On August 19, 2022, the Department of Health and Human Services (HHS), Department of Labor (DOL), and Department of the Treasury (DOT), released “Requirements Related to Surprise Billing: Final Rules” (the Rules). The Rules change and finalize the prior interim final rules concerning the information health insurers must share regarding the qualifying payment amount (QPA) and the independent dispute resolution (IDR) process under the No Surprises Act.  The Rules address comments received pertaining to the interim final rules as well as the recent judicial decisions in Texas Medical Association[1]and LifeNet. [2]


Among other things, the No Surprises Act created an independent dispute resolution (IDR) process to handle payment disputes that arise between health care providers and health insurers when out-of-network providers disagree with a payment amount offered by a health insurer. If negotiations between the health insurer and provider fail to reach an agreement on the payment amount, the IDR process can be initiated to have an independent arbitrator determine the payment amount. One of the critical factors the arbitrator is to consider is the QPA which, under the No Surprises Act, is generally the median in-network contracted rate for a specific service in the same geographic region.

Qualifying Payment Amount

The Rules finalize the interim final rule requiring health plans to disclose to providers the QPA for each item or service with each initial payment or notice of denial of payment when the QPA is the basis for cost sharing. The Rules also address concerns about the process of “downcoding,” which affects the QPA due to health insurers altering service codes or modifiers to ones considered more appropriate for the service(s) rendered. The prior interim final rules treatment of downcoding created concerns that the QPA considered in the IDR process might be one calculated for a lower-level service code rather than the one specified in the claim for reimbursement without adequate notice and information to the provider, thereby precluding the opportunity to meaningfully engage in open negotiations. The Rules now create a definition for “downcoding” to mean the insurer’s alteration of the service code to another service code or the alteration, addition, or removal by an insurer 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. Under the Rules, if a QPA is based on a downcoded service code or modifier, the insurer must provide the QPA at the outset, as well as the following:

  • A statement that the service code or modifier was downcoded;
  • An explanation of why the code or modifier was downcoded; and
  • The QPA if the service code or modifier was not downcoded

Independent Dispute Resolution

The Rules also address portions of the IDR process that were previously found unlawful by the United States District Court for the Eastern District of Texas in the cases of Texas Medical Association and LifeNet. The District Court invalidated those portions of the interim final rules that required the IDR arbitrator to select the parties’ offer  closest to the QPA unless credible information that the QPA was materially different than the appropriate out-of-network rate was presented, which was seen as creating a rebuttable presumption in favor of the QPA. Under the Rules, the IDR arbitrator must now consider the QPA and then all other permissible information to determine which party’s offer best represents the value of the qualified item or service.  The Rules also set forth parameters for determining the credibility of information submitted and ensuring that additional information evaluated is not double-counted. The Rules also finalize the interim final rule that all decisions should be accompanied by a written decision explaining how the selected offer represents the appropriate out-of-network rate, including information regarding the weight given to the QPA and any other credible information.

[1]           Texas Medical Association, v. United States Department of Health and Human Services, Dkt. No. 6:21-cv-425, 2022 WL 597141 (E.D. Tex. Feb. 23, 2022).

[2]           LifeNet, Inc. v. United States Department of Health and Human Services, et al., Case No. 6:22-cv-162 (E.D. Tex. July 26, 2022).