient information when the Federal IDR 
process is used for a payment determination. For example, commenters 
requested that plans and issuers be required, without a request, to 
provide information on the number of contracts and the geographic 
region used to calculate the QPA, whether the QPA was calculated based 
on a downcoded billed claim, information about the use of modifiers in 
calculating the QPA, the types of specialties and subspecialties that 
have contracted rates included in the data set used to determine the 
QPA, and whether bonuses and supplemental payments were paid to in-
network providers.
    These final rules define the term ``downcode,'' as described in the 
preamble to the October 2021 interim final rules, to mean the 
alteration by a plan or issuer of a 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.
    These final rules also specify that, if a QPA is based on a 
downcoded service code or modifier, in addition to the information 
already required to be provided with an initial payment or notice of 
denial of payment, a plan or issuer must provide a statement that the 
service code or modifier billed by the provider, facility, or provider 
of air ambulance services was downcoded; an explanation of why the 
claim was downcoded, including a description of which service codes 
were altered, if any, and which modifiers were altered, added, or 
removed, if any; and the amount that would have been the QPA had the 
service code or modifier not been downcoded.
    The Departments are continuing to consider comments on the July 
2021 interim final rules about whether additional disclosures related 
to the QPA calculation methodology should be required to be provided 
with an initial payment or notice of denial of payment, or upon 
request. The Departments note that the statute places the 
responsibility for monitoring the accuracy of plans' and issuers' QPA 
calculation methodologies with the Departments (and applicable state 
authorities) by requiring audits of plans' and issuers' QPA calculation 
methodologies,\30\ and the Departments have committed to conducting 
audits. The Departments also stress that payment determinations in the 
Federal IDR process should center on a determination of a total payment 
amount for a particular item or service based on the facts and 
circumstances of the dispute at issue, rather than an examination of a 
plan's or issuer's QPA methodology.
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    \30\ 86 FR 36872, 36899 (July 13, 2021).
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B. Payment Determinations Under the Federal IDR Process

    The October 2021 interim final rules provide that, not later than 
30 business days after the selection of the certified IDR entity, the 
certified IDR entity must select one of the offers submitted by the 
plan or issuer or the provider, facility, or provider of air ambulance 
services as the out-of-network rate for the qualified IDR item or 
service. In determining which offer to select, the October 2021 interim 
final rules provided, prior to Texas Medical Association and LifeNet, 
that the certified IDR entity must first look to the QPA, as it 
represents a reasonable market-based payment for relevant items and 
services, and then to additional information requested by the certified 
IDR entity from the parties and other additional information submitted 
by the parties. After considering the QPA and additional information, 
the October 2021 interim final rules required the certified IDR entity 
to select the offer closest to the QPA, unless the certified IDR entity 
determined that the additional information requested by the certified 
IDR entity and the credible information submitted by the parties 
demonstrated that the QPA was materially different from the appropriate 
out-of-network rate, or if the offers were equally distant from the QPA 
but in opposing directions. In instances in which the certified IDR 
entity determined that the credible information submitted by the 
parties clearly demonstrated that the QPA was materially different from 
the appropriate out-of-network rate, or when the offers were equally 
distant from the QPA but in opposing directions, the October 2021 
interim final rules state that the certified IDR entity must select the 
offer that the certified IDR entity determined best represents the 
value of the item or service, which could be either party's offer.
    As stated earlier in this preamble, on February 23, 2022 and July 
26, 2022, the District Court in Texas Medical Association and LifeNet 
issued memorandum opinions and orders that vacated certain provisions 
of the October 2021 interim final rules that govern aspects of the 
Federal IDR process, including provisions that

[[Page 52627]]

provided guidance to certified IDR entities on selecting the 
appropriate out-of-network rate in a payment determination. In the 
October 2021 interim final rules, the Departments required certified 
IDR entities to view the QPA as an appropriate payment amount, subject 
to consideration of the information submitted by the parties related to 
the additional circumstances outlined in the statute, as a mechanism to 
ensure that certified IDR entities approached making payment 
determinations in the Federal IDR process in a consistent manner. The 
regulatory text required certified IDR entities to select the offer 
closest to the QPA unless the certified IDR entity determined that 
credible information submitted by a party clearly demonstrated that the 
QPA was materially different from the appropriate out-of-network rate. 
The preamble to the October 2021 interim final rules described the 
relevant instructions to certified IDR entities as a ``rebuttable 
presumption'' in favor of the QPA.
    The District Court in Texas Medical Association and LifeNet vacated 
the portions of the October 2021 interim final rules that it construed 
as creating a rebuttable presumption in favor of the QPA. The 
Departments note that these final rules are not intended to impose a 
rebuttable presumption for payment determinations in the Federal IDR 
process. The regulatory text in these final rules does not include the 
provisions that the District Court reasoned would have the effect of 
imposing such a presumption.
    The Departments note that, in all cases, the QPA, which is 
generally based on the median contracted rate for a qualified IDR item 
or service, will be relevant to a payment determination, as it 
represents the typical payment amount that a plan or issuer that is a 
party to a payment determination will pay in-network providers, 
facilities, and providers of air ambulance services for that particular 
qualified IDR item or service. The Departments also note that, to the 
extent the QPA is calculated in a manner that is consistent with the 
detailed rules issued under the July 2021 interim final rules, and is 
communicated in a way that satisfies the applicable disclosure 
requirements, the QPA will meet the credibility requirement that 
applies to the additional information and circumstances set forth in 
these final rules.\31\ The credibility requirement is designed to 
ensure that the additional information submitted by the parties to a 
payment determination meet the same credibility standard that the QPA 
already meets through other mechanisms, by virtue of the requirements 
related to the QPA set forth in the July 2021 interim final rules. The 
Departments also note that the credibility requirement is designed to 
ensure that certified IDR entities have clear guidance on how to 
evaluate potentially voluminous and complex information in a methodical 
and consistent manner. Absent clear guidance on a process for 
evaluating the different factors, there would be no guarantee of 
consistency in how certified IDR entities reached determinations in 
different cases. The Departments are of the view that this guidance is 
also important because the QPA must be a quantitative figure, like the 
offers that will be submitted in a payment determination. Generally, 
these quantitative figures will be unlike the information received 
related to the additional circumstances, which will often be 
qualitative and open to subjective evaluation. Although the QPA is a 
quantitative figure, the amount that best represents the value of the 
qualified IDR items and services may be more or less than the QPA due 
to additional circumstances that are not easily quantifiable such as 
the care setting or the teaching status of the facility. It therefore 
is reasonable to ensure that certified IDR entities consider the QPA, a 
quantitative figure, and then consider the additional, likely-
qualitative factors, when determining the out-of-network rate--another 
quantitative figure.
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    \31\ To the extent there is a question whether a plan or issuer 
has complied with the July 2021 interim final rules' requirements 
for calculating the QPA, it is the Departments' (or applicable State 
authorities') responsibility, not the certified IDR entity's, to 
monitor the accuracy of the plan's or issuer's QPA calculation 
methodology by conducting an audit of the plan's or issuer's QPA 
calculation methodology. However, a provider or facility may always 
assert to the certified IDR entity that additional information 
points in favor of the selection of its offer as the out-of-network 
payment amount, even where that offer is for a payment amount that 
is different from the QPA.
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1. Requirement To Consider the QPA and Additional Information Submitted
    In light of the Texas Medical Association and LifeNet decisions, 
and in response to comments received on these provisions, the 
Departments are finalizing rules that remove the provisions that the 
District Court vacated and that adopt standards for making a payment 
determination that are intended to achieve the statutory aims 
articulated earlier in this preamble.
    Congress granted the Departments statutory authority to ``establish 
by regulation one independent dispute resolution process'' under which 
certified IDR entities determine the amount of payment for an out-of-
network item or service.\32\ The Federal IDR process that the 
Departments establish under this authority is to be ``in accordance 
with the succeeding provisions of'' the cited statutory 
subsections,\33\ including the statutory provisions describing the 
factors for the certified IDR entity to consider in determining the 
out-of-network payment amount. Under sections 9816(c)(5) and 9817(b)(5) 
of the Code, sections 716(c)(5) and 717(b)(5) of ERISA, and sections 
2799A-1(c)(5) and 2799A-2(b)(5) of the PHS Act, the statute provides 
that with respect to payment determinations, the certified IDR entity 
must always consider the QPA without the parties specifically bringing 
it to the certified IDR entity's attention. Next, the statute provides 
that the certified IDR entity must also consider ``additional 
information'' or ``additional circumstances'' submitted to the 
certified IDR entity.
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    \32\ See section 9816(c)(2)(A) of the Code, section 716(c)(2)(A) 
of ERISA, and section 2799A-1(c)(2)(A) of the PHS Act; see also 
section 9817(b)(2)(A) of the Code, section 717(b)(2)(A) of ERISA, 
and section 2799A-2(b)(2)(A) of the PHS Act.
    \33\ Id.
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    As explained later in this preamble, the Departments are of the 
view that it is appropriate to exercise their authority under this 
provision, and that it is in accordance with these statutory 
provisions, to adopt a Federal IDR process that encourages a consistent 
methodology for evaluation of information when making a payment 
determination. The Departments are of the view that there is value in 
ensuring that all certified IDR entities approach payment 
determinations in a similar manner, which will promote consistency and 
predictability in the process, thereby lowering administrative costs 
and encouraging consistency in appropriate payments for out-of-network 
services.\34\ The statute requires certified IDR entities to always 
consider the QPA when making a payment determination, as it is the one 
statutory consideration that will always be present in each payment 
determination, whereas the parties may or may not choose to submit

[[Page 52628]]

information related to the additional circumstances as part of their 
offer. Consideration of the QPA, which is the first-listed statutory 
factor and a quantitative figure, will aid certified IDR entities in 
their consideration of each of the other statutory factors, as these 
entities will then be in a position to evaluate whether the 
``additional'' factors present information that may not have already 
been captured in the calculation of the QPA.
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    \34\ See Cong. Budget Office, H.R. 5826, the Consumer 
Protections Against Surprise Medical Bills Act of 2020, as 
Introduced on February 10, 2020: Estimated Budgetary Effects at 1 
(Feb. 11, 2020) (arbitrators ``would be instructed to look to the 
health plan's median payment rate for in-network rate care,'' and as 
a result ``average payment rates for both in- and out-of-network 
care would move toward the median in-network rate,'' thereby 
lowering health insurance premiums and budget deficits); see also 
H.R. Rep. No. 116-615, pt. I, at 57-58 (2020).
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    As commenters noted, there may be instances in which the QPA would 
not adequately account for one or more of the additional factors. The 
Departments note that these final rules do not require certified IDR 
entities to default to the offer closest to the QPA or to apply a 
presumption in favor of that offer. The Departments are of the view 
that it will often be the case that the QPA represents an appropriate 
out-of-network rate, as the QPA is largely informed by similar 
information to what would be provided as information in support of the 
additional statutory circumstances. Nonetheless, the Departments 
acknowledge that the additional factors may be relevant in determining 
the appropriate out-of-network rate, because the QPA may not account 
for information specific to a particular item or service. Therefore, 
these final rules do not require the certified IDR entity to select the 
offer closest to the QPA. Rather, these final rules specify that 
certified IDR entities should select the offer that best represents the 
value of the item or service under dispute after considering the QPA 
and all permissible information submitted by the parties.
    Accordingly, in determining which offer to select during the 
Federal IDR process under these final rules, the certified IDR entity 
must consider the QPA for the applicable year for the same or similar 
item or service and then must consider all additional information 
submitted by a party to determine which offer best reflects the 
appropriate out-of-network rate, provided that the information relates 
to the party's offer for the payment amount for the qualified IDR item 
or service that is the subject of the payment determination (and does 
not include information that the certified IDR entity is prohibited 
from considering in making the payment determination under section 
9816(c)(5)(D) of the Code, section 716(c)(5)(D) of ERISA, and section 
2799A-1(c)(5)(D) of the PHS Act).\35\ For this purpose, the Departments 
understand that information requested by a certified IDR entity, or 
submitted by a party, would be information relating to a party's offer 
if it tends to show that the offer best represents the value of the 
item or service under dispute. Therefore, these rules require the 
certified IDR entity to evaluate whether the information relates to the 
offer submitted by either party for the payment amount for the 
qualified IDR item or service that is the subject of the payment 
determination. In considering this additional information, the 
certified IDR entity should evaluate whether information that is 
offered is credible and should not give weight to information that is 
not credible.\36\ The appropriate out-of-network rate must be the offer 
that the certified IDR entity determines best represents the value of 
the qualified IDR item or service.
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    \35\ See also 26 CFR 54.9816-8T(c)(4)(v), 29 CFR 2590.716-
8(c)(4)(v), and 45 CFR 149.510(c)(4)(v).
    \36\ For this purpose, credible information is information that 
upon critical analysis is worthy of belief and is trustworthy. 26 
CFR 54.9816-8T(a)(2)(v), 29 CFR 2590.716-8(a)(2)(v), and 45 CFR 
149.510(a)(2)(v).
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    For non-air ambulance items and services, the additional 
information to be considered includes information related to the 
following factors:
    1. the level of training, experience, and quality and outcomes 
measurements of the provider or facility that furnished the qualified 
IDR item or service (such as those endorsed by the consensus-based 
entity authorized in section 1890 of the Social Security Act);
    2. the market share held by the provider or facility or that of the 
plan or issuer in the geographic region in which the qualified IDR item 
or service was provided;
    3. the acuity of the participant, beneficiary, or enrollee 
receiving the qualified IDR item or service, or the complexity of 
furnishing the qualified IDR item or service to the participant, 
beneficiary, or enrollee;
    4. the teaching status, case mix, and scope of services of the 
facility that furnished the qualified IDR item or service, if 
applicable; and
    5. the demonstration of good faith efforts (or lack thereof) made 
by the provider or facility or the plan or issuer to enter into network 
agreements with each other, and, if applicable, contracted rates 
between the provider or facility, as applicable, and the plan or 
issuer, as applicable, during the previous 4 plan years.
    Under these final rules, the certified IDR entity must also 
consider information related to the offer provided in response to a 
request from the certified IDR entity under 26 CFR 54.9816-
8T(c)(4)(i)(A)(2), 29 CFR 2590.716-8(c)(4)(i)(A)(2), and 45 CFR 
149.510(c)(4)(i)(A)(2).
2. Avoidance of Double-Counting Information
    When considering the additional information under 26 CFR 54.9816-
8(c)(4)(iii), 29 CFR 2590.716-8(c)(4)(iii), and 45 CFR 
149.510(c)(4)(iii), the certified IDR entity should evaluate the 
information and should not give weight to that information if it is 
already accounted for by any of the other information submitted by the 
parties. The certified IDR entity should consider whether the 
additional information is already accounted for in the QPA and should 
not give weight to information related to a factor if the certified IDR 
entity determines the information was already accounted for in the 
calculation of the QPA, to avoid weighting the same information twice. 
In addition, if the parties submit information related to more than one 
of the additional factors, the certified IDR entity should also 
consider whether the information submitted regarding those factors is 
already accounted for by information submitted relating to other 
credible information submitted to the certified IDR entity in relation 
to another factor and, if so, should not weigh this information more 
than once.
    Numerous comments received on the October 2021 interim final rules 
highlighted that, in many cases, certain factors, such as patient 
acuity or the complexity of furnishing the qualified IDR item or 
service to the participant, beneficiary, or enrollee, will already be 
accounted for in the calculation of the QPA and should therefore not 
receive additional weight. For example, because the plan or issuer is 
required to calculate the QPA using median contracted rates for service 
codes, as well as modifiers (if applicable), and because service codes 
and modifiers in many cases reflect patient acuity and the complexity 
of the service provided, these factors will often already be reflected 
in the QPA.
    Commenters also acknowledged that there could be instances in which 
the QPA would not adequately account for the acuity of the patient or 
complexity of the service: for example, if the complexity of a case is 
an outlier such that the time or intensity of care exceeds what is 
typical for a service code. A certified IDR entity may also conclude 
that the QPA does not already account for patient acuity or the 
complexity of furnishing the qualified IDR item or service in instances 
where the parties disagree on what service code or modifier accurately 
describes the qualified IDR item or service, such as when a plan or 
issuer has downcoded a claim and the QPA is based on the

[[Page 52629]]

downcoded service code or modifier, rather than the billed service code 
or modifier.
    The Departments agree with the commenters that, in many cases, the 
additional factors for the certified IDR entity to consider other than 
the QPA will already be reflected in the QPA. The QPA is generally 
calculated to include characteristics that affect costs, including 
medical specialty, geographic region, and patient acuity and case 
severity, all captured in different billing codes or the QPA 
calculation methodology.\37\ Therefore, in the Departments' view, 
giving additional weight to information that is already incorporated 
into the calculation of the QPA would be redundant, possibly resulting 
in the selection of an offer that does not best represent the value of 
the qualified IDR item or service and potentially over time 
contributing to higher health care costs. As noted earlier in this 
preamble, the Departments are also aware that there are instances when 
certain factors related to the qualified IDR item or service may not be 
adequately reflected in the QPA. Under these final rules, certified IDR 
entities are required to consider the QPA and then must consider all 
additional information submitted by the parties relating to the offer 
for the payment amount for the qualified IDR item or service that is 
the subject of the payment determination, but each factor should be 
weighted only once in the evaluation of each party's payment offer. To 
the extent a factor is not already reflected in the QPA, the certified 
IDR entity should accord that factor appropriate weight based on 
information related to it provided by the parties. For example, some 
providers and facilities that provide high-acuity care, such as level 1 
trauma or neonatal care, may contend that additional factors such as 
their case mix and the scope of services offered were not accounted for 
in the QPA and could justify the selection of a higher amount as the 
out-of-network payment amount.
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    \37\ Plans and issuers are required to calculate separate QPAs 
for the same service code by provider specialty if the plan or 
issuer has contracted rates for the service code that vary based on 
provider specialty. See 26 CFR 54.9816-6T(b)(3), 29 CFR 2590.716-
6(b)(3), and 45 CFR 149.140(b)(3).
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3. Examples Provided
    These final rules also include examples to illustrate the 
consideration of factors when making a payment determination, including 
whether and how to give weight to additional information submitted by a 
party. Each example assumes that the Federal IDR process applies for 
purposes of determining the out-of-network rate, that both parties have 
submitted the information parties are required to submit as part of the 
Federal IDR process, including the applicable QPA(s), and the submitted 
information does not include information on the prohibited factors.
    In the first new example, a level 1 trauma center that is a 
nonparticipating emergency facility submits an offer that is higher 
than the QPA. Along with the offer, the nonparticipating emergency 
facility submits additional written information showing that the scope 
of services available at the nonparticipating emergency facility was 
critical to the delivery of care for the qualified IDR item or service 
provided, given the particular patient's acuity, and the information is 
determined to be credible by the certified IDR entity. The 
nonparticipating emergency facility also submits information showing 
that the contracted rates used to calculate the QPA were based on a 
level of service that is typical in cases in which the services are 
delivered by a facility that is not a level 1 trauma center and that 
does not have the capability to provide the scope of services provided 
by a level 1 trauma center. This information is also determined to be 
credible by the certified IDR entity. The issuer submits an offer equal 
to the QPA. No additional information is submitted by either party. The 
certified IDR entity determines that the information submitted by the 
nonparticipating emergency facility relates to the offer for the 
payment amount for the qualified IDR item or service that is the 
subject of the payment determination. If the certified IDR entity 
determines that it is appropriate to give weight to the additional 
credible information submitted by the nonparticipating emergency 
facility and that this information demonstrates that the facility's 
offer best represents the value of the qualified IDR item or service, 
the certified IDR entity should select the facility's offer.
    In the second new example, a nonparticipating provider submits an 
offer that is higher than the QPA. Along with the offer, the 
nonparticipating provider submits additional written information 
regarding the level of training and experience of the provider, and the 
information is determined to be credible by the certified IDR entity, 
but the certified IDR entity finds that the provider does not 
demonstrate that the level of training and experience relates to the 
offer for the appropriate payment amount for the qualified IDR item or 
service that is the subject of the payment determination (for example, 
the information does not show that the level of training and experience 
was necessary to provide the qualified IDR service or that the training 
or experience made an impact on the care that was provided). The 
nonparticipating provider does not submit any additional information. 
The issuer submits an amount equal to the QPA as its offer, with no 
additional information. Even if the certified IDR entity determines 
that the additional information regarding the level of training and 
experience is credible, if the certified IDR entity determines that the 
information does not relate to the offer for the payment amount for the 
qualified IDR service that is the subject of the payment determination, 
the certified IDR entity should not give weight to the additional 
information. In the absence of any other credible information that 
relates to a party's offer, the certified IDR entity should select the 
issuer's offer as the offer that best represents the value of the 
qualified IDR service.
    In the third new example, in connection with an emergency 
department visit for the evaluation and management of a patient, a 
nonparticipating provider submits an offer that is higher than the QPA. 
Along with the offer, the nonparticipating provider submits additional 
written information showing that the acuity of the patient's condition 
and the complexity of the qualified IDR service required the taking of 
a comprehensive history, a comprehensive examination, and medical 
decision making of high complexity, and the information is determined 
to be credible by the certified IDR entity. The issuer submits an offer 
equal to the QPA for Current Procedural Terminology (CPT) code 99285, 
which is the CPT code for an emergency department visit for the 
evaluation and management of a patient requiring a comprehensive 
history, a comprehensive examination, and medical decision making of 
high complexity. The issuer also submits additional written information 
showing that this CPT code accounts for the acuity of the patient's 
condition, and the information is determined to be credible by the 
certified IDR entity. The certified IDR entity determines that this 
information relates to the offer for the payment amount for the 
qualified IDR item or service that is the subject of the payment 
determination. Neither party submits any additional information. If the 
certified IDR entity determines the information on the acuity of the 
patient and complexity of the service is already accounted for in the 
calculation of the QPA, the certified IDR entity should not

