The No Surprises Act – and all its provisions – went into effect on January 1, 2022. Signed into law in December 2020 as part of a COVID-19 relief bill, The No Surprises Act was designed to minimize unexpected (“surprise”) medical bills for patients who received unavoidable out-of-network medical care, and to eliminate out-of-network cost-sharing.
A key provision of the No Surprises Act is in its Qualifying Payment Amount, or QPA. Accurate calculation of the QPA determines final payment for out-of-network services subject to the No Surprises Act – critical for long-term consumer protection and healthcare sector accountability.
So, what is the Qualifying Payment Amount as defined in the No Surprises Act? How do regulators determine this amount, and what does it mean for health care providers, payers, and patients? We dive into the details to examine why the Qualifying Payment Amount (QPA) is so critical to the No Surprises Act and the healthcare marketplace itself.
What Is The No Surprises Act?
Passed as part of the H.R. 133, Omnibus Appropriations and Emergency Coronavirus Relief Act, the No Surprises Act went into effect January 1, 2022. This legislation protects patients covered under group and individual health plans from receiving “surprise” medical bills. It prohibits providers from billing patients for more than the in-network cost-sharing obligations required by their insurance.
In essence, The No Surprises Act:
- Bans surprise bills for most emergency services, even if they are out-of-network and/or without prior authorization.
- Bans out-of-network cost-sharing for most emergency and some non-emergency services. The No Surprises Act prohibits providers from charging more than in-network cost-sharing for services.
- Bans out-of-network charges and balance bills for certain additional services (like radiology or anesthesiology) performed by out-of-network providers at an in-network facility.
- Requires that providers and facilities give patients an easy-to-understand written explanation of applicable billing protections and who to contact with concerns, and requires patient consent to waive billing protections.
The No Surprises Act also enforces a process for payers and providers to negotiate the correct billing amounts for out-of-network services. It specifies a separate and independent resolution system if negotiations fail. These negotiations – and the prices they decide – hinge on the correct determination of the Qualifying Payment Amount, or QPA.
What is the Qualifying Payment Amount?
The Qualifying Payment Amount plays a substantial role in the structure of the No Surprises Act. It is defined as the median of an insurer’s contracted rates for a particular service, in a particular geography, for a particular market. They define this median based on market reports as of January 31, 2019, and adjusted per the Consumer Price Index (CPI) over 2019, 2020, and 2021. For 2022 – the first year of the No Surprises Act provisions – the IRS determined this multiplier to be 1.0648523983.
Patient cost-sharing limits for surprise out-of-network services are based on the Qualifying Payment Amount. Public reporting requires that arbitration awards are listed as a percentage of this amount.
As mentioned above, the No Surprises Act delineates a process between payers and providers to determine correct billing amounts for out-of-network services. When parties cannot agree, a provider can initiate an independent dispute resolution, or IDR. We’ll learn more about the IDR in an upcoming blog. For now – let’s remember that the Qualifying Payment Amount is integral to an arbitrator’s decision for an IDR.
Consequences of Qualifying Payment Amount
The accurate determination of Qualifying Payment Amount is not only the first and most
concrete point of guidance in arbitration – precise QPAs can directly impact health care costs. Because the QPA is central to what patients and families will pay for services, and what insurance companies will pay healthcare providers, there are real consequences of how the QPA is calculated. Further, the 2022 QPAs will form the baseline for future years’ indexing and determination, making accuracy imperative.
The No Surprises Act – and its Qualifying Payment Amount provision – is complex, and requires oversight by multiple entities. The newness and complexity of the law may create difficulty in implementation and enforcement.
With new laws come new regulations, rules, red tape, and paperwork. Moving forward, payers need reliable payment integrity partners and processes to prevent overpayment and adapt to the No Surprises Act stipulations. Alaffia Health’s turnkey solution to payment integrity helps payers avoid provider fraud, waste, and abuse of new and existing regulations. Alaffia’s integrated solutions allow payers to navigate the complexities of the changing healthcare landscape, prevent payment errors, and drive savings. Learn more today.