The U.S. Departments of Health and Human Services (HHS), Treasury and Labor recently issued an interim final regulation implementing Part 1 of the No Surprises Act, which Congress passed in December 2020. The legislation bans balance billing for out-of-network services starting in 2022 to protect patients and establishes a baseball arbitration-style independent dispute resolution (IDR) process to allow physicians and insurers to resolve their payment differences.

The California Medical Association (CMA) has been advocating for physicians on both the state and federal level to ensure there is a fair process for physicians to be appropriately paid for out-of-network services and to incent insurers to contract in good faith. A balanced process will also protect patient access to emergency and on-call services.

CMA recently submitted comments on the regulations.

Overall, CMA continues to believe that the No Surprises Act is a mostly balanced solution. However, CMA’s foremost concern is that the proposed Qualifying Payment Amount (QPA) median contracted rate is not appropriately calculated to accurately reflect prevailing median contracted rates in private markets. We believe this artificially lower median rate will cause the same problems that experienced in California after implementation of AB 72.

CMA believes the proposed methodology will result in an artificially distorted QPA that will disincentivize plans from contracting with physician specialists which will threaten patient access to in-network hospital-based physicians in emergencies, particularly safety net physicians in underserved and rural areas, and drive-up health care costs by forcing physician consolidation with hospitals or private equity just as it did in California.

While California’s AB 72 successfully protected patients from surprise bills, patients and physicians have suffered due to unintended consequences, including terminated contracts and substantial rate cuts that have depleted health plan networks and negatively impacted patient access to certain specialists. To avoid the California experience, it is essential that the QPA accurately represent median commercial contract rates paid to physicians as Congress intended.

Under the Emergency Medical Treatment and Active Labor Act (EMTALA), physicians are required to provide services to all patients presenting in the emergency department even if payors do not reimburse a reasonable amount for those services. If adequate reimbursement is not received, all hospital-based physicians, and particularly EMTALA-obligated physicians, will not be able to staff underserved areas. EMTALA-obligated physicians rely on adequate payment from commercial payors to cover the cost of providing care to the uninsured and underinsured patients. California’s AB 72 excluded emergency care, but the No Surprises Act regulations will apply to ERISA plans.  Such a distorted median payment rate will result in the degradation of the emergency care and on-call specialist care safety net and result in decreased access to care.  Areas that already have a shortage of physicians will only see the situation get worse. 

CMA believes the success of the No Surprises Act in protecting patient access to physicians and reducing patient costs hinges on health plans being appropriately incentivized to contract with physicians to ensure adequate networks.

For more information, see CMA’s comments here.