[[Page 52630]]

give weight to the additional information provided by the 
nonparticipating provider. If, after evaluating the information 
submitted by the parties, the IDR entity determines that the issuer's 
offer best represents the value of the qualified IDR service, then the 
certified IDR entity should select the issuer's offer.
    In the fourth new example, the issuer submits an offer that is 
higher than the QPA and that is equal to the nonparticipating emergency 
facility's prior contracted rate (adjusted for inflation) with the 
issuer for the previous year for the qualified IDR service. Although 
the facility is not participating in the issuer's network this year, it 
was a participating facility in the issuer's network in the previous 4 
plan years. Along with the offer, the issuer submits additional written 
information showing that the contracted rates between the 
nonparticipating facility and the issuer during the previous 4 plan 
years were higher than the QPA, and that these prior contracted rates 
took into account the case mix and scope of services typically 
furnished at the facility. The certified IDR entity determines that the 
information is credible and that it relates to the offer submitted by 
the facility for the payment amount for the qualified IDR service that 
is the subject of the payment determination. The nonparticipating 
emergency facility submits an offer that is higher than both the QPA 
and the prior contracted rate (adjusted for inflation) and submits 
additional written information intending to show that the case mix and 
scope of services available at the facility that furnished the 
qualified IDR service were integral to the services provided. The 
certified IDR entity determines this information is credible and 
relates to the offer submitted by the facility for the payment amount 
for the qualified IDR service that is the subject of the payment 
determination. If the certified IDR entity determines that the 
information submitted by the facility regarding the case mix and scope 
of services available at the facility includes information that is also 
accounted for in the information that the issuer submitted regarding 
prior contracted rates, then that same information that has been 
submitted twice should be weighted only once by the certified IDR 
entity. The certified IDR entity also should not give weight to the 
same information provided by the nonparticipating emergency facility in 
relation to any other factor. If the certified IDR entity determines 
that the issuer's offer best represents the value of the qualified IDR 
service, the certified IDR entity should select the issuer's offer.
    In the fifth new example, regarding a qualified IDR service for 
which the issuer downcoded the service code that the provider billed, 
the issuer submits an offer equal to the QPA (which was calculated 
using the downcoded service code). The issuer also submits the 
additional written information that it was required to disclose to the 
nonparticipating provider at the time of the initial payment. The 
certified IDR entity determines the additional information to be 
credible and that it relates to the offer for the payment amount for 
the qualified IDR service that is the subject of the payment 
determination. The nonparticipating provider submits an offer equal to 
the amount that would have been the QPA had the service code not been 
downcoded. The nonparticipating provider submits additional written 
information that includes the same documentation provided by the 
issuer, as well as information that explains why the billed service 
code was more appropriate than the downcoded service code, as evidence 
that the provider's offer best represents the value of the service 
furnished, given its complexity. Neither party submits any additional 
information. The certified IDR entity determines that the information 
submitted by the provider is credible and that it is related to the 
offer for the payment amount for the qualified IDR service that is the 
subject of the payment determination. If the certified IDR entity 
determines that it is appropriate to give weight to the additional 
credible information submitted by the provider and that this 
information demonstrates that the provider's offer best represents the 
value of the qualified IDR service, the certified IDR entity should 
select the provider's offer.
    The Departments note that the statute and the October 2021 interim 
final rules continue to provide that when making a payment 
determination, a certified IDR entity must not consider information on 
the prohibited factors, such as the usual and customary charges 
(including payment or reimbursement rates expressed as a proportion of 
usual and customary charges); the amount that would have been billed by 
the provider, facility, or provider of air ambulance services with 
respect to the qualified IDR item or service had the balance billing 
provisions of 45 CFR 149.410, 149.420, and 149.440 (as applicable) not 
applied; or the payment or reimbursement rate for items and services 
furnished by the provider, facility, or provider of air ambulance 
services payable by a public payor.^{38 39} In considering all 
the permissible information submitted by the parties, the Departments 
expect that the certified IDR entity will conduct a thorough review of 
the information submitted to evaluate whether the information includes 
any of the prohibited factors, so as to ensure that prohibited factors 
are not considered in any payment determinations. In conducting this 
review, the certified IDR entity may request additional information 
from the disputing parties, including confirmation that information 
submitted does not include information on the prohibited factors.
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    \38\ Contracted rates are frequently based on a percentage of 
rates payable by a public payor, such as Medicare. In these cases, 
because contracting parties have chosen to set their rates in this 
way, the contracted rates represent an independent decision by 
contracting parties. Thus, if a party submits information on such 
rates to a certified IDR entity, consideration of these contracted 
rates does not violate the prohibition on considering the factors 
described in 26 CFR 54.9816-8T(c)(4)(v), 29 CFR 2590.716-8(c)(4)(v), 
and 45 CFR 149.510(c)(4)(v). In contrast, if a party submits 
evidence showing that its offer was a percentage of the rates paid 
by Medicare, a certified IDR entity is prohibited from considering 
such information.
    \39\ Under 5 U.S.C. 8904(b), in the case of a retired individual 
who is over age 65 and enrolled in the Federal Employees Health 
Benefits (FEHB) Program but not covered by Medicare part A or B, 
fee-for-service FEHB carriers may not pay a charge imposed by a 
hospital provider for inpatient services or a physician to the 
extent that charge exceeds applicable Medicare limits. The 
Departments, after consulting with OPM, clarify that a certified IDR 
entity is not considered to violate the prohibition on considering 
the payment or reimbursement rate for items and services furnished 
by the provider, facility, or provider of air ambulance services 
payable by a public payor to the extent the certified IDR entity's 
selection of an offer is made to allow compliance with 5 U.S.C. 
8904(b) and 5 CFR part 890, subpart I. That is, if 5 U.S.C. 8904(b) 
applies, and either offer exceeds the applicable Medicare limit 
referenced in 5 U.S.C. 8904(b), the certified IDR entity must ensure 
that the payment determination does not exceed the applicable 
Medicare limit. A certified IDR entity would not be considered to 
violate the prohibition on considering Medicare reimbursement rates 
when it selects an offer on this basis.
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    The Departments are committed to establishing a fair, cost-
effective, and reasonable IDR payment determination process that does 
not have an inflationary impact on health care costs. To that end, the 
Departments will monitor the effects of these payment determination 
requirements and make appropriate adjustments as necessary to achieve 
the intended goals articulated in this preamble.

C. Payment Determinations Under the Federal IDR Process for Air 
Ambulance Services

    As discussed in section I.C of this preamble, the process for a 
certified IDR entity to select an offer in a dispute

[[Page 52631]]

related to qualified IDR services that are air ambulance services is 
generally the same as the process applicable to disputes related to 
qualified IDR items or services that are not air ambulance services. 
However, section 9817(b)(5)(C) of the Code, section 717(b)(5)(C) of 
ERISA, section 2799A-2(b)(5)(C) of the PHS Act, and the October 2021 
interim final rules specify different additional circumstances, in 
addition to the QPA, that the certified IDR entity must consider in 
making the payment determination for air ambulance services. Upon 
review of the comments the Departments received on the Federal IDR 
process, and in light of the District Court's memorandum opinions and 
orders in Texas Medical Association and LifeNet, the Departments have 
determined that it is appropriate to issue the final rules under the 
Federal IDR process for air ambulance services.
    As for non-air ambulance items and services, these final rules 
provide that in determining which offer to select in a dispute related 
to air ambulance services, the certified IDR entity must consider 
certain additional information submitted by a party. Also, for non-air 
ambulance items and services, these final rules for air ambulance 
services provide that the certified IDR entity must consider the QPA 
for the applicable year for the same or similar service and then 
consider all additional permissible information to determine the 
appropriate out-of-network rate. For air ambulance services, this 
information includes information related to the following factors:
    1. quality and outcomes measurements of the provider that furnished 
the services;
    2. the acuity of the condition of the participant, beneficiary, or 
enrollee receiving the service, or the complexity of furnishing the 
service to the participant, beneficiary, or enrollee;
    3. training, experience, and quality of the medical personnel that 
furnished the air ambulance service;
    4. ambulance vehicle type, including the clinical capability level 
of the vehicle;
    5. population density of the point of pick-up; and
    6. demonstrations of good faith efforts (or lack thereof) by the 
disputing parties to enter into network agreements with each other, as 
well as, if applicable, contracted rates between the parties during the 
previous 4 plan years.
    Additionally, as with non-air ambulance disputes, the certified IDR 
entity must also consider information related to the offer provided in 
a response to the certified IDR entity's request under 26 CFR 54.9816-
8T(c)(4)(i)(A)(2), 29 CFR 2590.716-8(c)(4)(i)(A)(2), and 45 CFR 
149.510(c)(4)(i)(A)(2). The certified IDR entity must also consider 
other information provided by the parties under 26 CFR 54.9816-
8(c)(4)(iii)(D), 29 CFR 2590.716-8(c)(4)(iii)(D), and 45 CFR 
149.510(c)(4)(iii)(D).
    As with non-air ambulance disputes, the certified IDR entity should 
evaluate whether each piece of submitted information is credible, 
relates to the offer for the payment amount for the qualified IDR 
service submitted by either party, and does not include information on 
factors described in 26 CFR 54.9816-8T(c)(4)(v), 29 CFR 2590.716-
8(c)(4)(v), or 45 CFR 149.510(c)(4)(v) (regarding prohibited 
considerations). When considering the additional information listed 
above, the certified IDR entity should not give weight to the 
information to the extent it is not credible, does not relate to either 
party's offer for the payment amount for the qualified IDR service, or 
is included in the QPA calculation or other credible information. The 
Departments note that these final rules do not require certified IDR 
entities to default to the offer closest to the QPA or to apply a 
presumption in favor of that offer. Rather, these final rules specify 
that certified IDR entities should select the offer that best 
represents the value of the air ambulance service under dispute after 
considering the QPA and all permissible information submitted by the 
parties.

D. The Certified IDR Entity's Written Decision

    Under section 9816(c)(7) of the Code, section 716(c)(7) of ERISA, 
and section 2799A-1(c)(7) of the PHS Act, the Departments are required 
to publish a variety of information relating to the Federal IDR 
process, including the number of times a payment amount determined or 
agreed to under this process exceeds the QPA; the amount of each offer 
submitted in the Federal IDR process expressed as a percentage of the 
QPA; and any other information specified by the Departments. The 
statute also instructs certified IDR entities to submit to the 
Departments such information as the Departments determine necessary to 
carry out the provisions of section 9816(c) of the Code, section 716(c) 
of ERISA, and section 2799A-1(c) of the PHS Act, which include these 
reporting requirements as well as the Departments' obligations to 
establish and oversee the Federal IDR process. The Departments have 
determined it is necessary under this provision to require certified 
IDR entities to submit certain information, including a written 
statement of the certified IDR entity's reasons for a particular 
determination of an out-of-network rate.
    Under the October 2021 interim final rules, the certified IDR 
entity must explain its payment determination and the underlying 
rationale in a written decision submitted to the parties and the 
Departments, in a form and manner specified by the Departments. The 
October 2021 interim final rules also required the certified IDR entity 
to include in its written decision an explanation of the credible 
information that the certified IDR entity determined demonstrated that 
the QPA was materially different from the appropriate out-of-network 
rate if the certified IDR entity did not choose the offer closest to 
the QPA.
    As stated earlier in this preamble, on February 23, 2022, the 
District Court in Texas Medical Association issued a memorandum opinion 
and order that invalidated the requirement to provide an explanation of 
the credible information that the certified IDR entity determined 
demonstrated that the QPA was materially different from the appropriate 
out-of-network rate (but not the general requirement that a certified 
IDR entity issue a written decision). The Departments are of the view 
that, in all cases, a written decision with a comprehensive discussion 
of the rationale for the decision is important to ensure that the 
parties understand the outcome of a payment determination under the 
Federal IDR process. The Departments note that commenters generally 
supported the requirement that certified IDR entities provide a written 
rationale for determinations. The Departments agree with commenters' 
assertions that the certified IDR entity should be required to provide 
an explanation for its decision in all cases, and not only when the 
offer furthest from the QPA is determined to best represent the value 
of the qualified IDR item or service. This requirement will ensure that 
all parties understand the certified IDR entity's payment determination 
and how the various information was considered.
    The Departments are finalizing standards for the written decision 
that are intended to achieve transparency and consistency in the 
Federal IDR process. Accordingly, similar to the October 2021 interim 
final rules these final rules require that the certified IDR entity 
explain in all cases its determination in a written decision provided 
to the parties and the Departments, in a form and manner specified by 
the Departments in separate guidance. Additionally, these final rules

[[Page 52632]]

continue to require that the rationale be included in the written 
decision. In response to comments requesting additional transparency 
and explanation, these final rules also provide that the certified IDR 
entity's written decision must include an explanation of its 
determination, including what information the certified IDR entity 
determined demonstrated that the offer selected as the out-of-network 
rate is the offer that best represents the value of the qualified IDR 
item or service, including the weight given to the QPA and any 
additional credible information submitted in accordance with these 
final rules. This requirement will help ensure that certified IDR 
entities carefully evaluate all credible information and promote 
transparency with respect to payment determinations. These final rules 
also provide that, if the certified IDR entity relies on additional 
information or additional circumstances in selecting an offer, its 
written decision must include an explanation of why the certified IDR 
entity concluded that this information was not already reflected in the 
QPA. The Departments are of the view that, in these cases, the 
certified IDR entity should provide this additional explanation so that 
the Departments may fulfill their statutory functions to monitor and to 
report on how often, and why, an offer that is selected exceeds the QPA 
for a given qualified IDR item or service. Additionally, this 
requirement will provide the Departments with valuable information to 
inform future policy making, in particular, policy making related to 
the QPA methodology. As stated elsewhere in this preamble, the 
Departments are committed to establishing a reasonable and fair Federal 
IDR process.
    Finally, the Departments are also including two technical 
corrections to address a regulatory cross-references in the provisions 
that set forth the requirements for the certified IDR entity to include 
a rationale for its written decision for both air ambulance and non-air 
ambulance qualified IDR items and services in monthly reporting to the 
Departments, and to clarify that the certified IDR entity should report 
to the Departments the extent to which the decision relied on 26 CFR 
54.9816-8(c)(4)(iii)(B)-(D), 29 CFR 2590.716-8(c)(4)(iii)(B)-(D), and 
45 CFR 149.510(c)(4)(iii)(B)-(D). This requirement aligns the reporting 
requirement with the requirement for the written decision, and with the 
intent of the October 2021 interim final rules to gather such 
information.

III. Applicability of the Final Rules

    These rules finalize certain provisions of the July 2021 and 
October 2021 interim final rules and address the decisions in Texas 
Medical Association and LifeNet. The July 2021 and October 2021 interim 
final rules apply for plan years (in the individual market, policy 
years) beginning on or after January 1, 2022, except to the extent 
provided below.
    The final rules that implement the requirements related to the 
additional information that must be provided with each initial payment 
or notice of denial of payment if the QPA is based on a downcoded 
service code or modifier are applicable with respect to items or 
services furnished on or after October 25, 2022, for plan years (in the 
individual market, policy years) beginning on or after January 1, 2022.
    With respect to the additional information that must be provided 
with each initial payment or notice of denial of payment if a QPA is 
based on a downcoded service code or modifier, the Departments 
recognize that plans and issuers often provide these notices through an 
automated or other streamlined system for efficiency and that plans and 
issuers may need additional time to update their operating systems to 
amend the notices that are currently generated to satisfy the QPA 
disclosure requirements under the July 2021 interim final rules. Plans 
and issuers may use reasonable methods to provide this additional 
disclosure with the initial payment or notice of denial of payment 
while plan or issuer systems and procedures are updated to provide the 
additional notice in a more streamlined and automated manner. Even when 
using other reasonable methods, plans and issuers must provide the 
required information starting on the date these final rules are 
applicable to the relevant plan or policy and in accordance with the 
timeframes specified in the July 2021 interim final rules. The 
Departments expect that plans and issuers will work to make sure that 
systems are updated in a timely fashion, and the Departments may 
provide additional guidance, as warranted.
    For requirements that finalize certain provisions of the October 
2021 interim final rules, the final rules addressing the payment 
determination standards for certified IDR entities, written decisions, 
and reporting are applicable with respect to items or services provided 
or furnished on or after October 25, 2022, for plan years (in the 
individual market, policy years) beginning on or after January 1, 2022. 
This approach will ensure uniformity and predictability in standards 
for qualified IDR items and services (including between non-air 
ambulance items and services and air ambulance services, to the extent 
applicable), and will allow time for the Departments to provide updated 
guidance to certified IDR entities and stakeholders.
    If any provision in this rulemaking is held to be invalid or 
unenforceable facially, or as applied to any person, plaintiff, or 
circumstance, the provision shall be severable from the remainder of 
this rulemaking, and shall not affect the remainder thereof, and the 
invalidation of any specific application of a provision shall not 
affect the application of the provision to other persons or 
circumstances.

IV. Regulatory Impact Analysis

A. Summary

    The Departments have examined the effects of these final rules as 
required by Executive Order 12866,\40\ Executive Order 13563,\41\ the 
Paperwork Reduction Act of 1995,\42\ the Regulatory Flexibility 
Act,\43\ section 202 of the Unfunded Mandates Reform Act of 1995,\44\ 
Executive Order 13132,\45\ and the Congressional Review Act.\46\
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    \40\ Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993).
    \41\ Improving Regulation and Regulatory Review, 76 FR 3821 
(Jan. 18, 2011).
    \42\ 44 U.S.C. 3506(c)(2)(A) (1995).
    \43\ 5 U.S.C. 601 et seq. (1980).
    \44\ 2 U.S.C. 1501 et seq. (1995).
    \45\ Federalism, 64 FR 153 (Aug. 4, 1999).
    \46\ 5 U.S.C. 804(2) (1996).
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B. Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health, and safety effects; distributive impacts; and equity). 
Executive Order 13563 emphasizes the importance of quantifying costs 
and benefits, reducing costs, harmonizing rules, and promoting 
flexibility.
    Under Executive Order 12866, ``significant'' regulatory actions are 
subject to review by the Office of Management and Budget (OMB). Section 
3(f) of the Executive order defines a ``significant regulatory action'' 
as an action that is likely to result in a rule: (1) having an annual 
effect on the economy of $100 million or more, or adversely and 
materially affecting a sector of the economy, productivity,

[[Page 52633]]

competition, jobs, the environment, public health or safety, or State, 
local, or tribal governments or communities (also referred to as 
``economically significant''); (2) creating a serious inconsistency or 
otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raising novel legal or policy issues arising 
out of legal mandates, the President's priorities, or the principles 
set forth in the Executive order. Based on the Departments' estimates, 
OMB's Office of Information and Regulatory Affairs has determined this 
rulemaking is ``economically significant'' under section 3(f)(1) of 
Executive Order 12866 as measured by the $100 million threshold.\47\ 
Therefore, the Departments have prepared a Regulatory Impact Analysis 
that presents the costs, benefits, and transfers associated with this 
rulemaking. Pursuant to the Congressional Review Act, OMB has 
designated these final rules as a ``major rule,'' as defined by 5 
U.S.C. 804(2).
---------------------------------------------------------------------------

    \47\ This rulemaking builds on the July 2021 and October 2021 
interim final rules described in this preamble. The interim final 
rules were deemed to be economically significant. The economic 
analyses for each of these interim final rules can be found in the 
Federal Register at 86 FR 36872 and 86 FR 55980.
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C. Need for Regulatory Action

    On December 27, 2020, the CAA, which includes the No Surprises Act, 
was enacted.\48\ The No Surprises Act provides Federal protections 
against surprise billing by limiting out-of-network cost sharing and 
prohibiting balance billing in many of the circumstances in which 
surprise bills arise most frequently.
---------------------------------------------------------------------------

    \48\ Pub. L. 116-260 (Dec. 27, 2020).
---------------------------------------------------------------------------

    On July 13, 2021, the Departments published the July 2021 interim 
final rules.\49\ The July 2021 interim final rules implemented 
provisions of the No Surprises Act to protect participants, 
beneficiaries, and enrollees in group health plans and group and 
individual health insurance coverage from surprise medical bills when 
they receive emergency services, non-emergency services furnished by 
nonparticipating providers with respect to patient visits to certain 
participating facilities, and air ambulance services provided by 
nonparticipating providers of air ambulance services.
---------------------------------------------------------------------------

    \49\ 86 FR 36872 (July 13, 2021).
---------------------------------------------------------------------------

    On October 7, 2021, the Departments published the October 2021 
interim final rules.\50\ The October 2021 interim final rules build on 
the July 2021 interim final rules and implement the Federal IDR 
process.\51\ The October 2021 interim final rules generally apply to 
group health plans and health insurance issuers offering group or 
individual health insurance coverage (including grandfathered health 
plans) with respect to plan years (in the individual market, policy 
years) beginning on or after January 1, 2022; and to health care 
providers and facilities, providers of air ambulance services, and 
certified IDR entities beginning on January 1, 2022 with respect to 
items and services furnished during a plan year (in the individual 
market, policy year) beginning on or after January 1, 2022.
---------------------------------------------------------------------------

    \50\ 86 FR 55980 (October 7, 2021).
    \51\ The July 2021 and October 2021 interim final rules also 
include interim final regulations under 5 U.S.C. 8902(p) issued by 
OPM that specify how certain provisions of the No Surprises Act 
apply to health benefit plans offered by carriers under the Federal 
Employees Health Benefits Act. The rules apply to carriers in the 
FEHB Program with respect to contract years beginning on or after 
January 1, 2022.
---------------------------------------------------------------------------

