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IRS Announces Indexing Factor to Calculate No Surprises Act’s Qualifying Payment Amount for 2022

Revenue Procedure 2022-11 (Dec. 28, 2021)

Available at https://www.irs.gov/pub/irs-drop/rp-22-11.pdf

The IRS has issued Revenue Procedure 2022-11, which provides the indexing factor to be used by group health plans and insurers to calculate the qualifying payment amount (QPA) under the No Surprises Act for items or services provided on or after January 1, 2022, and before January 1, 2023. As background, the No Surprises Act was enacted in December 2020 as part of the Consolidated Appropriations Act, 2021 (CAA) to protect individuals from surprise bills for emergency services, air ambulance services furnished by a nonparticipating provider (i.e., an out-of-network provider or other provider that does not have a contractual relationship with the plan), and non-emergency services furnished by a nonparticipating provider at an in-network facility in certain circumstances (see our Checkpoint article). Participants in group health plans or insurance coverage pay cost-sharing for items and services that fall within the CAA’s scope based on the “recognized amount,” rather than the plan’s out-of-network cost-sharing. The recognized amount generally will be the lesser of the QPA (which is based on the plan’s median in-network rate for an item or service) and the amount billed by the provider—unless an amount is prescribed by state law or an all-payer model agreement between CMS and a state.

Regulations provide that for an item or service furnished during 2022, the group health plan or insurer must calculate the QPA by increasing the median contracted rate for the same or similar item or service under the plan or coverage as of January 31, 2019, by the combined percentage increase in the consumer price index for all urban consumers (U.S. city average) (CPI-U) over 2019, 2020, and 2021 (see our Checkpoint article). This revenue procedure advises that for 2022, the IRS has determined that the combined percentage increase to adjust the median contracted rate is 1.0648523983. After applying the percentage increase, group health plans and insurers may round any resulting QPA to the nearest dollar.

EBIA Comment: This indexing factor is a crucial piece of the surprise billing puzzle. Those responsible for calculating the QPA on behalf of group health plans and insurers will need to take note of this guidance as they implement these complex new rules for 2022. Also, the 2022 QPAs will form the baseline for further indexing in future years. For more information, see EBIA’s Health Care Reform manual at Section XII.B.3 (“Surprise Medical Billing: Emergency and Non-Emergency Services”) and EBIA’s Group Health Plan Mandates manual at Section XIII.B.4 (“Expanded Patient Protections: Surprise Medical Billing (Emergency and Non-Emergency Services)”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.C (“Federally Mandated Benefits”).

Contributing Editors: EBIA Staff.

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