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IRS Provides More Guidance for Calculating No Surprises Act’s Qualifying Payment Amount

EBIA  

EBIA  

Notice 2022-11 (Mar. 18, 2022)

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

The IRS has issued Notice 2022-11 with guidance for calculating the No Surprises Act’s qualifying payment amount (QPA) for items and services furnished in 2022, when a health plan does not have sufficient information to calculate the amount under Revenue Procedure 2022-11. As background, the No Surprises Act, enacted as part of the Consolidated Appropriations Act, 2021 (CAA), expanded patient protections to shield individuals from surprise bills for certain out-of-network emergency, air ambulance, and non-emergency services (see our Checkpoint article). Participants 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.

Regulations issued in July 2021 provide that for an item or service furnished during 2022, the 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). Revenue Procedure 2022-11 advised that for 2022, the combined percentage increase to adjust the median contracted rate is 1.0648523983 (see our Checkpoint article). Notice 2022-11 addresses items or services furnished in 2022 for which a plan or insurer does not have sufficient information to calculate the median of the contracted rates in 2019. In this situation, the QPA must be calculated by multiplying the median of the in-network allowed amounts for the same or similar item or service provided in the geographic region in 2021, drawn from any eligible database, by the percentage increase of 1.0299772040. (The July 2021 regulations provide detailed guidelines for identifying an “eligible database.”) For a newly covered item or service furnished in 2022, the QPA must be calculated by multiplying the median of the in-network allowed amounts for the same or similar item or service provided in the geographic region in 2021, drawn from any eligible database, by the percentage increase of 1.0299772040.

EBIA Comment: 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 rules for 2022, keeping in mind that 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.3 (“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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