    On February 23, 2022, the District Court in Texas Medical 
Association issued a memorandum opinion and order that vacated portions 
of the October 2021 interim final rules governing aspects of the 
Federal IDR process, as discussed earlier in this preamble. On July 26, 
2022, the District Court in LifeNet issued a memorandum opinion and 
order that vacated additional portions of the October 2021 interim 
final rules, as discussed earlier in this preamble.
    In response to the decisions in Texas Medical Association and 
LifeNet and comments received on the October 2021 interim final rules 
and July 2021 interim final rules, these final rules address certain 
issues critical to the implementation and effective operation of the 
Federal IDR process, including the disclosure requirements relating to 
information that group health plans and health insurance issuers 
offering group or individual health insurance coverage must share about 
the QPA, and certain requirements related to consideration of 
information when a certified IDR entity makes a payment determination 
under the Federal IDR process.
i. Final Rules on Information To Be Shared About the Qualifying Payment 
Amount
    As described earlier in this preamble, the July 2021 interim final 
rules require plans and issuers to make certain disclosures with each 
initial payment or notice of denial of payment in cases in which the 
recognized amount with respect to an item or service furnished by a 
nonparticipating provider or nonparticipating emergency facility, or 
the amount upon which cost sharing is based for air ambulance services 
furnished by a nonparticipating provider of air ambulance services, is 
the QPA. After review of the comments on the July 2021 interim final 
rules and October 2021 interim final rules, the Departments are 
finalizing parts of the July 2021 interim final rules to add a new 
definition and make changes to require additional information about the 
QPA that is provided by a plan or issuer with an initial payment or 
notice of denial of payment in certain cases. These disclosures are 
required in cases in which the recognized amount with respect to an 
item or service furnished by a nonparticipating provider or 
nonparticipating emergency facility, or the amount upon which cost 
sharing is based for air ambulance services furnished by a 
nonparticipating provider of air ambulance services, is the QPA. 
Specifically, these final rules provide a definition of the term 
``downcode'' to mean the alteration by a plan or issuer of a 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. These 
final rules also specify that when a QPA is calculated based on a 
downcoded service code or modifier, in addition to the information 
already required to be provided with an initial payment or notice of 
denial of payment under the July 2021 interim final rules, a plan or 
issuer must provide a statement that the claim was downcoded; an 
explanation of why the claim was downcoded, including a description of 
which service codes were altered, if applicable, and a description of 
which modifiers were altered, added, or removed, if applicable; and the 
amount that would have been the QPA had the service code or modifier 
not been downcoded. The Departments are of the view that this 
additional disclosure of information about the QPA will be helpful to 
ensure that providers, facilities, and providers of air ambulance 
services receive the information regarding the QPA that may assist in 
their meaningful participation in open negotiation and in the Federal 
IDR process in all payment disputes that involve qualified items or 
services that have been subject to downcoding. In particular, in cases 
in which the plan or issuer has downcoded the billed claim, it is of 
particular importance that the

[[Page 52634]]

provider, facility, or provider of air ambulance services has 
information regarding both the QPA (based on the downcoded service code 
or modifier) and the amount that would have been the QPA had the 
service code or modifier not been downcoded in order to ascertain what 
information will demonstrate that the provider's, facility's, or 
provider of air ambulance services' offer best represents the value of 
the item or service and aid the certified IDR entity in selecting an 
offer that best represents the value of the item or service provided.
ii. Final Rules on Payment Determinations Under the Federal IDR Process
    As discussed earlier in this preamble, the October 2021 interim 
final rules provided that, not later than 30 business days after the 
selection of the certified IDR entity, the certified IDR entity must 
select one of the offers submitted by the plan or issuer or the 
provider, facility, or provider of air ambulance services to be the 
out-of-network rate for the qualified IDR item or service. In 
determining which offer to select, the October 2021 interim final rules 
provided that the certified IDR entity must select the offer closest to 
the QPA unless the certified IDR entity were to determine that 
additional permissible information demonstrated that the QPA is 
materially different from the appropriate out-of-network rate, or if 
the offers are equally distant from the QPA but in opposing directions. 
A key goal in facilitating consistency in the Federal IDR process 
through the October 2021 interim final rules was to ensure a level of 
predictability in outcomes in the Federal IDR process. In the 
Departments' view, greater predictability in the Federal IDR process 
would encourage parties to settle disputes through open negotiation or 
earlier through the offer and acceptance of an adequate initial 
payment, which would increase efficiencies in how disputes are handled 
and ultimately lead to lower administrative costs associated with 
health care. As articulated earlier in this preamble, in light of the 
Texas Medical Association and LifeNet decisions, and in response to 
comments received on these provisions, the Departments are finalizing 
standards for making payment determinations that are intended to lead 
to greater predictability and regularity in the Federal IDR process. 
Accordingly, these final rules require that, in determining which offer 
to select during the Federal IDR process, the certified IDR entity must 
consider the QPA for the applicable year for the same or similar item 
or service. The certified IDR entity must then consider all additional 
information submitted by a party to determine which offer best reflects 
the appropriate out-of-network rate, provided that the information 
relates to the offer for the payment amount for the qualified IDR item 
or service that is the subject of the payment determination and does 
not include information that the certified IDR entity is prohibited 
from weighing in making the payment determination. In considering this 
additional information, the certified IDR entity should evaluate 
whether information that is offered is credible and should not give 
weight to information that is not credible. The appropriate out-of-
network rate must be the offer that the certified IDR entity determines 
best represents the value of the qualified IDR item or service.
    For non-air ambulance items and services, this information includes 
information related to the following factors: (1) the level of 
training, experience, and quality and outcomes measurements of the 
provider or facility that furnished the qualified IDR item or service 
(such as those endorsed by the consensus-based entity authorized in 
section 1890 of the Social Security Act); (2) the market share held by 
the provider or facility or that of the plan or issuer in the 
geographic region in which the qualified IDR item or service was 
provided; (3) the acuity of the participant, beneficiary, or enrollee 
receiving the qualified IDR item or service, or the complexity of 
furnishing the qualified IDR item or service to the participant, 
beneficiary, or enrollee; (4) the teaching status, case mix, and scope 
of services of the facility that furnished the qualified IDR item or 
service, if applicable; and (5) demonstration of good faith efforts (or 
lack thereof) made by the provider or facility or the plan or issuer to 
enter into network agreements with each other, and, if applicable, 
contracted rates between the provider or facility, as applicable, and 
the plan or issuer, as applicable, during the previous 4 plan years.
    Under these final rules, the certified IDR entity must also 
consider information related to the offer provided in a response to a 
request from the certified IDR entity. The certified IDR entity must 
also consider additional information submitted by a party, provided the 
information relates to the offer for the payment amount for the 
qualified IDR item or service that is the subject of the payment 
determination and does not include information that the certified IDR 
entity is prohibited from weighing in making the payment determination 
under section 9816(c)(5)(D) of the Code, section 716(c)(5)(D) of ERISA, 
and section 2799A-1(c)(5)(D) of the PHS Act. In considering either form 
of information, the certified IDR entity should evaluate whether the 
information is credible and should not give weight to information that 
is not credible.
    When considering the additional credible information under 26 CFR 
54.9816-8(c)(4)(iii), 29 CFR 2590.716-8(c)(4)(iii), and 45 CFR 
149.510(c)(4)(iii), the certified IDR entity should evaluate whether 
the information is already accounted for by any of the other credible 
information submitted by the parties. Because the certified IDR entity 
must consider the QPA, the certified IDR entity should always consider 
whether the additional credible information is already accounted for by 
the QPA and should avoid giving weight to information related to a 
factor if the certified IDR entity determines the information was 
already accounted for in the calculation of the QPA, to avoid weighting 
the same information twice. In addition, if the parties submit credible 
information related to more than one of the additional factors, the 
certified IDR entity should also consider whether the information 
submitted regarding those factors is already accounted for by 
information submitted relating to other credible information already 
before the certified IDR entity in relation to another factor and, if 
so, should not weigh the information more than once.
    Regarding air ambulance services, these final rules state that the 
certified IDR entity must consider the QPA for the applicable year for 
the same or similar service and then consider all additional 
permissible information to determine the appropriate out-of-network 
rate. In considering this additional information, the certified IDR 
entity should evaluate whether information that is offered is credible 
and should not give weight to information that is not credible. For air 
ambulance services, this information includes information related to 
the following factors: (1) quality and outcomes measurements of the 
provider that furnished the air ambulance services; (2) the acuity of 
the condition of the participant or beneficiary receiving the air 
ambulance service, or the complexity of furnishing the service to the 
participant or beneficiary; (3) training, experience, and quality of 
the medical personnel that furnished the air ambulance services; (4) 
ambulance vehicle type, including the clinical capability level of the 
vehicle; (5) population density of the point of pick-

[[Page 52635]]

up; and (6) demonstrations of good faith efforts (or lack thereof) by 
the disputing parties to enter into network agreements with each other, 
as well as, if applicable, contracted rates between the parties during 
the previous 4 plan years.
    After the certified IDR entity has reviewed and selected the offer 
it determines best represents the value of the qualified IDR item or 
service as the out-of-network rate, the certified IDR entity must 
explain its determination in a written decision submitted to the 
parties and the Departments, in a form and manner specified by the 
Departments. These final rules require that the certified IDR entity's 
written decision must include an explanation of what information the 
certified IDR entity determined demonstrated that the offer selected as 
the out-of-network rate is the offer that best represents the value of 
the qualified IDR item or service, including the weight given to the 
QPA and any additional credible information submitted in accordance 
with these final rules. If the certified IDR entity relies on any 
additional information in selecting an offer, the written decision must 
include an explanation of why the certified IDR entity concluded that 
this information was not already reflected in the QPA.
iii. Summary of Impacts
    Plans, issuers, third-party administrators (TPAs), Federal 
Employees Health Benefits (FEHB) Program carriers, health care 
providers, facilities, providers of air ambulance services, and 
certified IDR entities will incur costs to comply with the requirements 
in these final rules. However, these final rules will help ensure that 
the payment determination in the Federal IDR process is a more 
consistent process for providers, facilities, providers of air 
ambulance services, plans, and issuers. These final rules will improve 
transparency in the Federal IDR process. This increased transparency 
will aid in the open negotiation process, the decision whether to 
initiate the Federal IDR process, and the determination of the amount a 
provider, facility, or provider of air ambulance services submits as an 
offer. Therefore, the Departments have determined the benefits of these 
final rules justify the costs.
    This regulatory action finalizes certain provisions in the July 
2021 interim final rules and the October 2021 interim final rules, 
including changes to remove the language vacated by the District Court 
in Texas Medical Association and LifeNet. This cost-benefit analysis 
focuses on the incremental costs of complying with the requirements 
that are included in these final rules. One baseline assumption for 
this analysis is the existence of the requirements of the July 2021 and 
October 2021 interim final rules, with a second baseline assumption 
being the use of a comparison with a hypothetical state of the world 
absent those interim final rules. As discussed in the analysis of the 
July 2021 interim final rules, the total annualized cost associated 
with the July 2021 interim final rules is $2,252 million, using the 7 
percent discount rate.\52\ As discussed in the analysis of the October 
2021 interim final rules, the total annualized cost associated with the 
October 2021 interim final rules is $517 million, using the 7 percent 
discount rate.\53\ The Departments consider these cost estimates to be 
reflected in the analytic baseline of these final rules and to form a 
subset of total costs of these final rules for the purposes of this 
cost-benefit analysis relative to the hypothetical state of the world 
absent the July 2021 and October 2021 interim final rules.\54\ As noted 
in Table 1 (Accounting Statement) the Departments estimate the 
additional total annualized cost associated with the parts these final 
rules to be $5.9 million, using the 7 percent discount rate.
---------------------------------------------------------------------------

    \52\ As discussed in the analysis of the July 2021 interim final 
rules, the total annualized cost associated with the July 2021 
interim final rules is $2,177 million, using the 3 percent discount 
rate. The Departments note that these cost estimates have not been 
updated.
    \53\ As discussed in the analysis of the October 2021 interim 
final rules, the total annualized cost associated with the October 
2021 interim final rules is $491 million, using the 3 percent 
discount rate. The Departments note that these cost estimates have 
not been updated.
    \54\ The Departments are accounting for the additional costs 
associated with these final rules due to parts of the July 2021 
interim final rules and October 2021 interim final rules being 
finalized. For those parts being finalized, the Texas Medical 
Association and LifeNet decisions do not impact the quantified 
costs.
---------------------------------------------------------------------------

    To avoid repeating the analysis of the July 2021 and October 2021 
interim final rules, only a short summary of the benefits and costs is 
provided, and readers are directed to the analysis in the July 2021 and 
October 2021 interim final rules for more detail. Numbers in this 
analysis may not match numbers in the analysis for the July 2021 and 
October 2021 interim final rules because the estimates have been 
updated with the most current data. However, the methodology remains 
the same, except for the calculation of the burden to prepare the 
certified IDR entity's written decision for payment determinations, as 
explained later in this section. The Departments also discuss the 
impacts of changes made by these final rules is this section.
    In accordance with OMB Circular A-4, Table 1 depicts an accounting 
statement summarizing the Departments' assessment of the benefits, 
costs, and transfers associated with this regulatory action. The 
Departments are unable to quantify all benefits, costs, and transfers 
associated with this regulatory action, but have sought, where 
possible, to describe these non-quantified impacts. The effects in 
Table 1 reflect non-quantified impacts and estimated direct monetary 
costs resulting from the provisions of these final rules.

                                          Table 1--Accounting Statement
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Benefits:
     These final rules will increase transparency in the Federal IDR process.
     These final rules will help a provider, facility, or provider of air ambulance services ascertain
     what information will demonstrate that the provider's, facility's, or provider of air ambulance services'
     offer best represents the value of the item or service and aid the certified IDR entity in selecting an
     offer that best represents the value of the item or service.
     These final rules will promote more consistent payment determinations in the Federal IDR process
     for providers, facilities, providers of air ambulance services, plans, and issuers.
     These final rules will promote transparency with respect to the certified IDR entity's payment
     determination and will help to ensure that the determination of a total payment amount for a particular
     item or service is based on the facts and circumstances of the dispute at issue in each case.
----------------------------------------------------------------------------------------------------------------

[[Page 52636]]

 
Costs                                                Estimate     Year dollar    Discount rate    Period covered
                                                                                           (%)
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($million/Year).........            $5.9            2021                7         2022-2031
                                                          5.9            2021                3         2022-2031
----------------------------------------------------------------------------------------------------------------
Quantified Costs: The Departments estimate the total annual cost associated with these final rules to be $5.9
 million, with $4.3 million annually attributable to the additional information plans and issuers will be
 required to provide related to the QPAs, $1.2 million annually attributable to the preparation of IDR payment
 determination notices by certified IDR entities for nonparticipating providers or emergency facility claims,
 and $0.3 million annually attributable to the preparation of IDR payment determination notices by certified IDR
 entities for nonparticipating air ambulance providers' claims.
Transfers: These final rules make no changes that impact the transfers as described in the July 2021 and October
 2021 interim final rules.
----------------------------------------------------------------------------------------------------------------

D. Affected Entities

    These final rules will affect health care providers, health care 
facilities, providers of air ambulance services, group health plans, 
issuers, TPAs, FEHB carriers, and certified IDR entities.
    Based on data from 2020, CMS estimated that there were 1,477 
issuers in the U.S. health insurance market, of which 1,212 served the 
individual market, 6 served the student health insurance market, 623 
served the small group market, and 784 served the large group 
market.\55\ Further, of the plans that filed a Form 5500 in 2019, 
30,181 plans were self-insured.\56\ Additionally, in the October 2021 
interim final rules, the Departments previously estimated that there 
are 205 TPAs.\57\ The Departments also estimate that there are 44 FEHB 
carriers. While there is a significant amount of research that 
demonstrates the prevalence of surprise billing, the Departments do not 
have data on the percentage of surprise bills covered by health 
insurance issuers and self-insured plans. However, given the size of 
health insurance issuers and the scope of their activities, the 
Departments assume that all health insurance issuers, TPAs, and FEHB 
carriers will be affected by these final rules.
---------------------------------------------------------------------------

    \55\ Centers for Medicare and Medicaid Services. ``Medical Loss 
Ratio Data and System Resources'' (2020). https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.
    \56\ Employee Benefits Security Administration. ``Group Health 
Plans Report.'' (July 2021). https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/annual-report-on-self-insured-group-health-plans-2022-appendix-a.pdf.
    \57\ Non-issuer TPAs based on data derived from the 2016 Benefit 
Year reinsurance program contributions.
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    In 2019, 183 million individuals had employer-sponsored coverage 
and 33.2 million had other private insurance, including individual 
market insurance.\58\ The Departments do not expect that these final 
rules will directly affect individuals with private health coverage who 
visit an emergency room, visit a health care facility,\59\ or are 
transported by an air ambulance, as these final rules contain only 
provisions that affect the relationships among plans and issuers; 
providers, facilities, and providers of air ambulance services; and 
certified IDR entities. However, the Departments estimate that these 
final rules will indirectly affect covered individuals, as the outcomes 
of payment disputes will have implications for premiums.
---------------------------------------------------------------------------

    \58\ Employee Benefits Security Administration. ``Health 
Insurance Coverage Bulletin.'' (March 2020). https://www.dol.gov/sites/dolgov/files/EBSA/researchers/data/health-and-welfare/health-insurance-coverage-bulletin-2020.pdf.
    \59\ Health care facility is defined in the July 2021 interim 
final rules. See 26 CFR 54.9816-3T; 29 CFR 2590.716-3; and 45 CFR 
149.30.
---------------------------------------------------------------------------

    In the October 2021 interim final rules, the Departments estimated 
that there are 16,992 emergency and other health care facilities, 
including 6,090 hospitals,\60\ 29,227 diagnostic and medical 
laboratories,\61\ 270 independent freestanding emergency 
departments,\62\ 9,280 ambulatory surgical centers,\63\ and 1,352 
critical access hospitals.\64\ These entities will also be affected by 
these final rules.
---------------------------------------------------------------------------

    \60\ American Hospital Association. ``Fast Facts on U.S. 
Hospitals, 2021.'' (January 2021). https://www.aha.org/statistics/fast-facts-us-hospitals.
    \61\ IBIS World. Definitive Healthcare. ``Diagnostic & Medical 
Laboratories Industry in the US--Market Research Report?'' (May 
2021). https://www.ibisworld.com/industry-statistics/number-of-businesses/diagnostic-medical-laboratories-united-states/.
    \62\ Emergency Medicine Network. ``2018 National Emergency 
Department Inventory.'' (2021). https://www.emnet-usa.org/research/studies/nedi/nedi2018/.
    \63\ Definitive Healthcare. ``How Many Ambulatory Surgery 
Centers are in the US?'' (April 2019). https://www.definitivehc.com/blog/how-many-ascs-are-in-the-us.
    \64\ Flex Monitoring Team. ``Historical CAH Data.'' https://www.flexmonitoring.org/historical-cah-data-
---------------------------------------------------------------------------

    In the October 2021 interim final rules, the Departments also 
estimated that in 2018, the current year for which data are available, 
there were 1,114 air ambulance bases in the United States.\65\ The 
Departments do not have data on the number of providers of air 
ambulance services that submit out-of-network claims; however, given 
the prevalence of out-of-network billing among providers of air 
ambulance services, the Departments assume that all businesses in the 
industry will be affected by these final rules.
---------------------------------------------------------------------------

    \65\ Assistant Secretary for Planning and Evaluation (ASPE) 
Office of Health Policy. ``Air Ambulance Use and Surprise Billing'' 
(September 2021). https://aspe.hhs.gov/sites/default/files/2021-09/aspe-air-ambulance-ib-09-10-2021.pdf.
---------------------------------------------------------------------------

    Furthermore, in the October 2021 interim final rules, the 
Departments estimated that 140,270 physicians, on average, bill on an 
out-of-network basis and will be affected by these final rules.\66\ 
These final rules are also expected to affect non-physician providers 
who bill on an out-of-network basis. The Departments lack data on the 
number of non-physician providers who would be impacted.
---------------------------------------------------------------------------

    \66\ Please see the October 2021 interim final rules for more 
information on how these estimates were obtained.
---------------------------------------------------------------------------

    Finally, there are currently 11 certified IDR entities that will be 
affected by these final rules.\67\ The number of certified IDR entities 
may increase or decrease due to new IDR entities applying for 
certification or the Departments revoking certification because of 
noncompliance with the certification requirements or a certified IDR 
entity's inability to handle its caseload.
---------------------------------------------------------------------------

    \67\ As of July 31, 2022, there are 11 certified IDR entities. 
Center for Medicare and Medicaid Services. ``List of Certified 
Independent Dispute Resolution Entities.'' https://www.cms.gov/nosurprises/Help-resolve-payment-disputes/certified-IDRE-list.
---------------------------------------------------------------------------

E. Benefits

    These final rules will require plans and issuers to provide 
additional information about the QPA with an initial payment or notice 
of denial of payment in cases involving downcoding, without the 
provider, facility, or provider of air ambulance services having to ask 
for this information. These final rules will be helpful to the 
provider, facility, or provider of air ambulance services in developing 
an offer or submitting information if it believes that the QPA

[[Page 52637]]

calculated by the plan or issuer does not best represent the value of 
the item or service. Furthermore, the requirement to disclose this 
additional information will increase transparency in the Federal IDR 
process. This increased transparency will aid in the open negotiation 
process, the decision whether to initiate the Federal IDR process, and 
the determination of the amount a provider, facility, or provider of 
air ambulance services submits as an offer. Further, these final rules 
will help a provider, facility, or provider of air ambulance services 
ascertain what information will demonstrate that the provider's, 
facility's, or provider of air ambulance services' offer best 
represents the value of the item or service and aid the certified IDR 
entity in selecting an offer that best represents the value of the item 
or service.
    In addition, these final rules require that certified IDR entities 
must consider the QPA and then must consider all additional permissible 
information submitted by a party to determine which offer best reflects 
the appropriate out-of-network rate, provided the information relates 
to the offer for the payment amount for the qualified IDR item or 
service that is the subject of the payment determination and does not 
include information that the certified IDR entity is prohibited from 
weighing in making the payment determination under section 
9816(c)(5)(D) of the Code, section 716(c)(5)(D) of ERISA, and section 
2799A-1(c)(5)(D) of the PHS Act. In considering this additional 
information, the certified IDR entity should evaluate whether 
information that is offered is credible and should not give weight to 
information that is not credible. The appropriate out-of-network rate 
must be the offer that the certified IDR entity determines best 
represents the value of the qualified IDR item or service.
    Because the certified IDR entity must consider the QPA, the 
certified IDR entity should always consider whether the additional 
credible information is already accounted for by the QPA and should not 
give weight to information related to a factor if the certified IDR 
entity determines the information was already accounted for in the 
calculation of the QPA, to avoid weighting the same information twice. 
In addition, if the parties submit credible information related to more 
than one of the additional factors, the certified IDR entity should 
also consider whether the information submitted regarding each of those 
factors is already accounted for by information submitted relating to 
other credible information already before the certified IDR entity in 
relation to another factor and, if so, should not weigh such 
information more than once. These final rules will help ensure that the 
payment determination in the Federal IDR process is a consistent 
process for providers, facilities, providers of air ambulance services, 
plans, and issuers.
    The certified IDR entity's written decision must include an 
explanation of what information the certified IDR entity determined 
demonstrated that the offer selected as the out-of-network rate is the 
offer that best represents the value of the qualified IDR item or 
service, including the weight given to the QPA and any additional 
credible information submitted in accordance with these final rules. If 
the certified IDR entity relies on any additional information in 
selecting an offer, the written decision must include an explanation of 
why the certified IDR entity concluded that this information was not 
already reflected in the qualifying payment amount. These final rules 
will help ensure that certified IDR entities carefully evaluate all 
credible non-duplicative information. These final rules will also 
promote transparency with respect to the certified IDR entity's payment 
determination.

F. Costs

    This regulatory action seeks to minimize costs to providers, 
facilities, providers of air ambulance services, plans, issuers, TPAs, 
and certified IDR entities.
i. Federal IDR Process for Nonparticipating Providers or 
Nonparticipating Emergency Facilities
    As explained in the analysis provided in the October 2021 interim 
final rules, the Departments estimate that there will be approximately 
17,435 claims submitted to the Federal IDR process each year.\68\
---------------------------------------------------------------------------

    \68\ For more details, please refer to the Paperwork Reduction 
Act analysis, found in section V of this preamble.
---------------------------------------------------------------------------

    After the selected certified IDR entity has reviewed the offers, 
the certified IDR entity must notify the provider or facility and the 
plan, issuer, or FEHB carrier and the Departments of the payment 
determination and the reason for such determination, in a form and 
manner specified by the Departments.\69\ The Departments estimate that 
the annual cost to prepare the notice of the certified IDR entity's 
determination is $1.2 million. For more information on this 
calculation, please refer to the Paperwork Reduction Act analysis, 
found in section V of this preamble.
---------------------------------------------------------------------------

    \69\ IDR Payment Determination Notification (section 
716(c)(5)(A) of ERISA).
---------------------------------------------------------------------------

    In addition to the information already required to be provided with 
an initial payment or notice of denial of payment under the July 2021 
interim final rules, including the QPA, these final rules require that 
a plan or issuer must provide, if applicable, an acknowledgement if all 
or any portion of the claim was downcoded; an explanation of why the 
claim was downcoded, including a description of which service codes 
were altered, if any, and a description of any modifiers that were 
altered, added, or removed, if any; and the amount that would have been 
the QPA had the service code or modifier not been downcoded. In the 
July 2021 interim final rules, the Departments estimated that plans and 
issuers will be required to provide documents related to the QPA along 
with the initial payment or notice of denial of payment for 
approximately 5,068,512 claims annually from nonparticipating providers 
or facilities.\70\ The Departments assume that approximately 10 percent 
of those claims will involve downcoding and estimate that the annual 
cost to prepare the required documentation and attach it to each 
initial payment or notice of denial of payment sent to the 
nonparticipating provider or facility is $4.3 million. For more 
information on this calculation, please refer to the Paperwork 
Reduction Act analysis, found in section V of this preamble.
---------------------------------------------------------------------------

    \70\ See 86 FR 36872 for more information on this estimate.
---------------------------------------------------------------------------

    In total, the Departments estimate that certified IDR entities, 
TPAs, and issuers will incur costs of approximately $5.5 million 
annually to provide, as applicable, payment determination notifications 
and the additional QPA information required under these rules.
ii. Federal IDR Process for Nonparticipating Providers of Air Ambulance 
Services
    As explained in the October 2021 interim final rules, the 
Departments assume that 10 percent of out-of-network claims for air 
ambulance services will be submitted to the Federal IDR process,\71\ 
which would result in nearly 5,000 annual air ambulance payment 
determinations via the Federal IDR process.\72\
---------------------------------------------------------------------------

    \71\ The Departments utilize 10 percent as an assumption to 
estimate the overall number of providers of air ambulance services 
billing out-of-network at least once in a year.
    \72\ The Departments estimate that of the 216.2 million 
individuals with employer-sponsored and other private health 
coverage (183 million individuals with employer-sponsored health 
coverage and 33.2 million individuals with other private coverage), 
there are 33.3 air transports per 100,000 individuals, of which 69 
percent result in out-of-network bills. The Departments assume that 
10 percent of the out-of-network bills will end up in the Federal 
IDR process. This is calculated as: 216,200,000 individuals x 
0.000333 air transports per individual x 69% x 10%= 4,968.

---------------------------------------------------------------------------

[[Page 52638]]

    After the certified IDR entity has reviewed and selected the offer, 
the certified IDR entity must notify the provider of air ambulance 
services and the plan, issuer, or FEHB carrier and the Departments of 
the payment determination and include the written decision explaining 
such determination.\73\ The Departments estimate that the annual cost 
to prepare this notice of the certified IDR entity's determination for 
air ambulance claims is $0.3 million. For more details, please refer to 
the Paperwork Reduction Act analysis, found in section V of this 
document.
---------------------------------------------------------------------------

    \73\ IDR Payment Determination Notification (section 
716(c)(5)(A) of ERISA).
---------------------------------------------------------------------------

    Similar to these final rules' provisions related to the disclosure 
of downcoded claims for nonparticipating providers and nonparticipating 
emergency facilities, these final rules require that a plan or issuer 
must provide, if applicable, an acknowledgement if all or any portion 
of the claim pertaining to air ambulance services was downcoded; an 
explanation of why the claim was downcoded, including a description of 
which service codes were altered, if any, and a description of any 
modifiers that were altered, added, or removed, if any; and the amount 
that would have been the QPA had the service code or modifier not been 
downcoded. The Departments estimate that plans and issuers will be 
required to provide these documents for approximately 49,676 claims 
annually from providers of air ambulance services.\74\ The Departments 
assume that approximately 10 percent of those claims will involve 
downcoding and estimate that the annual cost to prepare the required 
documentation and attach it to each initial payment or notice of denial 
of payment sent to the providers of air ambulance service is 
approximately $42,000. For more details, please refer to the Paperwork 
Reduction Act analysis, found in section V of this preamble.
---------------------------------------------------------------------------

    \74\ The Departments estimate that of the 216.2 million 
individuals with employer-sponsored and other private health 
coverage, there are 33.3 air transports per 100,000 individuals, of 
which 69 percent result in an out-of-network bill. The number of air 
ambulance claims is estimated as: 216,200,000 individuals x 0.000333 
air transports per individual x 69% = 49,676.
---------------------------------------------------------------------------

    In total, the Departments estimate that certified IDR entities, 
TPAs, and issuers will incur costs of approximately $0.4 million 
annually to provide payment determination notifications and the 
additional QPA information required under these final rules.
iii. Summary
    The Departments estimate the total annual cost associated with 
these final rules to be $5.9 million with $4.3 million annually 
attributable to the additional information related to the QPAs, $1.2 
million annually attributable to the certified IDR entity's payment 
determination for nonparticipating provider and emergency facility 
claims, and $0.3 million annually attributable to the certified IDR 
entity's payment determination notification for nonparticipating 
provider of air ambulance service claims.

G. Transfers

    These final rules make no changes that impact the transfers as 
described in the July 2021 and October 2021 interim final rules.

H. Uncertainty

    These final rules make no changes that impact the uncertainties as 
described in the July 2021 and October 2021 interim final rules.

I. Regulatory Alternatives

    Section 6(a)(3)(C)(iii) of Executive Order 12866 requires an 
economically significant regulation, and encourages other regulations, 
to include an assessment of the costs and benefits of potentially 
effective and reasonable alternatives to the planned regulation. A 
discussion of the regulatory alternatives is included in this section.
    As described in Section I.E. of this preamble, the District Court 
in Texas Medical Association and LifeNet vacated provisions in the 
October 2021 interim final rules addressing how certified IDR entities 
were to weigh the QPA and the additional factors. The Departments 
considered the possibility of not replacing the provisions vacated by 
the District Court. However, in the Departments' view, this would have 
resulted in uncertainty regarding the Federal IDR process, because 
certain aspects of the process would be governed by the October 2021 
interim final rules as published in the Federal Register, while others 
would not. This approach could result in confusion on the part of the 
public and certified IDR entities, likely making the decisions of 
certified IDR entities less predictable, adding to the uncertainty and 
the costs of the Federal IDR process. Therefore, the Departments are of 
the view that it is more appropriate to make changes to the Federal IDR 
process for both non-air ambulance and air ambulance items and services 
in these final rules.
    The Departments considered finalizing the additional factors other 
than the QPA that a certified IDR entity may consider when submitted by 
one of the disputing parties without addressing the possibility that 
these factors may already have been accounted for in the QPA. Numerous 
comments received on the October 2021 interim final rules highlighted 
that in many cases, certain factors, such as patient acuity or the 
complexity of furnishing the qualified IDR item or service to the 
participant, beneficiary, or enrollee, will already be accounted for in 
the calculation of the QPA. Commenters acknowledged, however, that 
there could be instances in which the QPA would not adequately account 
for the acuity of the patient or complexity of the service: for 
example, if the complexity of a case is an outlier such that the time 
or intensity of care exceeds what is typical for the service code. The 
Departments are of the view that, in many cases, factors that a 
certified IDR entity may consider other than the QPA will already be 
reflected in the QPA. The QPA is generally calculated to include 
characteristics that can affect costs, including medical specialty, 
geographic region, and patient acuity and case severity, all captured 
in different billing codes or aspects of the methodology that plans and 
issuers are required to follow in calculating the QPA. Therefore, 
weighting additional information that is already taken into account in 
the calculation of the QPA would be redundant and in the Departments' 
view, would result in increased administrative burden to the certified 
IDR entity, potentially resulting in the selection of an offer that 
does not best reflect the most appropriate value insofar as additional 
weight would be given to information related to a factor that is 
already accounted for in the QPA, effectively weighting that 
information twice. Under these final rules, certified IDR entities must 
consider the QPA and then must consider all additional information 
submitted by the parties. To help ensure that the Federal IDR process 
results in determinations that accurately reflect the fair value of a 
given item or service, the certified IDR entity should consider all 
additional information submitted by the parties but should not give 
weight to information if it is already accounted for by any of the 
other information submitted by the parties.

J. Conclusion and Summary of Economic Impacts

    The Departments are of the view that these final rules will promote

[[Page 52639]]

transparency, consistency, and predictability in the Federal IDR 
process. These final rules provide a market-based approach that will 
help encourage plans and issuers, and providers, facilities, and 
providers of air ambulance services to arrive at reasonable payment 
rates.
    The Departments estimate that these final rules will impose 
incremental annual costs of approximately $5.9 million. Over 10 years, 
the associated costs will be approximately $44.1 million with an 
annualized cost of $5.9 million, using a 7 percent discount rate.\75\
---------------------------------------------------------------------------

    \75\ The costs would be $51.5 million over 10-year period with 
an annualized cost of $5.9 million, applying a 3 percent discount 
rate.
---------------------------------------------------------------------------

V. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44 
U.S.C. 3506(c)(2)(A)), the Departments solicited comments concerning 
the information collection requirements (ICRs) included in the July 
2021 and October 2021 interim final rules. At the same time, the 
Departments also submitted ICRs to OMB, in accordance with 44 U.S.C. 
3507(d).
    The Departments received comments that specifically addressed the 
paperwork burden analysis of the information collection requirements 
contained in the July 2021 and October 2021 interim final rules. The 
Departments reviewed these public comments in developing the paperwork 
burden analysis discussed here.
    The changes made by these final rules affect the existing OMB 
control number, 1210-0169. A copy of the ICR for OMB Control Number 
1210-0169 may be obtained by contacting the PRA addressee listed in the 
following sentence or at www.RegInfo.gov. For additional information, 
contact James Butikofer, Office of Research and Analysis, U.S. 
Department of Labor, Employee Benefits Security Administration, 200 
Constitution Avenue NW, Room N-5718, Washington, DC 20210; or sent to 
[email protected].
    The OMB will consider all written comments that they receive on or 
before September 26, 2022. Written comments and recommendations for the 
proposed information collection should be sent within 30 days of 
publication of this notice to www.reginfo.gov/public/do/PRAMain. Find 
this particular information collection by selecting ``Currently under 
30-day Review--Open for Public Comments'' or by using the search 
function.
    Comments are invited on: (1) whether the collection of information 
is necessary for the proper performance of the functions of the 
Departments, including whether the information will have practical 
utility; (2) if the information will be processed and used in a timely 
manner; (3) the accuracy of the Departments' estimates of the burden 
and cost of the collection of information, including the validity of 
the methodology and assumptions used; (4) ways to enhance the quality, 
utility, and clarity of the information collection; and (5) ways to 
minimize the burden of the collection of information on those who are 
to respond, including the use of automated collection techniques or 
other forms of information technology.
    Group health plans, health insurance issuers, FEHB carriers, and 
certified IDR entities are responsible for ensuring compliance with 
these final rules. Accordingly, the Departments refer to costs incurred 
by plans, issuers, FEHB carriers, and certified IDR entities. However, 
it is expected that most self-insured group health plans will work with 
a TPA to meet the requirements of these final rules. The Departments 
recognize the potential that some of the largest self-insured plans may 
seek to meet the requirements of these final rules in-house and not use 
a TPA or other third party. In these cases, those plans will incur the 
estimated hour burden and cost directly.
    These final rules add additional burdens to the ICR presented in 
the October 2021 interim final rules. The following discussion covers 
the changes being made to the ICR and the additional burden these 
changes impose, followed by a summary of the ICR. Copies of the ICR may 
be obtained by contacting the PRA addressee.

A. ICRs Regarding Additional Information To Be Shared With the Initial 
Payment or Notice of Denial of Payment (26 CFR 54.9816-6(d), 29 CFR 
2590.716-6(d), and 45 CFR 149.140(d); OMB Control Number: 1210-0169)

    These final rules specify that where a QPA is calculated based on a 
downcoded service code, in addition to the information already required 
to be provided with an initial payment or notice of denial of payment 
under the July 2021 interim final rules, a plan or issuer must provide, 
if applicable, a statement that all or a portion of the claim was 
downcoded; an explanation of why the claim was downcoded, including a 
description of which service codes were altered, if any, and a 
description of any modifiers that were altered or added, if any; and 
the amount that would have been the QPA had the service codes or 
modifiers not been downcoded.
    The Departments assume that TPAs will provide this information on 
behalf of self-insured plans. In addition, the Departments assume that 
issuers and TPAs will automate the process of preparing and providing 
this information in a format similar to an explanation of benefits as 
part of the system to calculate the QPA. The Departments estimate that 
a total of 1,477 issuers and 205 TPAs will incur a burden to comply 
with this provision.
    In the July 2021 interim final rules, the Departments estimated 
that plans and issuers will be required to provide documents related to 
QPAs along with the initial payment or notice of denial of payment for 
approximately 5,068,512 claims annually from nonparticipating providers 
or facilities.\76\ Additionally, the Departments estimated that plans 
and issuers will be required to provide these documents for 
approximately 49,676 claims annually from nonparticipating providers of 
air ambulance services.\77\ In the absence of data, the Departments 
assume that approximately 10 percent, or 511,819, of claims from 
nonparticipating providers, facilities, and nonparticipating providers 
of air ambulance services will involve downcoding and that it will take 
a medical secretary 10 minutes (at an hourly rate of $50.76 \78\) to 
prepare the required documentation and include it with each initial 
payment or notice of denial of payment sent to the nonparticipating 
provider, facility, or provider of air ambulance services.
---------------------------------------------------------------------------

    \76\ See 86 FR 36872 for more information on this estimate.
    \77\ The Departments estimate that of the 216.2 million 
individuals with employer-sponsored and other private health 
coverage, there are 33.3 air transports per 100,000 individuals, of 
which 69 percent result in an out-of-network bill. The number of air 
ambulance claims is estimated as: 216,200,000 individuals x 0.000333 
air transports per individual x 0.69% = 49,676 claims.
    \78\ Internal DOL calculation based on 2021 labor cost data. For 
a description of DOL's methodology for calculating wage rates, see 
https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf
---------------------------------------------------------------------------

    The Departments estimate the additional QPA information will be 
provided for approximately 506,851 claims from nonparticipating 
providers or facilities. The annual burden to prepare the required 
documentation and attach it to each initial payment or notice of denial 
of payment sent to the nonparticipating providers or facilities will be 
approximately 84,475 hours annually, with an associated equivalent

[[Page 52640]]

cost of $4.3 million.\79\ The Departments estimate that the additional 
QPA information will be provided for approximately 4,968 claims from 
providers of air ambulance services. The annual burden to prepare the 
required documentation and attach it to each initial payment or notice 
of denial of payment sent to providers of air ambulance services will 
be approximately 828 hours annually, with an associated equivalent cost 
of $42,029.\80\ Thus, the total estimated burden to provide the 
additional QPA information with initial payments or notices of denial 
of payment sent to the nonparticipating providers, facilities, and 
providers of air ambulance services, for all issuers and TPAs, will be 
approximately 85,303 hours annually, with an associated equivalent cost 
of approximately $4.3 million.\81\ As shown in Table 2, the Departments 
share jurisdiction, and it is estimated that 50 percent of the burden 
will be accounted for by HHS, 25 percent of the burden will be 
accounted for by DOL, and 25 percent will be accounted for by 
Department of the Treasury. Thus, HHS will account for approximately 
42,652 hours with an equivalent cost of approximately $2,164,990. DOL 
and the Department of the Treasury will each account for approximately 
21,326 hours with an equivalent cost of approximately $1,082,495.
---------------------------------------------------------------------------

    \79\ This is calculated as: (5,068,512 documents for 
nonparticipating providers or facilities) x (10%) x (10 minutes) = 
84,475 hours. 84,475 hours x $50.76 = $4,287,951.
    \80\ This is calculated as: (49,676 documents for 
nonparticipating providers of air ambulance services) x (10%) x (10 
minutes) = 828 hours. 828 hours x $50.76 = $42,029.
    \81\ This is calculated as: (5,068,512 documents for 
nonparticipating providers or facilities + 49,676 documents for 
nonparticipating providers of air ambulance services) x (10%) x (10 
minutes) = 85,303 hours. 85,303 hours x $50.76 = $4,329,980.

      Table 2--Summary Annual Cost and Burden Regarding Information To Be Shared About QPA Starting in 2022
----------------------------------------------------------------------------------------------------------------
                                                                     Estimated                       Estimated
                           Department                                number of     Total annual    dollar value
                                                                     responses    burden (hours)  of labor hours
----------------------------------------------------------------------------------------------------------------
HHS.............................................................         255,910          42,652      $2,164,990
DOL.............................................................         127,955          21,326       1,082,495
Treasury........................................................         127,955          21,326       1,082,495
----------------------------------------------------------------------------------------------------------------

B. ICRs Regarding the Certified IDR Entity's Payment Determination 
Written Decision in the Federal IDR Process for Nonparticipating 
Providers or Nonparticipating Emergency Facilities (26 CFR 54.9816-8T, 
26 CFR 54.9816-8, 29 CFR 2590.716-8, and 45 CFR 149.510; OMB Control 
Number: 1210-0169)

    The Departments estimate that 17,435 claims will be submitted as 
part of the Federal IDR process each year.\82\ After the certified IDR 
entity has reviewed the offers and credible information submitted by 
the parties and selected an offer, the certified IDR entity must notify 
the provider, facility, or provider of air ambulance services and the 
plan, issuer, or FEHB carrier and the Departments of the payment 
determination and the reason for such determination, in a form and 
manner specified by the Departments.\83\ The certified IDR entity's 
written decision must include an explanation of the additional non-
prohibited information that the certified IDR entity determined 
demonstrated that the offer selected is the out-of-network rate that 
best represents the value of the qualified IDR item or service, 
including the weight given to the QPA and any additional credible 
information submitted in accordance with these final rules. If the 
certified IDR entity relies on any additional information in selecting 
an offer, the written decision must include an explanation of why the 
certified IDR entity concluded that this information was not already 
reflected in the qualifying payment amount.
---------------------------------------------------------------------------

    \82\ In 2020, 10.7 million individuals had employer-sponsored 
coverage and 1.7 million individuals had other private coverage in 
New York State, while 183 million individuals had employer-sponsored 
coverage and 33.2 million individuals had other private coverage 
nationally. The Departments estimate that New York accounts for 5.7 
percent of the private insurance market ((10.7 + 1.7)/(183 + 33.2) = 
5.7 percent). (See Employee Benefits Security Administration. 
``Health Insurance Coverage Bulletin.'' (March 2020).) In 2018, New 
York State had 1,014 IDR decisions, up from 650 in 2017 and 396 in 
2016. (See Adler, Loren. ``Experience with New York's Arbitration 
Process for Surprise Out-of-Network Bills.'' U.S.C.-Brookings 
Schaeffer on Health Policy. (October 2019).) For purposes of this 
analysis, the Departments assume that, going forward, New York State 
will continue to see 1,000 IDR cases each year and that the number 
of Federal IDR cases will be proportional to that in New York State 
by share of covered individuals in the private health coverage 
market. The number of claims in the Federal IDR process is 
calculated in the following manner: 1,000/0.057= 17,435.
    \83\ IDR Payment Determination Notification (section 
716(c)(5)(A) of ERISA).
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    The Departments estimate that, on average, it will take a physician 
and medical billing specialist 0.5 hours to prepare the notice at a 
composite hourly wage rate of $136.81.\84\ The burden for each 
certified IDR entity will be 0.5 hours, with an equivalent cost of 
approximately $69.24. Thus, the total cost burden for all certified IDR 
entities to prepare this notice for Federal IDR claims will be $1.2 
million.\85\
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    \84\ The Departments use a composite wage rate because different 
professionals will review different types of claims and groups of 
individuals. The wage rate of a physician is $192.37, and the wage 
rate of a medical billing specialist is $109.03. (Internal DOL 
calculation based on 2021 labor cost data. For a description of 
DOL's methodology for calculating wage rates, see https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf.) The composite wage 
rate is estimated in the following manner: ($192.37 x (\1/3\) + 
$109.03 x (\2/3\) = $136.81).
    \85\ 17,453 claims x 0.5 hours x $136.81 as the composite wage 
rate for a physician and medical billing specialist = $1,192,641.
---------------------------------------------------------------------------

    The total annual cost burden for certified IDR entities to provide 
the payment determination notices regarding Federal IDR claims will be 
$1,192,641. As shown in Table 3, the Departments and OPM share 
jurisdiction, and it is estimated that 45 percent of the burden will be 
accounted for by HHS, 25 percent will be accounted for by DOL, 25 
percent of the burden will be accounted for by the Department of the 
Treasury, and 5 percent will be accounted for by OPM. Thus, HHS will 
account for a cost burden of $536,689. DOL and the Department of the 
Treasury will each account for a cost burden of $298,160. OPM will 
account for a cost burden of $59,632.

[[Page 52641]]



   Table 3--Summary Annual Cost and Burden Starting in 2022 Regarding
  Certified IDR Entity's Payment Determination Written Decision in the
 Federal IDR Process for Nonparticipating Providers or Nonparticipating
                       Emergency Facilities Claims
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Department
------------------------------------------------------------------------
HHS.........................................................    $536,689
DOL.........................................................     298,160
Treasury....................................................     298,160
OPM.........................................................      59,632
------------------------------------------------------------------------

C. ICRs Regarding the Certified IDR Entity's Payment Determination 
Written Decision in the Federal IDR Process for Nonparticipating 
Providers of Air Ambulance Services (26 CFR 54.9817-2T, 26 CFR 54.9817-
2, 29 CFR 2590.717-2, and 45 CFR 149.520; OMB Control Number: 1210-
0169)

    The Departments estimate there will be 4,968 claims for air 
ambulance services submitted to the Federal IDR process each year.\86\ 
After the certified IDR entity has reviewed the offers and any 
submitted credible information, and selected an offer, the certified 
IDR entity must notify the provider of air ambulance services and the 
plan, issuer, or FEHB carrier and the Departments of the payment 
determination and include the written decision explaining such 
determination.\87\ The certified IDR entity's written decision must 
include an explanation of what information that the certified IDR 
entity determined demonstrated that the offer selected is the out-of-
network rate that best represents the value of the qualified IDR 
service. This explanation must include the weight given to the QPA and 
any additional non-prohibited, credible information submitted in 
accordance with these final rules. If the certified IDR entity relies 
on any additional information in selecting an offer, the written 
decision must include an explanation of why the certified IDR entity 
concluded that this information was not already reflected in the 
qualifying payment amount.
---------------------------------------------------------------------------

    \86\ The Departments estimate that of the 183 million 
individuals with employment-related health insurance and 33.2 
million individuals with other private coverage, there are 33.3 air 
transports per 100,000 individuals, of which 69 percent result in an 
out-of-network bill. The Departments assume that 10 percent of the 
out-of-network bills will end up in the Federal IDR process. The 
number of air ambulance service claims is calculated in the 
following manner: (183,000,000 individuals + 33,200,000 individuals) 
x 0.000333 air transports per individual x 69% x 10%= 4,968 claims.
    \87\ IDR Payment Determination Notification (section 
716(c)(5)(A) of ERISA).
---------------------------------------------------------------------------

    The Departments estimate that, on average, it will take a physician 
and medical billing specialist working for the certified IDR entity 0.5 
hour to prepare the notice of the certified IDR entity's determination 
at a composite hourly wage rate of $136.81.\88\ The burden for each 
certified IDR entity will be 0.5 hours, with an equivalent cost of 
approximately $69.24. Thus, the total cost burden for certified IDR 
entities to provide this notice for air ambulance claims will be $0.3 
million.\89\
---------------------------------------------------------------------------

    \88\ The Departments use a composite wage rate because different 
professionals will review different types of claims and groups of 
individuals. The wage rate of a physician is $192.37, and the wage 
rate of a medical billing specialist is $109.03. (Internal DOL 
calculation based on 2021 labor cost data. For a description of 
DOL's methodology for calculating wage rates, see https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf.) The composite wage 
rate is estimated in the following manner: ($192.37 x (\1/3\) + 
$109.03 x (\2/3\) = $136.81).
    \89\ 4,968 air ambulance claims x 0.5 hours x $136.81 as the 
composite wage rate for a physician and medical billing specialist = 
$339,836.
---------------------------------------------------------------------------

    The total annual cost burden for the certified IDR entities to 
provide the payment determination notices regarding air ambulance 
claims will be $339,836. As shown in Table 4, the Departments and OPM 
share jurisdiction, and it is estimated that 45 percent of the burden 
will be accounted for by HHS, 25 percent will be accounted for by DOL, 
25 percent of the burden will be accounted for by the Department of the 
Treasury, and 5 percent will be accounted for by OPM. Thus, HHS will 
account for a cost burden of $152,926. DOL and the Department of the 
Treasury will each account for a cost burden of $84,959. OPM will 
account for a cost burden of $16,992.

   Table 4--Summary Annual Cost and Burden Starting in 2022 Regarding
  Certified IDR Entity's Payment Determination Written Decision in the
              Federal IDR Process for Air Ambulance Claims
------------------------------------------------------------------------
                                                   Estimated     Total
                   Department                      number of   estimated
                                                   responses     cost
------------------------------------------------------------------------
HHS.............................................       2,235    $152,926
DOL.............................................       1,242      84,959
Treasury........................................       1,242      84,959
OPM.............................................         248      16,992
------------------------------------------------------------------------

Summary
    The total annual cost burden for certified IDR entities to provide 
payment determination notices regarding non-air ambulance and air 
ambulance claims will be $1,532,477. As shown in Table 5, HHS will 
account for a cost burden of approximately $689,615. DOL and the 
Department of the Treasury will each account for a cost burden of 
approximately $383,119. OPM will account for a cost burden of 
approximately $76,624.

   Table 5--Summary Annual Cost and Burden Starting in 2022 Regarding
  Certified IDR Entity's Payment Determination Written Decision in the
   Federal IDR Process for Non-air Ambulance and Air Ambulance Claims
------------------------------------------------------------------------
                                                   Estimated     Total
                   Department                      number of   estimated
                                                   responses     cost
------------------------------------------------------------------------
HHS.............................................      10,145    $689,615
DOL.............................................       5,636     383,119
Treasury........................................       5,636     383,119
OPM.............................................       1,127      76,624
------------------------------------------------------------------------

    These paperwork burden estimates are summarized as follows:
    Agency: Employee Benefits Security Administration, Department of 
Labor.
    Type of Review: Revision of existing collection.
    Title: Requirements Related to Surprise Billing: Payment 
Determination.
    OMB Control Number: 1210-0169.
    Affected Public: Private Sector--Businesses or other for-profits; 
not-for-profit institutions.
    Estimated Number of Respondents: 22,828
    Estimated Number of Annual Responses: 163,542
    Frequency of Response: Occasionally.
    Estimated Total Annual Burden Hours: 89,521
    Estimated Total Annual Burden Cost: $555,427

VI. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) \90\ imposes certain 
requirements with respect to Federal rules that are subject to the 
notice and comment requirements of section 553(b) of the Administrative 
Procedure Act (APA) and are not likely to have a significant economic 
impact on a substantial number of small entities. Unless the head of an 
agency determines that a final rule is not likely to have a significant 
economic impact on a substantial number of small entities, section 604 
\91\ of the RFA requires the agency to present a final regulatory 
flexibility analysis of these final rules.
---------------------------------------------------------------------------

    \90\ 5 U.S.C. 601 et seq. (1980).
    \91\ 5 U.S.C. 604 (1980).
---------------------------------------------------------------------------

    The Departments certify that these final rules would not have a 
significant

[[Page 52642]]

impact on a substantial number of small entities during the first year. 
The Departments have prepared a justification for this determination 
below.

A. Affected Small Entities

    The Small Business Administration (SBA), pursuant to the Small 
Business Act,\92\ defines small businesses and issues size standards by 
industry. These final rules will affect all health insurance issuers, 
TPAs, and certified IDR entities.
---------------------------------------------------------------------------

    \92\ 15 U.S.C. 631 et seq.
---------------------------------------------------------------------------

    For purposes of analysis under the RFA, the Departments consider an 
employee benefit plan with fewer than 100 participants to be a small 
entity.\93\ The basis of this definition is found in section 104(a)(2) 
of ERISA, which permits the Secretary of Labor to prescribe simplified 
annual reports for plans that cover fewer than 100 participants. Under 
section 104(a)(3) of ERISA, the Secretary may also provide for 
exemptions or simplified annual reporting and disclosure for welfare 
benefit plans. Pursuant to the authority of section 104(a)(3), DOL has 
previously issued simplified reporting provisions and limited 
exemptions from reporting and disclosure requirements for small plans, 
including unfunded or insured welfare plans, which cover fewer than 100 
participants and satisfy certain requirements. See 29 CFR 2520.104-20, 
2520.104-21, 2520.104-41, 2520.104-46, and 2520.104b-10. While some 
large employers have small plans, small plans are maintained generally 
by small employers. Thus, the Departments are of the view that 
assessing the impact of these final rules on small plans is an 
appropriate substitute for evaluating the effect on small entities. The 
definition of small entity considered appropriate for this purpose 
differs, however, from a definition of small business based on size 
standards promulgated by the SBA \94\ pursuant to the Small Business 
Act.\95\
---------------------------------------------------------------------------

    \93\ The Departments consulted with the Small Business 
Administration Office of Advocacy in making this determination, as 
required by 5 U.S.C. 603(c) and 13 CFR 121.903(c) in a memo dated 
June 4, 2020.
    \94\ 13 CFR 121.201 (2011).
    \95\ 15 U.S.C. 631 et seq. (2011).
---------------------------------------------------------------------------

    As discussed in the regulatory impact analysis, these final rules 
will affect health insurance issuers and TPAs. In 2020, there were 205 
TPAs \96\ and 1,477 issuers in the U.S. health insurance market.\97\ 
Most TPAs would be classified under the North American Industry 
Classification System (NAICS) code 524292 (Third Party Administration 
of Insurance and Pension Funds). According to SBA size standards,\98\ 
entities with average annual receipts of $40 million or less are 
considered small entities. By this standard, the Departments estimate 
that 63.5 percent of TPAs (130 TPAs) are small under the SBA's size 
standards.\99\ Most health insurance issuers would be classified under 
the NAICS code 524114 (Direct Health and Medical Insurance Carriers). 
According to SBA size standards,\100\ entities with average annual 
receipts of $41.5 million or less are considered small entities. By 
this standard, the Departments estimate that 8.5 percent of issuers 
(125 issuers), are small under the SBA's size standards.\101\
---------------------------------------------------------------------------

    \96\ Non-issuer TPAs based on data derived from the 2016 Benefit 
Year reinsurance program contributions.
    \97\ Centers for Medicare and Medicaid Services. ``Medical Loss 
Ratio Data and System Resources'' (2020). https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.
    \98\ Available at https://www.sba.gov/document/support--table-
size-standards.
    \99\ Based on data from the NAICS Association for NAICS code 
524292, the Departments estimate the percent of businesses within 
the industry of Third Party Administration of Insurance and Pension 
Funds with less than $40 million in annual sales. (See NAICS 
Association. ``Market Analysis Profile: NAICS Code & Annual Sales.'' 
https://www.naics.com/business-lists/counts-by-naics-code/.)
    \100\ Available at https://www.sba.gov/document/support--table-
size-standards.
    \101\ Based on data from the NAICS Association for NAICS code 
524114, the Departments estimate the percent of businesses within 
the industry of Direct Health and Medical Insurer Carriers with less 
than $41.5 million in annual sales. (See NAICS Association. ``Market 
Analysis Profile: NAICS Code & Annual Sales.'' https://www.naics.com/business-lists/counts-by-naics-code/.)
---------------------------------------------------------------------------

    This estimate may overstate the actual number of small health 
insurance issuers that may be affected. The Departments expect that few 
insurance issuers underwriting comprehensive health insurance coverage 
fall below these size thresholds. Based on data from medical loss ratio 
(MLR) annual report \102\ submissions for the 2020 MLR reporting year, 
approximately 78 out of 481 issuers of health insurance coverage 
nationwide had total premium revenue of $41.5 million or less. This 
estimate may overstate the actual number of small health insurance 
issuers that may be affected, since over 72 percent of these small 
issuers belong to larger holding groups, and many, if not all, of these 
small issuers are likely to have non-health lines of business that will 
result in their revenues exceeding $41.5 million. However, to produce a 
conservative estimate, for the purposes of this analysis, the 
Departments assume 8.5 percent, (125 issuers) are considered small 
entities.
---------------------------------------------------------------------------

    \102\ Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
---------------------------------------------------------------------------

    These final rules will also affect health care providers because 
the Departments assume that the cost of preparing and delivering the 
notice of the certified IDR entity's determination is included in the 
certified IDR entity fees paid by providers, facilities, providers of 
air ambulance services, plans, issuers, and FEHB carriers. The 
Departments estimate that 140,270 physicians, on average, bill on an 
out-of-network basis. The number of small physicians is estimated based 
on the SBA's size standards. The size standard applied for providers is 
NAICS 62111 (Offices of Physicians), for which a business with less 
than $14 million in receipts is considered to be small. By this 
standard, the Departments estimate that 45.8 percent (64,232 
physicians) are considered small under the SBA's size standards.\103\ 
These final rules are also expected to affect non-physician providers 
who bill on an out-of-network basis. The Departments lack data on the 
number of non-physician providers who would be impacted.
---------------------------------------------------------------------------

    \103\ Based on data from the NAICS Association for NAICS code 
62111, the Departments estimate the percent of businesses within the 
industry of Offices of Physicians with less than $14 million in 
annual sales. (See NAICS Association. ``Market Analysis Profile: 
NAICS Code & Annual Sales.'' https://www.naics.com/business-lists/counts-by-naics-code/.)
---------------------------------------------------------------------------

    The Departments do not have the same level of data for the air 
ambulance sub-sector. In 2020, the total revenue of providers of air 
ambulance services is estimated to be $4.2 billion with 1,114 air 
ambulance bases.\104\ This results in an industry average of $3.8 
million per air ambulance base. Accordingly, the Departments are of the 
view that most providers of air ambulance services are likely to be 
small entities.
---------------------------------------------------------------------------

    \104\ ASPE Office of Health Policy. ``Air Ambulance Use and 
Surprise Billing'' (September 2021). https://aspe.hhs.gov/sites/default/files/2021-09/aspe-air-ambulance-ib-09-10-2021.pdf. U.S. 
Small Business Administration. ``Table of Small Business Size 
Standards Matched to North American Industry Classification System 
Codes.'' https://www.naics.com/business-lists/counts-by-naics-code/. 
https://www.sba.gov/sites/default/files/2022-05/Table%20of%20Size%20Standards_Effective%20May%202%202022_Final.pdf.
---------------------------------------------------------------------------

B. Impact of the Final Rules

    In addition to the information already required to be provided with 
an initial payment or notice of denial of payment under the July 2021 
interim final rules, including the QPA, these final rules require that 
a plan or issuer must provide, if applicable, an acknowledgement if all 
or any portion of the claim was downcoded; an explanation of why the 
claim was

[[Page 52643]]

downcoded, including a description of which service codes were altered, 
if any, and a description of any modifiers that were altered, added, or 
removed, if any; and the amount that would have been the QPA had the 
service code or modifier not been downcoded. The total annual burden 
for all issuers and TPAs for providing the additional information 
related to the QPA is estimated to be 85,303 hours with an equivalent 
cost of approximately $4.3 million. For more details, please refer to 
the Paperwork Reduction Act analysis, found in section VI of this 
preamble.
    In addition, after the certified IDR entity has reviewed the offers 
and selected an offer, the certified IDR entity must explain its 
determination in a written decision submitted to the parties and the 
Departments, in a form and manner specified by the Departments. The 
certified IDR entity's written decision must include an explanation of 
what information the certified IDR entity determined demonstrated that 
the offer selected is the out-of-network rate that best represents the 
value of the qualified IDR item or service. This explanation must 
include the weight given to the QPA and any additional non-prohibited, 
credible information submitted in accordance with these final rules. If 
the certified IDR entity relies on any additional information in 
selecting an offer, the written decision must include an explanation of 
why the certified IDR entity concluded that this information was not 
already reflected in the qualifying payment amount. The total estimated 
annual cost burden for certified IDR entities to provide payment 
determination notices regarding non-air ambulance Federal IDR claims is 
estimated to be $1.2 million and the total estimated annual cost burden 
for certified IDR entities to provide payment determination notices 
regarding air ambulance Federal IDR claims is estimated to be $0.3 
million. The Departments assume for this calculation that half of the 
cost will fall on the providers, providers of air ambulance services, 
and facilities and the remaining half will fall on plans, issuers, and 
FEHB carriers. For more details, please refer to the Paperwork 
Reduction Act analysis, found in section V of this preamble.
    To estimate the proportion of the total costs that would fall onto 
small entities, the Departments assume that the proportion of costs is 
proportional to the industry receipts. The Departments are of the view 
that this assumption is reasonable because the number of providers, 
facilities, and providers of air ambulance services that receive 
initial and additional information about the QPA is likely to be 
proportional to the amount of business in which the entity is involved. 
Applying data from the Census Bureau of receipts by size for each 
industry, the Departments estimate that small issuers will incur 0.2 
percent of the total costs incurred by all issuers and small providers 
will incur 37 percent of the total cost by all providers.\105\
---------------------------------------------------------------------------

    \105\ Census Bureau. ``2017 SUSB Annual Data Tables by 
Establishment Industry, Data by Enterprise Receipt Size.'' (May 
2021). https://www.census.gov/data/tables/2017/econ/susb/2017-susb-annual.html.
---------------------------------------------------------------------------

    Accordingly, the Departments estimate that small issuers and TPAs 
will incur an annual cost of $4,330 associated with disclosing 
additional information about the QPA.\106\ For each small issuer and 
TPA, this results in an estimated annual cost of $16.98.\107\
---------------------------------------------------------------------------

    \106\ The annual cost is estimated as: $4,329,980 x 0.5 x 0.2% = 
$4,330.
    \107\ The cost is estimated as: $4,330/(125 Issuers + 130 TPAs) 
= $16.98.
---------------------------------------------------------------------------

    For the payment determination notice regarding disputes involving 
non-air ambulance claims, the Departments estimate that the total 
annual cost for all small issuers will be $1,193 and the total annual 
cost for small providers will be $219,446.\108\ This results in a per-
entity annual cost of $9.54 for small issuers and a per-entity annual 
cost of $3.42 for small providers that are not providers of air 
ambulance services.\109\
---------------------------------------------------------------------------

    \108\ The annual cost for issuers is estimated as: $1,192,641 x 
0.5 x 0.2% = $1,193. The annual cost for small physicians is 
estimated as: $1,192,641 x 0.5 x 36.8% = $219,446.
    \109\ The annual per-claim cost for issuers is estimated as: 
$1,193/125 Issuers = $9.54. The annual per-claim cost for small 
physicians is estimated as: $219,446/64,232 small physicians = 
$3.42.
---------------------------------------------------------------------------

    For the payment determination notice regarding a dispute involving 
air ambulance claims, the Departments estimate that the total annual 
cost for small issuers will be $344 and the total annual cost for all 
small providers of air ambulance services will be $62,530.\110\ This 
results in a per-entity annual cost of $2.72 for small issuers and a 
per-entity annual cost of $56.13 for small providers of air ambulance 
services.\111\
---------------------------------------------------------------------------

    \110\ The annual cost for issuers is estimated as: $339,836 x 
0.5 x 0.2% = $340. The annual cost for small providers of air 
ambulance services is estimated as: $339,836 x 0.5 x 36.8% = 
$62,530.
    \111\ The annual per-claim cost for issuers is estimated as: 
$340/125 Issuers = $2.72. The annual per-claim cost for small 
providers of air ambulance services is estimated as: $62,530/1,114 
providers of air ambulance services = $56.13.
---------------------------------------------------------------------------

    The number of impacted small health plans is not a significant 
number of plans compared to the total universe of 1.9 million small 
health plans. Assuming that 17,435 non-air ambulance claims and 4,968 
air ambulance claims are submitted to the Federal IDR process each 
year, only one percent of small health plans will be impacted.\112\ The 
number of impacted plans and issuers may be even smaller, if some plans 
and issuers have multiple disputes that are batched in the Federal IDR 
process. By batching qualified IDR items and services, there may be a 
reduction in the per-service cost of the Federal IDR process, and 
potentially the aggregate administrative costs, because the Federal IDR 
process is likely to exhibit at least some economies of scale.\113\
---------------------------------------------------------------------------

    \112\ (17,435 claims + 4,968 air ambulance claims)/1,927,786 
ERISA health plans = 1% (Source: 2020 Medical Expenditure Panel 
Survey-Insurance Component).
    \113\ Matthew Fiedler, Loren Adler, and Benedic Ippolito. 
``Recommendations for Implementing the No Surprises Act.'' U.S.C.-
Brookings Schaeffer on Health Policy. (March 2021). https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2021/03/16/recommendations-for-implementing-the-no-surprises-act/.
---------------------------------------------------------------------------

VII. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to prepare a written statement assessing 
the effects of any Federal mandate in a proposed agency rule, or a 
finalization of such a proposal, that may result in an expenditure of 
$100 million or more (adjusted annually for inflation with the base 
year 1995) in any one year by State, local, and tribal governments, in 
the aggregate, or by the private sector.\114\ In 2022, that threshold 
is approximately $165 million. For purposes of the UMRA, these final 
rules do not include any Federal mandate that the Departments expect to 
result in such expenditures by State, local, or tribal governments.
---------------------------------------------------------------------------

    \114\ 2 U.S.C. 1501 et seq. (1995).
---------------------------------------------------------------------------

VIII. Federalism Statement

    Executive Order 13132 outlines fundamental principles of federalism 
and requires Federal agencies to adhere to specific criteria when 
formulating and implementing policies that have ``substantial direct 
effects'' on the States, the relationship between the National 
Government and States, or on the distribution of power and 
responsibilities among the various levels of government. Federal 
agencies promulgating regulations that have federalism implications 
must consult with State and local officials and describe the extent of 
their consultation and the nature of the concerns of State and local 
officials in the preamble to these final rules.
    In the Departments' view, these final rules have federalism 
implications

[[Page 52644]]

because they have direct effects on the States, the relationship 
between the National Government and the States, or the distribution of 
power and responsibilities among various levels of government. State 
and local government providers, facilities, and health plans may be 
subject to the Federal IDR process or an All-Payer Model Agreement or a 
specified State law. Additionally, the No Surprises Act authorizes 
States to enforce the new requirements, including those related to 
balance billing, with respect to issuers, providers, facilities, and 
providers of air ambulance services, with HHS enforcing only in cases 
in which the State has notified HHS that the State does not have the 
authority to enforce or is otherwise not enforcing, or HHS has made a 
determination that a State has failed to substantially enforce the 
requirements. However, in the Departments' view, the federalism 
implications of these final rules are substantially mitigated because 
the Departments expect that some States will have their own process for 
determining the total amount payable under a plan or coverage. Where a 
State does not have an applicable All-Payer Model Agreement, but does 
have such a specified State law, the State law, rather than the Federal 
IDR process, will apply. The Departments anticipate that some States 
with their own IDR processes or other mechanism for determining the 
out-of-network rate may want to change their laws or adopt new laws in 
response to these final rules. The Departments anticipate that these 
States will incur a small incremental cost when making changes to their 
laws.
    In general, section 514 of ERISA preempts state laws to the extent 
that they relate to any private covered employee benefit plan, 
including covered group health plans, and preserves State laws that 
regulate insurance, banking, or securities. While ERISA prohibits 
States from regulating a plan as an insurance or investment company or 
bank, the preemption provisions of section 731 of ERISA and section 
2724 of the PHS Act (implemented in 29 CFR 2590.731(a) and 45 CFR 
146.143(a)) apply so that requirements of Part 7 of ERISA and title 
XXVII of the PHS Act (including those of the No Surprises Act) are not 
to be ``construed to supersede any provision of State law which 
establishes, implements, or continues in effect any standard or 
requirement solely relating to health insurance issuers in connection 
with group health insurance coverage except to the extent that such 
standard or requirement prevents the application of a requirement'' of 
a Federal standard. The conference report accompanying the Health 
Insurance Portability and Accountability Act of 1996 (HIPAA) indicates 
that this is intended to be the ``narrowest'' preemption of State 
laws.\115\ Additionally, the No Surprises Act requires that when a 
State law determines the total amount payable under such a plan, 
coverage, or issuer for emergency services or to nonparticipating 
providers related to patient visits to participating facilities for 
nonemergency services, the State law will apply, rather than the 
Federal IDR process specified in these final rules.
---------------------------------------------------------------------------

    \115\ See House Conf. Rep. No. 104-736, at 205, reprinted in 
1996 U.S. Code Cong. & Admin. News 2018.
---------------------------------------------------------------------------

    In compliance with the requirement of Executive Order 13132 that 
agencies examine closely any policies that may have federalism 
implications or limit the policy-making discretion of the States, the 
Departments engaged in efforts to consult with and work cooperatively 
with affected States, including participating in conference calls with 
and attending conferences of the NAIC and consulting with State 
insurance officials on a state-by-state basis. In addition, the 
Departments consulted with the NAIC, as required by the No Surprises 
Act, to establish the geographic regions to be used in the methodology 
for calculating the QPA as detailed in the July 2021 interim final 
rules.
    In developing these final rules, the Departments attempted to 
balance the States' interests in regulating health insurance issuers, 
providers, and facilities with the need to ensure at least the minimum 
Federal consumer protections in every State. By doing so, the 
Departments complied with the requirements of Executive Order 13132.

List of Subjects

26 CFR Part 54

    Excise taxes, Health care, Health insurance, Pensions, Reporting 
and recordkeeping requirements.

29 CFR Part 2590

    Continuation coverage, Disclosure, Employee benefit plans, Group 
health plans, Health care, Health insurance, Medical child support, 
Reporting and recordkeeping requirements.

45 CFR Part 149

    Balance billing, Health care, Health insurance, Reporting and 
recordkeeping requirements, Surprise billing, State regulation of 
health insurance, Transparency in coverage.

Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement, Internal Revenue 
Service.

Lily L. Batchelder,
Assistant Secretary of the Treasury (Tax Policy).
Ali Khawar,
Acting Assistant Secretary, Employee Benefits Security Administration, 
U.S. Department of Labor.
Xavier Becerra,
Secretary, Department of Health and Human Services.

Department of the Treasury

Internal Revenue Service

Adoption of the Amendments to the Regulations

    Accordingly, the Treasury Department and the IRS adopts as final 
the temporary regulations adding 26 CFR 54.9816-6T and 54.9817-2T, 
published at 86 FR 36872 (July 13, 2021), and 26 CFR 54.9816-8T, 
published at 86 FR 55980 (October 7, 2021), with the following changes 
to 26 CFR part 54:

PART 54--PENSION EXCISE TAXES

0
1. The authority citation for part 54 continues to read in part as 
follows:

    Authority: 26 U.S.C. 7805, unless otherwise noted.
* * * * *

0
2. Section 54.9816-6 is added to read as follows:


Sec.  54.9816-6  Methodology for calculating qualifying payment amount.

    (a) For further guidance see Sec.  54.9816-6T(a) introductory text 
through (a)(17).
    (1)-(17) [Reserved]
    (18) Downcode means the alteration by a plan or issuer of a 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 qualifying payment amount than the service code 
or modifier billed by the provider, facility, or provider of air 
ambulance services.
    (b)-(c) For further guidance see Sec.  54.9816-6T(b) and (c).
    (d) For further guidance see Sec.  54.9816-6T(d) introductory text 
through (d)(1)(i).
    (1) [Reserved]
    (i) [Reserved]
    (ii) If the qualifying payment amount is based on a downcoded 
service code or modifier--
    (A) A statement that the service code or modifier billed by the 
provider,

[[Page 52645]]

facility, or provider of air ambulance services was downcoded;
    (B) An explanation of why the claim was downcoded, which must 
include a description of which service codes were altered, if any, and 
a description of which modifiers were altered, added, or removed, if 
any; and
    (C) The amount that would have been the qualifying payment amount 
had the service code or modifier not been downcoded.
    (iii)-(v) For further guidance see Sec.  54.9816-6T(d)(1)(iii) 
through (v).
    (2) For further guidance see Sec.  54.9816-6T(d)(2).
    (e)-(f) For further guidance see Sec.  54.9816-6T(e) and (f).
    (g) Applicability date. The provisions of this section are 
applicable for plan years beginning on or after January 1, 2022, except 
that paragraph (a)(18) of this section regarding the definition of the 
term ``downcode'' and paragraph (d)(1)(ii) of this section regarding 
additional information that must be provided if the qualifying payment 
amount is based on a downcoded service code or modifier are applicable 
with respect to items or services provided or furnished on or after 
October 25, 2022, for plan years beginning on or after January 1, 2022.

0
3. Section 54.9816-6T is amended by:
0
a. Adding paragraph (a)(18);
0
b. Redesignating paragraphs (d)(1)(ii) through and (iv) as paragraphs 
(d)(1)(iii) through (v), respectively; and
0
c. Adding a new paragraph (d)(1)(ii).
    The additions read as follows:


Sec.  54.9816-6T   Methodology for calculating qualifying payment 
amount (temporary).

    (a) * * *
    (18) For further guidance see Sec.  54.9816-6(a)(18).
* * * * *
    (d) * * *
    (1) * * *
    (ii) For further guidance see Sec.  54.9816-6(d)(1)(ii);
* * * * *

0
4. Section 54.9816-8 is added to read as follows:


Sec.  54.9816-8  Independent dispute resolution process.

    (a)-(b) For further guidance see Sec.  54.9816-8T(a) and (b).
    (c) For further guidance see Sec.  54.9816-8T(c) introductory text 
through (c)(3).
    (1)-(3) [Reserved]
    (4) For further guidance see Sec.  54.9816-8T(c)(4) introductory 
text through (c)(4)(ii) introductory text.
    (i) [Reserved]
    (ii) [Reserved]
    (A) Select as the out-of-network rate for the qualified IDR item or 
service one of the offers submitted under Sec.  54.9816-8T(c)(4)(i), 
weighing only the considerations specified in paragraph (c)(4)(iii) of 
this section (as applied to the information provided by the parties 
pursuant to Sec.  54.9816-8T(c)(4)(i)). The certified IDR entity must 
select the offer that the certified IDR entity determines best 
represents the value of the qualified IDR item or service as the out-
of-network rate.
    (B) For further guidance see Sec.  54.9816-8T(c)(4)(ii)(B).
    (iii) Considerations in determination. In determining which offer 
to select:
    (A) The certified IDR entity must consider the qualifying payment 
amount(s) for the applicable year for the same or similar item or 
service.
    (B) The certified IDR entity must then consider information 
submitted by a party that relates to the following circumstances:
    (1) The level of training, experience, and quality and outcomes 
measurements of the provider or facility that furnished the qualified 
IDR item or service (such as those endorsed by the consensus-based 
entity authorized in section 1890 of the Social Security Act).
    (2) The market share held by the provider or facility or that of 
the plan or issuer in the geographic region in which the qualified IDR 
item or service was provided.
    (3) The acuity of the participant or beneficiary receiving the 
qualified IDR item or service, or the complexity of furnishing the 
qualified IDR item or service to the participant or beneficiary.
    (4) The teaching status, case mix, and scope of services of the 
facility that furnished the qualified IDR item or service, if 
applicable.
    (5) Demonstration of good faith efforts (or lack thereof) made by 
the provider or facility or the plan or issuer to enter into network 
agreements with each other, and, if applicable, contracted rates 
between the provider or facility, as applicable, and the plan or 
issuer, as applicable, during the previous 4 plan years.
    (C) The certified IDR entity must also consider information 
provided by a party in response to a request by the certified IDR 
entity under Sec.  54.9816-8T(c)(4)(i)(A)(2) that relates to the offer 
for the payment amount for the qualified IDR item or service that is 
the subject of the payment determination and that does not include 
information on factors described in Sec.  54.9816-8T(c)(4)(v).
    (D) The certified IDR entity must also consider additional 
information submitted by a party that relates to the offer for the 
payment amount for the qualified IDR item or service that is the 
subject of the payment determination and that does not include 
information on factors described in Sec.  54.9816-8T(c)(4)(v).
    (E) In weighing the considerations described in paragraphs 
(c)(4)(iii)(B) through (D) of this section, the certified IDR entity 
should evaluate whether the information is credible and relates to the 
offer submitted by either party for the payment amount for the 
qualified IDR item or service that is the subject of the payment 
determination. The certified IDR entity should not give weight to 
information to the extent it is not credible, it does not relate to 
either party's offer for the payment amount for the qualified IDR item 
or service, or it is already accounted for by the qualifying payment 
amount under paragraph (c)(4)(iii)(A) of this section or other credible 
information under paragraphs (c)(4)(iii)(B) through (D) of this 
section.
    (iv) Examples. The rules of paragraph (c)(4)(iii) of this section 
are illustrated in the following paragraphs. Each example assumes that 
the Federal IDR process applies for purposes of determining the out-of-
network rate, that both parties have submitted the information parties 
are required to submit as part of the Federal IDR process, and that the 
submitted information does not include information on factors described 
in paragraph (c)(4)(v) of this section:
    (A) Example 1--(1) Facts. A level 1 trauma center that is a 
nonparticipating emergency facility and an issuer are parties to a 
payment determination in the Federal IDR process. The facility submits 
an offer that is higher than the qualifying payment amount. The 
facility also submits additional written information showing that the 
scope of services available at the facility was critical to the 
delivery of care for the qualified IDR item or service provided, given 
the particular patient's acuity. This information is determined to be 
credible by the certified IDR entity. Further, the facility submits 
additional information showing the contracted rates used to calculate 
the qualifying payment amount for the qualified IDR item or service 
were based on a level of service that is typical in cases in which the 
services are delivered by a facility that is not a level 1 trauma 
center and that does not have the capability to provide the scope of 
services provided by a level 1 trauma center. This information is also 
determined to be credible by the certified IDR entity. The issuer 
submits an offer equal to the qualifying payment amount. No additional 
information is submitted by

[[Page 52646]]

either party. The certified IDR entity determines that all the 
information submitted by the nonparticipating emergency facility 
relates to the offer for the payment amount for the qualified IDR item 
or service that is the subject of the payment determination.
    (2) Conclusion. In this paragraph (c)(4)(iv)(A) (Example 1), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity then must consider the additional information 
submitted by the nonparticipating emergency facility, provided the 
information relates to circumstances described in paragraphs 
(c)(4)(iii)(B) through (D) of this section and relates to the offer for 
the payment amount for the qualified IDR item or service that is the 
subject of the payment determination. If the certified IDR entity 
determines that it is appropriate to give weight to the additional 
credible information submitted by the nonparticipating emergency 
facility and that the additional credible information submitted by the 
facility demonstrates that the facility's offer best represents the 
value of the qualified IDR item or service, the certified IDR entity 
should select the facility's offer.
    (B) Example 2--(1) Facts. A nonparticipating provider and an issuer 
are parties to a payment determination in the Federal IDR process. The 
provider submits an offer that is higher than the qualifying payment 
amount. The provider also submits additional written information 
regarding the level of training and experience the provider possesses. 
This information is determined to be credible by the certified IDR 
entity, but the certified IDR entity finds that the information does 
not demonstrate that the provider's level of training and experience 
relates to the offer for the payment amount for the qualified IDR item 
or service that is the subject of the payment determination (for 
example, the information does not show that the provider's level of 
training and experience was necessary for providing the qualified IDR 
service that is the subject of the payment determination to the 
particular patient, or that the training or experience made an impact 
on the care that was provided). The nonparticipating provider does not 
submit any additional information. The issuer submits an offer equal to 
the qualifying payment amount, with no additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(B) (Example 2), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity must then consider the additional information 
submitted by the nonparticipating provider, provided the information 
relates to circumstances described in paragraphs (c)(4)(iii)(B) through 
(D) of this section and relates to the offer for the payment amount for 
the qualified IDR item or service that is the subject of the payment 
determination. In addition, the certified IDR entity should not give 
weight to information to the extent it is already accounted for by the 
qualifying payment amount or other credible information under 
paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified 
IDR entity determines that the additional information submitted by the 
provider is credible but does not relate to the offer for the payment 
amount for the qualified IDR service that is the subject of the payment 
determination, and determines that the issuer's offer best represents 
the value of the qualified IDR service, in the absence of any other 
credible information that relates to either party's offer, the 
certified IDR entity should select the issuer's offer.
    (C) Example 3--(1) Facts. A nonparticipating provider and an issuer 
are parties to a payment determination in the Federal IDR process 
involving an emergency department visit for the evaluation and 
management of a patient. The provider submits an offer that is higher 
than the qualifying payment amount. The provider also submits 
additional written information showing that the acuity of the patient's 
condition and complexity of the qualified IDR service furnished 
required the taking of a comprehensive history, a comprehensive 
examination, and medical decision making of high complexity. This 
information is determined to be credible by the certified IDR entity. 
The issuer submits an offer equal to the qualifying payment amount for 
CPT code 99285, which is the CPT code for an emergency department visit 
for the evaluation and management of a patient requiring a 
comprehensive history, a comprehensive examination, and medical 
decision making of high complexity. The issuer also submits additional 
written information showing that this CPT code accounts for the acuity 
of the patient's condition. This information is determined to be 
credible by the certified IDR entity. The certified IDR entity 
determines that the information provided by the provider and issuer 
relates to the offer for the payment amount for the qualified IDR 
service that is the subject of the payment determination. Neither party 
submits any additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(C) (Example 3), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity then must consider the additional information 
submitted by the parties, but the certified IDR entity should not give 
weight to information to the extent it is already accounted for by the 
qualifying payment amount or other credible information under 
paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified 
IDR entity determines the additional information on the acuity of the 
patient and complexity of the service is already accounted for in the 
calculation of the qualifying payment amount, the certified IDR entity 
should not give weight to the additional information provided by the 
provider. If the certified IDR entity determines that the issuer's 
offer best represents the value of the qualified IDR service, the 
certified IDR entity should select the issuer's offer.
    (D) Example 4--(1) Facts. A nonparticipating emergency facility and 
an issuer are parties to a payment determination in the Federal IDR 
process. Although the facility is not participating in the issuer's 
network during the relevant plan year, it was a participating facility 
in the issuer's network in the previous 4 plan years. The issuer 
submits an offer that is higher than the qualifying payment amount and 
that is equal to the facility's contracted rate (adjusted for 
inflation) for the previous year with the issuer for the qualified IDR 
service. The issuer also submits additional written information showing 
that the contracted rates between the facility and the issuer during 
the previous 4 plan years were higher than the qualifying payment 
amount submitted by the issuer, and that these prior contracted rates 
account for the case mix and scope of services typically furnished at 
the nonparticipating facility. The certified IDR entity determines this 
information is credible and that it relates to the offer submitted by 
the issuer for the payment amount for the qualified IDR service that is 
the subject of the payment determination. The facility submits an offer 
that is higher than both the qualifying payment amount and the 
contracted rate (adjusted for inflation) for the previous year with the 
issuer for the qualified IDR service. The facility also submits 
additional written information, with the intent to show that the case 
mix and scope of services available at the facility were integral to 
the service provided. The certified IDR entity determines this 
information is credible and that it relates to the offer submitted by 
the facility for the payment amount for the qualified IDR service that 
is the subject of the

[[Page 52647]]

payment determination. Neither party submits any additional 
information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(D) (Example 4), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity then must consider the additional information 
submitted by the parties, but should not give weight to information to 
the extent it is already accounted for by the qualifying payment amount 
or other credible information under paragraphs (c)(4)(iii)(B) through 
(D) of this section. If the certified IDR entity determines that the 
information submitted by the facility regarding the case mix and scope 
of services available at the facility includes information that is also 
accounted for in the information the issuer submitted regarding prior 
contracted rates, then the certified IDR entity should give weight to 
that information only once. The certified IDR entity also should not 
give weight to the same information provided by the nonparticipating 
emergency facility in relation to any other factor. If the certified 
IDR entity determines that the issuer's offer best represents the value 
of the qualified IDR service, the certified IDR entity should select 
the issuer's offer.
    (E) Example 5--(1) Facts. A nonparticipating provider and an issuer 
are parties to a payment determination in the Federal IDR process 
regarding a qualified IDR service for which the issuer downcoded the 
service code that the provider billed. The issuer submits an offer 
equal to the qualifying payment amount (which was calculated using the 
downcoded service code). The issuer also submits additional written 
information that includes the documentation disclosed to the 
nonparticipating provider under Sec.  54.9816-6(d)(1)(ii) at the time 
of the initial payment (which describes why the service code was 
downcoded). The certified IDR entity determines this information is 
credible and that it relates to the offer for the payment amount for 
the qualified IDR service that is the subject of the payment 
determination. The provider submits an offer equal to the amount that 
would have been the qualifying payment amount had the service code not 
been downcoded. The provider also submits additional written 
information that includes the documentation disclosed to the 
nonparticipating provider under Sec.  54.9816-6(d)(1)(ii) at the time 
of the initial payment. Further, the provider submits additional 
written information that explains why the billed service code was more 
appropriate than the downcoded service code, as evidence that the 
provider's offer, which is equal to the amount the qualifying payment 
amount would have been for the service code that the provider billed, 
best represents the value of the service furnished, given its 
complexity. The certified IDR entity determines this information to be 
credible and that it relates to the offer for the payment amount for 
the qualified IDR service that is the subject of the payment 
determination. Neither party submits any additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(E) (Example 5), the 
certified IDR entity must consider the qualifying payment amount, which 
is based on the downcoded service code. The certified IDR entity then 
must consider whether to give weight to additional information 
submitted by the parties. If the certified IDR entity determines that 
the additional credible information submitted by the provider 
demonstrates that the nonparticipating provider's offer, which is equal 
to the qualifying payment amount for the service code that the provider 
billed, best represents the value of the qualified IDR service, the 
certified IDR entity should select the nonparticipating provider's 
offer.
    (v) For further guidance see Sec.  54.9816-8T(c)(4)(v) through 
(c)(4)(vi)(A).
    (vi) [Reserved]
    (A) [Reserved]
    (B) The certified IDR entity's written decision must include an 
explanation of their determination, including what information the 
certified IDR entity determined demonstrated that the offer selected as 
the out-of-network rate is the offer that best represents the value of 
the qualified IDR item or service, including the weight given to the 
qualifying payment amount and any additional credible information under 
paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified 
IDR entity relies on information described under paragraphs 
(c)(4)(iii)(B) through (D) of this section in selecting an offer, the 
written decision must include an explanation of why the certified IDR 
entity concluded that this information was not already reflected in the 
qualifying payment amount.
    (vii)-(ix) For further guidance see Sec.  54.9816-8T(c)(4)(vii) 
through (ix).
    (d)-(e) For further guidance see Sec.  54.9816-8T(d) through (e).
    (f) For further guidance see Sec.  54.9816-8T(f) introductory text 
through (f)(1)(iv).
    (1) [Reserved]
    (i)-(iv) [Reserved]
    (v) For further guidance see Sec.  54.9816-8T(f)(1)(v) introductory 
text through (f)(1)(v)(E).
    (A)-(E) [Reserved]
    (F) The rationale for the certified IDR entity's decision, 
including the extent to which the decision relied on the criteria in 
paragraphs (c)(4)(iii)(B) through (D) of this section.
    (G)-(I) For further guidance see Sec.  54.9816-8T(f)(1)(v)(G) 
through (I).
    (vi) For further guidance see Sec.  54.9816-8T(f)(1)(vi).
    (2) [Reserved]
    (g) For further guidance see Sec.  54.9816-8T(g).
    (h) Applicability date. The provisions of this section are 
applicable with respect to plan years beginning on or after January 1, 
2022, except that paragraphs (c)(4)(ii) through (iv) of this section 
regarding payment determinations, paragraph (c)(4)(vi)(B) of this 
section regarding written decisions, and paragraph (f)(1)(v)(F) of this 
section regarding reporting of information relating to the Federal IDR 
process are applicable with respect to items or services provided or 
furnished on or after October 25, 2022, for plan years beginning on or 
after January 1, 2022.

0
5. Section 54.9816-8T is amended by:
0
a. Removing paragraph (a)(2)(viii);
0
b. Redesignating paragraphs (a)(2)(ix) through (xiii) as paragraphs 
(a)(2)(viii) through (xii), respectively; and
0
c. Revising paragraphs (c)(4)(ii)(A), (c)(4)(iii) and (iv), 
(c)(4)(vi)(B), (f)(1)(v)(F), and (h).
    The revisions read as follows:


Sec.  54.9816-8T  Independent dispute resolution process (temporary).

* * * * *
    (c) * * *
    (4) * * *
    (ii) * * *
    (A) For further guidance see Sec.  54.9816-8(c)(4)(ii)(A).
* * * * *
    (iii) For further guidance see Sec.  54.9816-8(c)(4)(iii).
    (iv) For further guidance see Sec.  54.9816-8(c)(4)(iv).
* * * * *
    (vi) * * *
    (B) For further guidance see Sec.  54.9816-8(c)(4)(vi)(B).
* * * * *
    (f) * * *
    (1) * * *
    (v) * * *
    (F) For further guidance see Sec.  54.9816-8(f)(1)(v)(F);
* * * * *
    (h) Applicability date. The provisions of this section are 
applicable with respect to plan years beginning on or after January 1, 
2022, except that the provisions regarding IDR entity certification at 
paragraphs (a) and (e) of

[[Page 52648]]

this section are applicable beginning on October 7, 2021; and 
paragraphs (c)(4)(ii) through (iv) of this section regarding payment 
determinations, paragraph (c)(4)(vi)(B) of this section regarding 
written decisions, and paragraph (f)(1)(v)(F) of this section regarding 
reporting of information relating to the Federal IDR process are 
applicable with respect to items or services provided or furnished on 
or after October 25, 2022, for plan years beginning on or after January 
1, 2022.

0
6. Section 54.9817-2 is added to read as follows:


Sec.  54.9817-2  Independent dispute resolution process for air 
ambulance services

    (a) For further guidance see Sec.  54.9817-2T(a).
    (b) For further guidance see Sec.  54.9817-2T(b) introductory text.
    (1) In general. Except as provided in paragraphs (b)(2) and (3) of 
this section and Sec.  54.9817-2T(b)(2) and (4), in determining the 
out-of-network rate to be paid by group health plans and health 
insurance issuers offering group health insurance coverage for out-of-
network air ambulance services, plans and issuers must comply with the 
requirements of Sec. Sec.  54.9816-8T and 54.9816-8, except that 
references in Sec. Sec.  54.9816-8T and 54.9816-8 to the additional 
circumstances in Sec.  54.9816-8(c)(4)(iii)(B) shall be understood to 
refer to paragraph (b)(2) of this section and Sec.  54.9817-2T(b)(2).
    (2) Considerations for air ambulance services. In determining which 
offer to select, in addition to considering the applicable qualifying 
payment amount(s), the certified IDR entity must consider information 
submitted by a party that relates to the following circumstances:
    (i)-(vi) For further guidance see Sec.  54.9817-2T(b)(2)(i) through 
(vi).
    (3) Weighing considerations. In weighing the considerations 
described in paragraph (b)(2) of this section and Sec.  54.9817-
2T(b)(2), the certified IDR entity should evaluate whether the 
information is credible and relates to the offer submitted by either 
party for the payment amount for the qualified IDR service that is the 
subject of the payment determination. The certified IDR entity should 
not give weight to information to the extent it is not credible, it 
does not relate to either party's offer for the payment amount for the 
qualified IDR service, or it is already accounted for by the qualifying 
payment amount under Sec.  54.9816-8(c)(4)(iii)(A) or other credible 
information under Sec.  54.9816-8(c)(4)(iii)(B) through (D), except 
that the additional circumstances in Sec.  54.9816-8(c)(4)(iii)(B) 
shall be understood to refer to paragraph (b)(2) of this section and 
Sec.  54.9817-2T(b)(2).
    (4) For further guidance see Sec.  54.9817-2T(b)(4) introductory 
text through (b)(4)(iii).
    (i)-(iii) [Reserved]
    (iv) For further guidance see Sec.  54.9817-2T(b)(4)(iv) 
introductory text through (b)(4)(iv)(E).
    (A)-(E) [Reserved]
    (F) The rationale for the certified IDR entity's decision, 
including the extent to which the decision relied on the criteria in 
paragraph (b)(2) of this section and Sec.  54.9816-8(c)(4)(iii)(C) and 
(D).
    (G)-(I) For further guidance see Sec.  54.9817-2T(b)(4)(iv)(G) 
through (I).
    (c) Applicability date. The provisions of this section are 
applicable with respect to plan years beginning on or after January 1, 
2022, except that paragraphs (b)(1), (2), and (3) and (b)(4)(iv)(F) of 
this section regarding payment determinations are applicable with 
respect to services provided or furnished on or after October 25, 2022, 
for plan years beginning on or after January 1, 2022.

0
7. Section 54.9817-2T is amended by:
0
a. Revising paragraphs (b)(1) and (2);
0
b. Redesignating paragraph (b)(3) as paragraph (b)(4);
0
c. Adding a new paragraph (b)(3); and
0
d. Revising newly redesignated paragraph (b)(4)(iv)(F) and paragraph 
(c).
    The revisions and addition read as follows:


Sec.  54.9817-2T   Independent dispute resolution process for air 
ambulance services (temporary).

* * * * *
    (b) * * *
    (1) For further guidance see Sec.  54.9817-2(b)(1).
    (2) For further guidance see Sec.  54.9817-2(b)(2).
    (3) For further guidance see Sec.  54.9817-2(b)(3).
    (4) * * *
    (iv) * * *
    (F) For further guidance see Sec.  54.9817-2(b)(4)(iv)(F);
* * * * *
    (c) Applicability date. The provisions of this section are 
applicable with respect to plan years beginning on or after January 1, 
2022, except that paragraphs (b)(1), (2), and (3) and (b)(4)(iv)(F) of 
this section regarding payment determinations are applicable with 
respect to services provided or furnished on or after October 25, 2022, 
for plan years beginning on or after January 1, 2022.

Department of Labor

Employee Benefits Security Administration

29 CFR Chapter XXV

    For the reasons set forth in the preamble, the Department of Labor 
adopts as final the interim rules adding 29 CFR 2590.716-6, published 
at 86 FR 36872 (July 13, 2021), and 29 CFR 2590.716-8 and 2590.717-2, 
published at 86 FR 55980 (October 7, 2021), with the following changes:

PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS

0
8. The authority citation for part 2590 continues to read as follows:

    Authority:  29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a-n, 1191, 1191a, 1191b, and 1191c; sec. 
101(g), Pub. L.104-191, 110 Stat. 1936; sec. 401(b), Pub. L. 105-
200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 110-
343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-148, 
124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029; 
Division M, Pub. L. 113-235, 128 Stat. 2130; Pub. L. 116-260 134 
Stat. 1182; Secretary of Labor's Order 1-2011, 77 FR 1088 (Jan. 9, 
2012).


0
9. Section 2590.716-6 is amended by:
0
a. Adding paragraph (a)(18);
0
b. Redesignating paragraphs (d)(1)(ii) through (iv) as paragraphs 
(d)(1)(iii) through (v), respectively;
0
c. Adding a new paragraph (d)(1)(ii); and
0
d. Revising paragraph (f).
    The revisions and additions read as follows:


Sec.  2590.716-6  Methodology for calculating qualifying payment 
amount.

    (a) * * *
    (18) Downcode means the alteration by a plan or issuer of a 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 qualifying payment amount than the service code 
or modifier billed by the provider, facility, or provider of air 
ambulance services.
* * * * *
    (d) * * *
    (1) * * *
    (ii) If the qualifying payment amount is based on a downcoded 
service code or modifier--
    (A) A statement that the service code or modifier billed by the 
provider, facility, or provider of air ambulance services was 
downcoded;
    (B) An explanation of why the claim was downcoded, which must 
include a

[[Page 52649]]

description of which service codes were altered, if any, and a 
description of which modifiers were altered, added, or removed, if any; 
and
    (C) The amount that would have been the qualifying payment amount 
had the service code or modifier not been downcoded;
* * * * *
    (f) Applicability date. The provisions of this section are 
applicable for plan years beginning on or after January 1, 2022, except 
that paragraph (a)(18) of this section regarding the definition of the 
term ``downcode'' and paragraph (d)(1)(ii) of this section regarding 
additional information that must be provided if the qualifying payment 
amount is based on a downcoded service code or modifier are applicable 
with respect to items or services provided or furnished on or after 
October 25, 2022, for plan years beginning on or after January 1, 2022.

0
10. Section 2590.716-8 is amended by:
0
a. Removing paragraph (a)(2)(viii);
0
b. Redesignating paragraphs (a)(2)(ix) through (xiii) as paragraphs 
(a)(2)(viii) through (xii), respectively; and
0
c. Revising paragraphs (c)(4)(ii)(A), (c)(4)(iii) and (iv), 
(c)(4)(vi)(B), (f)(1)(v)(F), and (h).
    The revisions read as follows:


Sec.  2590.716-8  Independent dispute resolution process.

* * * * *
    (c) * * *
    (4) * * *
    (ii) * * *
    (A) Select as the out-of-network rate for the qualified IDR item or 
service one of the offers submitted under paragraph (c)(4)(i) of this 
section, weighing only the considerations specified in paragraph 
(c)(4)(iii) of this section (as applied to the information provided by 
the parties pursuant to paragraph (c)(4)(i) of this section). The 
certified IDR entity must select the offer that the certified IDR 
entity determines best represents the value of the qualified IDR item 
or service as the out-of-network rate.
* * * * *
    (iii) Considerations in determination. In determining which offer 
to select:
    (A) The certified IDR entity must consider the qualifying payment 
amount(s) for the applicable year for the same or similar item or 
service.
    (B) The certified IDR entity must then consider information 
submitted by a party that relates to the following circumstances:
    (1) The level of training, experience, and quality and outcomes 
measurements of the provider or facility that furnished the qualified 
IDR item or service (such as those endorsed by the consensus-based 
entity authorized in section 1890 of the Social Security Act).
    (2) The market share held by the provider or facility or that of 
the plan or issuer in the geographic region in which the qualified IDR 
item or service was provided.
    (3) The acuity of the participant or beneficiary receiving the 
qualified IDR item or service, or the complexity of furnishing the 
qualified IDR item or service to the participant or beneficiary.
    (4) The teaching status, case mix, and scope of services of the 
facility that furnished the qualified IDR item or service, if 
applicable.
    (5) Demonstration of good faith efforts (or lack thereof) made by 
the provider or facility or the plan or issuer to enter into network 
agreements with each other, and, if applicable, contracted rates 
between the provider or facility, as applicable, and the plan or 
issuer, as applicable, during the previous 4 plan years.
    (C) The certified IDR entity must also consider information 
provided by a party in response to a request by the certified IDR 
entity under paragraph (c)(4)(i)(A)(2) of this section that relates to 
the offer for the payment amount for the qualified IDR item or service 
that is the subject of the payment determination and that does not 
include information on factors described in paragraph (c)(4)(v) of this 
section.
    (D) The certified IDR entity must also consider additional 
information submitted by a party that relates to the offer for the 
payment amount for the qualified IDR item or service that is the 
subject of the payment determination and that does not include 
information on factors described in paragraph (c)(4)(v) of this 
section.
    (E) In weighing the considerations described in paragraphs 
(c)(4)(iii)(B) through (D) of this section, the certified IDR entity 
should evaluate whether the information is credible and relates to the 
offer submitted by either party for the payment amount for the 
qualified IDR item or service that is the subject of the payment 
determination. The certified IDR entity should not give weight to 
information to the extent it is not credible, it does not relate to 
either party's offer for the payment amount for the qualified IDR item 
or service, or it is already accounted for by the qualifying payment 
amount under paragraph (c)(4)(iii)(A) of this section or other credible 
information under paragraphs (c)(4)(iii)(B) through (D) of this 
section.
    (iv) Examples. The rules of paragraph (c)(4)(iii) of this section 
are illustrated in the following paragraphs. Each example assumes that 
the Federal IDR process applies for purposes of determining the out-of-
network rate, that both parties have submitted the information parties 
are required to submit as part of the Federal IDR process, and that the 
submitted information does not include information on factors described 
in paragraph (c)(4)(v) of this section:
    (A) Example 1--(1) Facts. A level 1 trauma center that is a 
nonparticipating emergency facility and an issuer are parties to a 
payment determination in the Federal IDR process. The facility submits 
an offer that is higher than the qualifying payment amount. The 
facility also submits additional written information showing that the 
scope of services available at the facility was critical to the 
delivery of care for the qualified IDR item or service provided, given 
the particular patient's acuity. This information is determined to be 
credible by the certified IDR entity. Further, the facility submits 
additional information showing the contracted rates used to calculate 
the qualifying payment amount for the qualified IDR item or service 
were based on a level of service that is typical in cases in which the 
services are delivered by a facility that is not a level 1 trauma 
center and that does not have the capability to provide the scope of 
services provided by a level 1 trauma center. This information is also 
determined to be credible by the certified IDR entity. The issuer 
submits an offer equal to the qualifying payment amount. No additional 
information is submitted by either party. The certified IDR entity 
determines that all the information submitted by the nonparticipating 
emergency facility relates to the offer for the payment amount for the 
qualified IDR item or service that is the subject of the payment 
determination.
    (2) Conclusion. In this paragraph (c)(4)(iv)(A) (Example 1), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity then must consider the additional information 
submitted by the nonparticipating emergency facility, provided the 
information relates to circumstances described in paragraphs 
(c)(4)(iii)(B) through (D) of this section and relates to the offer for 
the payment amount for the qualified IDR item or service that is the 
subject of the payment determination. If the certified IDR entity 
determines that it is appropriate to give weight to the additional 
credible information submitted by the nonparticipating emergency 
facility and that the

[[Page 52650]]

additional credible information submitted by the facility demonstrates 
that the facility's offer best represents the value of the qualified 
IDR item or service, the certified IDR entity should select the 
facility's offer.
    (B) Example 2--(1) Facts. A nonparticipating provider and an issuer 
are parties to a payment determination in the Federal IDR process. The 
provider submits an offer that is higher than the qualifying payment 
amount. The provider also submits additional written information 
regarding the level of training and experience the provider possesses. 
This information is determined to be credible by the certified IDR 
entity, but the certified IDR entity finds that the information does 
not demonstrate that the provider's level of training and experience 
relates to the offer for the payment amount for the qualified IDR item 
or service that is the subject of the payment determination (for 
example, the information does not show that the provider's level of 
training and experience was necessary for providing the qualified IDR 
service that is the subject of the payment determination to the 
particular patient, or that the training or experience made an impact 
on the care that was provided). The nonparticipating provider does not 
submit any additional information. The issuer submits an offer equal to 
the qualifying payment amount, with no additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(B) (Example 2), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity must then consider the additional information 
submitted by the nonparticipating provider, provided the information 
relates to circumstances described in paragraphs (c)(4)(iii)(B) through 
(D) of this section and relates to the offer for the payment amount for 
the qualified IDR item or service that is the subject of the payment 
determination. In addition, the certified IDR entity should not give 
weight to information to the extent it is already accounted for by the 
qualifying payment amount or other credible information under 
paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified 
IDR entity determines that the additional information submitted by the 
provider is credible but does not relate to the offer for the payment 
amount for the qualified IDR service that is the subject of the payment 
determination, and determines that the issuer's offer best represents 
the value of the qualified IDR service, in the absence of any other 
credible information that relates to either party's offer, the 
certified IDR entity should select the issuer's offer.
    (C) Example 3--(1) Facts. A nonparticipating provider and an issuer 
are parties to a payment determination in the Federal IDR process 
involving an emergency department visit for the evaluation and 
management of a patient. The provider submits an offer that is higher 
than the qualifying payment amount. The provider also submits 
additional written information showing that the acuity of the patient's 
condition and complexity of the qualified IDR service furnished 
required the taking of a comprehensive history, a comprehensive 
examination, and medical decision making of high complexity. This 
information is determined to be credible by the certified IDR entity. 
The issuer submits an offer equal to the qualifying payment amount for 
CPT code 99285, which is the CPT code for an emergency department visit 
for the evaluation and management of a patient requiring a 
comprehensive history, a comprehensive examination, and medical 
decision making of high complexity. The issuer also submits additional 
written information showing that this CPT code accounts for the acuity 
of the patient's condition. This information is determined to be 
credible by the certified IDR entity. The certified IDR entity 
determines that the information provided by the provider and issuer 
relates to the offer for the payment amount for the qualified IDR 
service that is the subject of the payment determination. Neither party 
submits any additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(C) (Example 3), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity then must consider the additional information 
submitted by the parties, but the certified IDR entity should not give 
weight to information to the extent it is already accounted for by the 
qualifying payment amount or other credible information under 
paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified 
IDR entity determines the additional information on the acuity of the 
patient and complexity of the service is already accounted for in the 
calculation of the qualifying payment amount, the certified IDR entity 
should not give weight to the additional information provided by the 
provider. If the certified IDR entity determines that the issuer's 
offer best represents the value of the qualified IDR service, the 
certified IDR entity should select the issuer's offer.
    (D) Example 4--(1) Facts. A nonparticipating emergency facility and 
an issuer are parties to a payment determination in the Federal IDR 
process. Although the facility is not participating in the issuer's 
network during the relevant plan year, it was a participating facility 
in the issuer's network in the previous 4 plan years. The issuer 
submits an offer that is higher than the qualifying payment amount and 
that is equal to the facility's contracted rate (adjusted for 
inflation) for the previous year with the issuer for the qualified IDR 
service. The issuer also submits additional written information showing 
that the contracted rates between the facility and the issuer during 
the previous 4 plan years were higher than the qualifying payment 
amount submitted by the issuer, and that these prior contracted rates 
account for the case mix and scope of services typically furnished at 
the nonparticipating facility. The certified IDR entity determines this 
information is credible and that it relates to the offer submitted by 
the issuer for the payment amount for the qualified IDR service that is 
the subject of the payment determination. The facility submits an offer 
that is higher than both the qualifying payment amount and the 
contracted rate (adjusted for inflation) for the previous year with the 
issuer for the qualified IDR service. The facility also submits 
additional written information, with the intent to show that the case 
mix and scope of services available at the facility were integral to 
the service provided. The certified IDR entity determines this 
information is credible and that it relates to the offer submitted by 
the facility for the payment amount for the qualified IDR service that 
is the subject of the payment determination. Neither party submits any 
additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(D) (Example 4), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity then must consider the additional information 
submitted by the parties, but should not give weight to information to 
the extent it is already accounted for by the qualifying payment amount 
or other credible information under paragraphs (c)(4)(iii)(B) through 
(D) of this section. If the certified IDR entity determines that the 
information submitted by the facility regarding the case mix and scope 
of services available at the facility includes information that is also 
accounted for in the information the issuer submitted regarding prior 
contracted rates, then the certified IDR entity should give weight to 
that information only once. The certified IDR entity also should not 
give weight to the same information provided by the nonparticipating 
emergency facility in

[[Page 52651]]

relation to any other factor. If the certified IDR entity determines 
that the issuer's offer best represents the value of the qualified IDR 
service, the certified IDR entity should select the issuer's offer.
    (E) Example 5--(1) Facts. A nonparticipating provider and an issuer 
are parties to a payment determination in the Federal IDR process 
regarding a qualified IDR service for which the issuer downcoded the 
service code that the provider billed. The issuer submits an offer 
equal to the qualifying payment amount (which was calculated using the 
downcoded service code). The issuer also submits additional written 
information that includes the documentation disclosed to the 
nonparticipating provider under Sec.  2590.716-6(d)(1)(ii) at the time 
of the initial payment (which describes why the service code was 
downcoded). The certified IDR entity determines this information is 
credible and that it relates to the offer for the payment amount for 
the qualified IDR service that is the subject of the payment 
determination. The provider submits an offer equal to the amount that 
would have been the qualifying payment amount had the service code not 
been downcoded. The provider also submits additional written 
information that includes the documentation disclosed to the 
nonparticipating provider under Sec.  2590.716-6(d)(1)(ii) at the time 
of the initial payment. Further, the provider submits additional 
written information that explains why the billed service code was more 
appropriate than the downcoded service code, as evidence that the 
provider's offer, which is equal to the amount the qualifying payment 
amount would have been for the service code that the provider billed, 
best represents the value of the service furnished, given its 
complexity. The certified IDR entity determines this information to be 
credible and that it relates to the offer for the payment amount for 
the qualified IDR service that is the subject of the payment 
determination. Neither party submits any additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(E) (Example 5), the 
certified IDR entity must consider the qualifying payment amount, which 
is based on the downcoded service code. The certified IDR entity then 
must consider whether to give weight to additional information 
submitted by the parties. If the certified IDR entity determines that 
the additional credible information submitted by the provider 
demonstrates that the nonparticipating provider's offer, which is equal 
to the qualifying payment amount for the service code that the provider 
billed, best represents the value of the qualified IDR service, the 
certified IDR entity should select the nonparticipating provider's 
offer.
* * * * *
    (vi) * * *
    (B) The certified IDR entity's written decision must include an 
explanation of their determination, including what information the 
certified IDR entity determined demonstrated that the offer selected as 
the out-of-network rate is the offer that best represents the value of 
the qualified IDR item or service, including the weight given to the 
qualifying payment amount and any additional credible information under 
paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified 
IDR entity relies on information described under paragraphs 
(c)(4)(iii)(B) through (D) of this section in selecting an offer, the 
written decision must include an explanation of why the certified IDR 
entity concluded that this information was not already reflected in the 
qualifying payment amount.
* * * * *
    (f) * * *
    (1) * * *
    (v) * * *
    (F) The rationale for the certified IDR entity's decision, 
including the extent to which the decision relied on the criteria in 
paragraphs (c)(4)(iii)(B) through (D) of this section;
* * * * *
    (h) Applicability date. The provisions of this section are 
applicable with respect to plan years beginning on or after January 1, 
2022, except that the provisions regarding IDR entity certification at 
paragraphs (a) and (e) of this section are applicable beginning on 
October 7, 2021; and paragraphs (c)(4)(ii) through (iv) of this section 
regarding payment determinations, paragraph (c)(4)(vi)(B) of this 
section regarding written decisions, and paragraph (f)(1)(v)(F) of this 
section regarding reporting of information relating to the Federal IDR 
process are applicable with respect to items or services provided or 
furnished on or after October 25, 2022, for plan years beginning on or 
after January 1, 2022.

0
11. Section 2590.717-2 is amended by:
0
a. Revising paragraphs (b)(1) and (b)(2) introductory text;
0
b. Redesignating paragraph (b)(3) as paragraph (b)(4);
0
c. Adding a new paragraph (b)(3); and
0
d. Revising newly redesignated paragraph (b)(4)(iv)(F) and paragraph 
(c).
    The addition and revisions read as follows:


Sec.  2590.717-2   Independent dispute resolution process for air 
ambulance services.

* * * * *
    (b) * * *
    (1) In general. Except as provided in paragraphs (b)(2) and (3) of 
this section, in determining the out-of-network rate to be paid by 
group health plans and health insurance issuers offering group health 
insurance coverage for out-of-network air ambulance services, plans and 
issuers must comply with the requirements of Sec.  2590.716-8, except 
that references in Sec.  2590.716-8 to the additional circumstances in 
Sec.  2590.716-8(c)(4)(iii)(B) shall be understood to refer to 
paragraph (b)(2) of this section.
    (2) Considerations for air ambulance services. In determining which 
offer to select, in addition to considering the applicable qualifying 
payment amount(s), the certified IDR entity must consider information 
submitted by a party that relates to the following circumstances:
* * * * *
    (3) Weighing considerations. In weighing the considerations 
described in paragraph (b)(2) of this section, the certified IDR entity 
should evaluate whether the information is credible and relates to the 
offer submitted by either party for the payment amount for the 
qualified IDR service that is the subject of the payment determination. 
The certified IDR entity should not give weight to information to the 
extent it is not credible, it does not relate to either party's offer 
for the payment amount for the qualified IDR service, or it is already 
accounted for by the qualifying payment amount under Sec.  2590.716-
8(c)(4)(iii)(A) or other credible information under Sec.  2590.716-
8(c)(4)(iii)(B) through (D), except that the additional circumstances 
in Sec.  2590.716-8(c)(4)(iii)(B) shall be understood to refer to 
paragraph (b)(2) of this section.
    (4) * * *
    (iv) * * *
    (F) The rationale for the certified IDR entity's decision, 
including the extent to which the decision relied on the criteria in 
paragraph (b)(2) of this section and Sec.  2590.716-8(c)(4)(iii)(C) and 
(D);
* * * * *
    (c) Applicability date. The provisions of this section are 
applicable with respect to plan years beginning on or after January 1, 
2022, except that paragraphs (b)(1), (2), and (3) and (b)(4)(iv)(F) of 
this section regarding payment determinations are applicable with 
respect to services provided or furnished on or after October 25, 2022, 
for plan years beginning on or after January 1, 2022.

[[Page 52652]]

Department of Health and Human Services

45 CFR Subtitle A, Subchapter B

    For the reasons set forth in the preamble, the Department of Health 
and Human Services adopts as final the interim rules adding 45 CFR 
149.140, published at 86 FR 36872 (July 13, 2021), and 45 CFR 149.510 
and 149.520, published at 86 FR 55980 (October 7, 2021), with the 
following changes to 45 CFR part 149:

PART 149--SURPRISE BILLING AND TRANSPARENCY REQUIREMENTS

0
12. The authority citation for part 149 continues to read as follows:

    Authority: 42 U.S.C. 300gg-92 and 300gg-111 through 300gg-139, 
as amended.

0
13. Section 149.140 is amended by:
0
a. Adding paragraph (a)(18);
0
b. Redesignating paragraphs (d)(1)(ii) through (iv) as paragraphs 
(d)(1)(iii) through (v), respectively;
0
c. Adding a new paragraph (d)(1)(ii); and
0
d. Revising paragraph (g).
    The revisions and additions read as follows:


Sec.  149.140  Methodology for calculating qualifying payment amount.

    (a) * * *
    (18) Downcode means the alteration by a plan or issuer of a 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 qualifying payment amount than the service code 
or modifier billed by the provider, facility, or provider of air 
ambulance services.
* * * * *
    (d) * * *
    (1) * * *
    (ii) If the qualifying payment amount is based on a downcoded 
service code or modifier--
    (A) A statement that the service code or modifier billed by the 
provider, facility, or provider of air ambulance services was 
downcoded;
    (B) An explanation of why the claim was downcoded, which must 
include a description of which service codes were altered, if any, and 
a description of which modifiers were altered, added, or removed, if 
any; and
    (C) The amount that would have been the qualifying payment amount 
had the service code or modifier not been downcoded;
* * * * *
    (g) Applicability date. The provisions of this section are 
applicable for plan years or in the individual market, policy years 
beginning on or after January 1, 2022, except that paragraph (a)(18) of 
this section regarding the definition of the term ``downcode'' and 
paragraph (d)(1)(ii) of this section regarding additional information 
that must be provided if the qualifying payment amount is based on a 
downcoded service code or modifier are applicable with respect to items 
or services provided or furnished on or after October 25, 2022, for 
plan years or in the individual market, policy years beginning on or 
after January 1, 2022.

0
14. Section 149.510 is amended by:
0
a. Removing paragraph (a)(2)(viii);
0
b. Redesignating paragraphs (a)(2)(ix) through (xiii) as paragraphs 
(a)(2)(viii) through (xii), respectively; and
0
c. Revising paragraphs (c)(4)(ii)(A), (c)(4)(iii) and (iv), 
(c)(4)(vi)(B), (f)(1)(v)(F), and (h).
    The revisions read as follows:


Sec.  149.510  Independent dispute resolution process.

* * * * *
    (c) * * *
    (4) * * *
    (ii) * * *
    (A) Select as the out-of-network rate for the qualified IDR item or 
service one of the offers submitted under paragraph (c)(4)(i) of this 
section, weighing only the considerations specified in paragraph 
(c)(4)(iii) of this section (as applied to the information provided by 
the parties pursuant to paragraph (c)(4)(i) of this section). The 
certified IDR entity must select the offer that the certified IDR 
entity determines best represents the value of the qualified IDR item 
or service as the out-of-network rate.
* * * * *
    (iii) Considerations in determination. In determining which offer 
to select:
    (A) The certified IDR entity must consider the qualifying payment 
amount(s) for the applicable year for the same or similar item or 
service.
    (B) The certified IDR entity must then consider information 
submitted by a party that relates to the following circumstances:
    (1) The level of training, experience, and quality and outcomes 
measurements of the provider or facility that furnished the qualified 
IDR item or service (such as those endorsed by the consensus-based 
entity authorized in section 1890 of the Social Security Act).
    (2) The market share held by the provider or facility or that of 
the plan or issuer in the geographic region in which the qualified IDR 
item or service was provided.
    (3) The acuity of the participant, beneficiary, or enrollee 
receiving the qualified IDR item or service, or the complexity of 
furnishing the qualified IDR item or service to the participant, 
beneficiary, or enrollee.
    (4) The teaching status, case mix, and scope of services of the 
facility that furnished the qualified IDR item or service, if 
applicable.
    (5) Demonstration of good faith efforts (or lack thereof) made by 
the provider or facility or the plan or issuer to enter into network 
agreements with each other, and, if applicable, contracted rates 
between the provider or facility, as applicable, and the plan or 
issuer, as applicable, during the previous 4 plan years.
    (C) The certified IDR entity must also consider information 
provided by a party in response to a request by the certified IDR 
entity under paragraph (c)(4)(i)(A)(2) of this section that relates to 
the offer for the payment amount for the qualified IDR item or service 
that is the subject of the payment determination and that does not 
include information on factors described in paragraph (c)(4)(v) of this 
section.
    (D) The certified IDR entity must also consider additional 
information submitted by a party that relates to the offer for the 
payment amount for the qualified IDR item or service that is the 
subject of the payment determination and that does not include 
information on factors described in paragraph (c)(4)(v) of this 
section.
    (E) In weighing the considerations described in paragraphs 
(c)(4)(iii)(B) through (D) of this section, the certified IDR entity 
should evaluate whether the information is credible and relates to the 
offer submitted by either party for the payment amount for the 
qualified IDR item or service that is the subject of the payment 
determination. The certified IDR entity should not give weight to 
information to the extent it is not credible, it does not relate to 
either party's offer for the payment amount for the qualified IDR item 
or service, or it is already accounted for by the qualifying payment 
amount under paragraph (c)(4)(iii)(A) of this section or other credible 
information under paragraphs (c)(4)(iii)(B) through (D) of this 
section.
    (iv) Examples. The rules of paragraph (c)(4)(iii) of this section 
are illustrated in the following paragraphs. Each example assumes that 
the Federal IDR process applies for purposes of determining the out-of-
network rate, that both parties have submitted the information parties 
are required to submit as part of the Federal IDR process, and that the 
submitted information does not include information on factors described 
in paragraph (c)(4)(v) of this section:

[[Page 52653]]

    (A) Example 1--(1) Facts. A level 1 trauma center that is a 
nonparticipating emergency facility and an issuer are parties to a 
payment determination in the Federal IDR process. The facility submits 
an offer that is higher than the qualifying payment amount. The 
facility also submits additional written information showing that the 
scope of services available at the facility was critical to the 
delivery of care for the qualified IDR item or service provided, given 
the particular patient's acuity. This information is determined to be 
credible by the certified IDR entity. Further, the facility submits 
additional information showing the contracted rates used to calculate 
the qualifying payment amount for the qualified IDR item or service 
were based on a level of service that is typical in cases in which the 
services are delivered by a facility that is not a level 1 trauma 
center and that does not have the capability to provide the scope of 
services provided by a level 1 trauma center. This information is also 
determined to be credible by the certified IDR entity. The issuer 
submits an offer equal to the qualifying payment amount. No additional 
information is submitted by either party. The certified IDR entity 
determines that all the information submitted by the nonparticipating 
emergency facility relates to the offer for the payment amount for the 
qualified IDR item or service that is the subject of the payment 
determination.
    (2) Conclusion. In this paragraph (c)(4)(iv)(A) (Example 1), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity then must consider the additional information 
submitted by the nonparticipating emergency facility, provided the 
information relates to circumstances described in paragraphs 
(c)(4)(iii)(B) through (D) of this section and relates to the offer for 
the payment amount for the qualified IDR item or service that is the 
subject of the payment determination. If the certified IDR entity 
determines that it is appropriate to give weight to the additional 
credible information submitted by the nonparticipating emergency 
facility and that the additional credible information submitted by the 
facility demonstrates that the facility's offer best represents the 
value of the qualified IDR item or service, the certified IDR entity 
should select the facility's offer.
    (B) Example 2--(1) Facts. A nonparticipating provider and an issuer 
are parties to a payment determination in the Federal IDR process. The 
provider submits an offer that is higher than the qualifying payment 
amount. The provider also submits additional written information 
regarding the level of training and experience the provider possesses. 
This information is determined to be credible by the certified IDR 
entity, but the certified IDR entity finds that the information does 
not demonstrate that the provider's level of training and experience 
relates to the offer for the payment amount for the qualified IDR item 
or service that is the subject of the payment determination (for 
example, the information does not show that the provider's level of 
training and experience was necessary for providing the qualified IDR 
service that is the subject of the payment determination to the 
particular patient, or that the training or experience made an impact 
on the care that was provided). The nonparticipating provider does not 
submit any additional information. The issuer submits an offer equal to 
the qualifying payment amount, with no additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(B) (Example 2), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity must then consider the additional information 
submitted by the nonparticipating provider, provided the information 
relates to circumstances described in paragraphs (c)(4)(iii)(B) through 
(D) of this section and relates to the offer for the payment amount for 
the qualified IDR item or service that is the subject of the payment 
determination. In addition, the certified IDR entity should not give 
weight to information to the extent it is already accounted for by the 
qualifying payment amount or other credible information under 
paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified 
IDR entity determines that the additional information submitted by the 
provider is credible but does not relate to the offer for the payment 
amount for the qualified IDR service that is the subject of the payment 
determination, and determines that the issuer's offer best represents 
the value of the qualified IDR service, in the absence of any other 
credible information that relates to either party's offer, the 
certified IDR entity should select the issuer's offer.
    (C) Example 3--(1) Facts. A nonparticipating provider and an issuer 
are parties to a payment determination in the Federal IDR process 
involving an emergency department visit for the evaluation and 
management of a patient. The provider submits an offer that is higher 
than the qualifying payment amount. The provider also submits 
additional written information showing that the acuity of the patient's 
condition and complexity of the qualified IDR service furnished 
required the taking of a comprehensive history, a comprehensive 
examination, and medical decision making of high complexity. This 
information is determined to be credible by the certified IDR entity. 
The issuer submits an offer equal to the qualifying payment amount for 
CPT code 99285, which is the CPT code for an emergency department visit 
for the evaluation and management of a patient requiring a 
comprehensive history, a comprehensive examination, and medical 
decision making of high complexity. The issuer also submits additional 
written information showing that this CPT code accounts for the acuity 
of the patient's condition. This information is determined to be 
credible by the certified IDR entity. The certified IDR entity 
determines that the information provided by the provider and issuer 
relates to the offer for the payment amount for the qualified IDR 
service that is the subject of the payment determination. Neither party 
submits any additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(C) (Example 3), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity then must consider the additional information 
submitted by the parties, but the certified IDR entity should not give 
weight to information to the extent it is already accounted for by the 
qualifying payment amount or other credible information under 
paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified 
IDR entity determines the additional information on the acuity of the 
patient and complexity of the service is already accounted for in the 
calculation of the qualifying payment amount, the certified IDR entity 
should not give weight to the additional information provided by the 
provider. If the certified IDR entity determines that the issuer's 
offer best represents the value of the qualified IDR service, the 
certified IDR entity should select the issuer's offer.
    (D) Example 4--(1) Facts. A nonparticipating emergency facility and 
an issuer are parties to a payment determination in the Federal IDR 
process. Although the facility is not participating in the issuer's 
network during the relevant plan year, it was a participating facility 
in the issuer's network in the previous 4 plan years. The issuer 
submits an offer that is higher than the qualifying payment amount and 
that is equal to the facility's contracted rate (adjusted for 
inflation) for the previous year with the issuer for the qualified IDR 
service. The issuer also submits additional written

[[Page 52654]]

information showing that the contracted rates between the facility and 
the issuer during the previous 4 plan years were higher than the 
qualifying payment amount submitted by the issuer, and that these prior 
contracted rates account for the case mix and scope of services 
typically furnished at the nonparticipating facility. The certified IDR 
entity determines this information is credible and that it relates to 
the offer submitted by the issuer for the payment amount for the 
qualified IDR service that is the subject of the payment determination. 
The facility submits an offer that is higher than both the qualifying 
payment amount and the contracted rate (adjusted for inflation) for the 
previous year with the issuer for the qualified IDR service. The 
facility also submits additional written information, with the intent 
to show that the case mix and scope of services available at the 
facility were integral to the service provided. The certified IDR 
entity determines this information is credible and that it relates to 
the offer submitted by the facility for the payment amount for the 
qualified IDR service that is the subject of the payment determination. 
Neither party submits any additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(D) (Example 4), the 
certified IDR entity must consider the qualifying payment amount. The 
certified IDR entity then must consider the additional information 
submitted by the parties, but should not give weight to information to 
the extent it is already accounted for by the qualifying payment amount 
or other credible information under paragraphs (c)(4)(iii)(B) through 
(D) of this section. If the certified IDR entity determines that the 
information submitted by the facility regarding the case mix and scope 
of services available at the facility includes information that is also 
accounted for in the information the issuer submitted regarding prior 
contracted rates, then the certified IDR entity should give weight to 
that information only once. The certified IDR entity also should not 
give weight to the same information provided by the nonparticipating 
emergency facility in relation to any other factor. If the certified 
IDR entity determines that the issuer's offer best represents the value 
of the qualified IDR service, the certified IDR entity should select 
the issuer's offer.
    (E) Example 5--(1) Facts. A nonparticipating provider and an issuer 
are parties to a payment determination in the Federal IDR process 
regarding a qualified IDR service for which the issuer downcoded the 
service code that the provider billed. The issuer submits an offer 
equal to the qualifying payment amount (which was calculated using the 
downcoded service code). The issuer also submits additional written 
information that includes the documentation disclosed to the 
nonparticipating provider under Sec.  149.140(d)(1)(ii) at the time of 
the initial payment (which describes why the service code was 
downcoded). The certified IDR entity determines this information is 
credible and that it relates to the offer for the payment amount for 
the qualified IDR service that is the subject of the payment 
determination. The provider submits an offer equal to the amount that 
would have been the qualifying payment amount had the service code not 
been downcoded. The provider also submits additional written 
information that includes the documentation disclosed to the 
nonparticipating provider under Sec.  149.140(d)(1)(ii) at the time of 
the initial payment. Further, the provider submits additional written 
information that explains why the billed service code was more 
appropriate than the downcoded service code, as evidence that the 
provider's offer, which is equal to the amount the qualifying payment 
amount would have been for the service code that the provider billed, 
best represents the value of the service furnished, given its 
complexity. The certified IDR entity determines this information to be 
credible and that it relates to the offer for the payment amount for 
the qualified IDR service that is the subject of the payment 
determination. Neither party submits any additional information.
    (2) Conclusion. In this paragraph (c)(4)(iv)(E) (Example 5), the 
certified IDR entity must consider the qualifying payment amount, which 
is based on the downcoded service code. The certified IDR entity then 
must consider whether to give weight to additional information 
submitted by the parties. If the certified IDR entity determines that 
the additional credible information submitted by the provider 
demonstrates that the nonparticipating provider's offer, which is equal 
to the qualifying payment amount for the service code that the provider 
billed, best represents the value of the qualified IDR service, the 
certified IDR entity should select the nonparticipating provider's 
offer.
* * * * *
    (vi) * * *
    (B) The certified IDR entity's written decision must include an 
explanation of their determination, including what information the 
certified IDR entity determined demonstrated that the offer selected as 
the out-of-network rate is the offer that best represents the value of 
the qualified IDR item or service, including the weight given to the 
qualifying payment amount and any additional credible information under 
paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified 
IDR entity relies on information described under paragraphs 
(c)(4)(iii)(B) through (D) of this section in selecting an offer, the 
written decision must include an explanation of why the certified IDR 
entity concluded that this information was not already reflected in the 
qualifying payment amount.
* * * * *
    (f) * * *
    (1) * * *
    (v) * * *
    (F) The rationale for the certified IDR entity's decision, 
including the extent to which the decision relied on the criteria in 
paragraphs (c)(4)(iii)(B) through (D) of this section;
* * * * *
    (h) Applicability date. The provisions of this section are 
applicable with respect to plan years or in the individual market 
policy years beginning on or after January 1, 2022, except that the 
provisions regarding IDR entity certification at paragraphs (a) and (e) 
of this section are applicable beginning on October 7, 2021; and 
paragraphs (c)(4)(ii) through (iv) of this section regarding payment 
determinations, paragraph (c)(4)(vi)(B) of this section regarding 
written decisions, and paragraph (f)(1)(v)(F) of this section regarding 
reporting of information relating to the Federal IDR process are 
applicable with respect to items or services provided or furnished on 
or after October 25, 2022, for plan years or in the individual market 
policy years beginning on or after January 1, 2022.

0
15. Section 149.520 is amended by:
0
a. Revising paragraphs (b)(1) and (b)(2) introductory text;
0
b. Redesignating paragraph (b)(3) as paragraph (b)(4);
0
c. Adding a new paragraph (b)(3); and
0
d. Revising newly redesignated paragraph (b)(4)(iv)(F) and paragraph 
(c).
    The addition and revisions read as follows:


Sec.  149.520   Independent dispute resolution process for air 
ambulance services.

* * * * *
    (b) * * *
    (1) In general. Except as provided in paragraphs (b)(2) and (3) of 
this section, in determining the out-of-network rate to be paid by 
group health plans and health insurance issuers offering group

[[Page 52655]]

or individual health insurance coverage for out-of-network air 
ambulance services, plans and issuers must comply with the requirements 
of Sec.  149.510, except that references in Sec.  149.510 to the 
additional circumstances in Sec.  149.510(c)(4)(iii)(B) shall be 
understood to refer to paragraph (b)(2) of this section.
    (2) Considerations for air ambulance services. In determining which 
offer to select, in addition to considering the applicable qualifying 
payment amount(s), the certified IDR entity must consider information 
submitted by a party that relates to the following circumstances:
* * * * *
    (3) Weighing considerations. In weighing the considerations 
described in paragraph (b)(2) of this section, the certified IDR entity 
should evaluate whether the information is credible and relates to the 
offer submitted by either party for the payment amount for the 
qualified IDR service that is the subject of the payment determination. 
The certified IDR entity should not give weight to information to the 
extent it is not credible, it does not relate to either party's offer 
for the payment amount for the qualified IDR service, or it is already 
accounted for by the qualifying payment amount under Sec.  
149.510(c)(4)(iii)(A) or other credible information under Sec.  
149.510(c)(4)(iii)(B) through (D), except that the additional 
circumstances in Sec.  149.510(c)(4)(iii)(B) shall be understood to 
refer to paragraph (b)(2) of this section.
    (4) * * *
    (iv) * * *
    (F) The rationale for the certified IDR entity's decision, 
including the extent to which the decision relied on the criteria in 
paragraph (b)(2) of this section and Sec.  149.510(c)(4)(iii)(C) and 
(D);
* * * * *
    (c) Applicability date. The provisions of this section are 
applicable with respect to plan years, or in the individual market, 
policy years, beginning on or after January 1, 2022, except that 
paragraphs (b)(1), (2), and (3) and (b)(4)(iv)(F) of this section 
regarding payment determinations are applicable with respect to 
services provided or furnished on or after October 25, 2022, for plan 
years or in the individual market policy years beginning on or after 
January 1, 2022.

[FR Doc. 2022-18202 Filed 8-24-22; 11:15 am]
BILLING CODE 4830-01-4510-29-4120-01-P

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