The qualifying payment amount (QPA) is the basis for determining individual cost sharing for items and services covered by the balance-billing protections in the No Surprises Act (NSA), under certain circumstances.
- Cost-sharing for emergency items and services and non-emergency items and services furnished by an out-of-network provider in an in-network facility must be based on the lesser of billed charges or the QPA, where an All-Payer Model Agreement under section 1115A of the Soc.
Sec. Act or a specified state law does not apply.
- Cost-sharing for air ambulances services must be based on the lesser of billed charges or the QPA.
Certified Independent Dispute Resolution (IDR) entities are required to consider the QPA when selecting between the offer submitted by a plan or issuer and the offer submitted by a facility or provider or provider of air ambulance services when determining the total out-of-network payment rate for items and services subject to the federal IDR process.
What is Qualifying Payment Amount (QPA)?
The QPA for a given item or service is generally the median contracted rate on January 31, 2019 for the same or similar item or service, increased for inflation.
Median Contracted Rate
The median contracted rate for an item or service is determined by:
- Identifying the contracted rates of all plans of the plan sponsor (or of the administering entity, if applicable) or all coverage offered by the issuer in the same insurance market for the same or similar item or service that is provided by a provider in the same or similar specialty or facility of the same or similar facility type and provided in the geographic region in which the item or service is furnished.
- Arranging the contracted rates from least to greatest, and selecting the middle number (or the average of the middle two numbers, if there are an even number of contracted rates).
The contracted rate is the total amount (including cost sharing) that a group health plan or health insurance issuer has contractually agreed to pay a participating provider, facility, or provider of air ambulance services for covered items and services, whether directly or indirectly, including through a third-party administrator (TPA) or pharmacy benefit manager (PBM).
Contracted Rate – Rules & Exclusions
The amount negotiated under each contract is treated as a separate amount.
- Excludes rates paid under single case agreements, letters of agreement, or similar arrangements between a provider, facility, or provider of air ambulance services and a plan or issuer, used to supplement the network of the plan for a specific enrollee, participant, or beneficiary in unique circumstances.
The rate negotiated under a contract constitutes a single contracted rate regardless of the number of claims paid at that contracted rate.
If a plan or issuer has:
Separate contracts with individual providers → rate under each contract constitutes a single contracted rate (even if the same rate is paid to other providers under separate contracts).
A single contract with a provider group or facility, with the same negotiated rate applying to all providers in the group/facility→ rate negotiated with that provider group or facility is treated as a single contracted rate.
A single contract with multiple providers, with separate negotiated rates with each particular provider → each unique contracted rate constitutes a single contracted rate for purposes of determining the median contracted rate.
Same Insurance Market
“Insurance market” is defined as:
o Individual market (excludes short-term, limited-duration insurance).
o Small group market.
o Large group market.
For self-insured group health plans, “insurance market” means:
o All self-insured group health plans (other than account-based plans and plans that consist
solely of excepted benefits) of the plan sponsor, or
o At the option of the plan sponsor, all self-insured group health plans administered by the
same entity (including a TPA contracted by the plan) that’s responsible for calculating the
QPA on behalf of the plan.
Any plan or coverage that is not a “group health plan” or “group or individual health insurance coverage” offered by a “health insurance issuer,” as those terms are defined in the Code, ERISA, and the PHS Act, such as a Medicare Advantage or Medicaid managed care organization plan, must also not be included in any insurance market for purposes of
determining the QPA.
Relevant market is determined irrespective of the state.
All markets exclude coverage that consists solely of excepted benefits.
Same or Similar Item or Service
Defined as a health care item or service billed under the same service code, or a comparable code under a different procedural code system.
Service code: the code that describes an item or service, including a Current Procedural Terminology (CPT), Healthcare Common Procedure Coding System (HCPCS), or Diagnosis-Related Group (DRG) code.
Same or Similar Item or Service – Modifiers
Modifiers: codes that are applied to the service code to provide a more specific description of the furnished item or service and that may adjust the payment rate or affect the processing or payment of the code billed.
Median contracted rates must be calculated separately for CPT code modifiers that distinguish the professional services component (“26”) from the technical component (“TC”).
If application of a modifier causes contracted rates to vary, the plan or issuer must calculate a separate median contracted rate for each such service code-modifier combination.
Modifiers that don’t cause contracted rates to vary must not be taken into account when calculating the median contracted rate.
Provider in the Same or Similar Specialty
Defined as the practice specialty of a provider, as identified by the plan or issuer consistent with the plan’s or issuer’s usual business practice.
With respect to air ambulance services, all providers of air ambulance services are considered to be a single provider specialty.
If a plan or issuer has contracted rates for a service code that vary based on provider specialty, the median contracted rate is calculated separately for each provider specialty.
Facility of the Same or Similar Facility Type
Defined to mean, with respect to emergency services, either an emergency department (ED) of a hospital or an independent freestanding emergency department (IFED).
If a plan’s or issuer’s contracted rates for emergency services vary based on the type of facility (that is, whether a facility is a hospital ED or an IFED, the median contracted rate is
calculated separately for each facility type.
Note: Plans and issuers may not separately calculate a median contracted rate based on other characteristics of facilities that might cause contracted rates to vary, such as whether a hospital is an academic medical center or teaching hospital.
If a plan or issuer does not have sufficient information to calculate a median contracted rate for the geographic regions under the primary definition, geographic regions are defined according to the first alternative definition.
If the plan or issuer still does not have sufficient information after applying these broader regions, geographic regions are defined using the second alternative definition (N/A for air ambulance services).
Note: MSAs that cross state boundaries are divided between the respective states, with all the counties in a particular MSA in each state counted as a geographic region.
Geographic region to be applied for air ambulance services is determined by the point of pickup, meaning the location of the individual at the time the individual is placed on board the air ambulance.
Non-Fee-for-Service Contractual Arrangements
QPA methodology establishes an approach for calculating a median contracted rate where
payment for an item or service is not fully on a fee-for-service basis (e.g., under bundled and fully- or partially-capitated arrangements).
General approach: The plan or issuer must calculate a median contracted rate for each item or service using the underlying fee schedule rates (if available) for the relevant items and services.
Underlying fee schedule rate: the rate for a covered item or service that a group health
plan or health insurance issuer uses to determine an individual’s cost-sharing liability for the item or service, when that rate is different from the contracted rate.
Alternative approach: If there is no underlying fee schedule rate, the plan or issuer must
calculate the median contracted rate using a derived amount, which is the price that a plan or issuer assigns an item or service for the purpose of internal accounting, reconciliation with providers, or for the purpose of submitting data in accordance with 45 CFR 153.710(c).
When calculating median contracted rates, plans and issuers must exclude risk sharing,
bonus, or penalty, and other incentive-based and retrospective payments or payment
Cases With Insufficient Information
An alternative process is used to determine the QPA in cases where a group health plan or health insurance issuer offering group or individual health insurance coverage lacks sufficient information to calculate the median of contracted rates in 2019, as well as for newly covered items or services in the first coverage year after 2019.
In cases in which a plan or issuer does not have “sufficient information” to calculate a median contracted rate, the plan or issuer must determine the QPA using an eligible database.
Rule: A plan or issuer has sufficient information to calculate the median of contracted rates for an item or service if the plan or issuer has at least three contracted rates on 1/31/2019.
Where a plan or issuer does not have sufficient information to calculate the median contracted rate based on 1/31/2019 contracted rates (or for new plans and coverage or new service codes) but later gains sufficient information, the plan or issuer must calculate the QPA using the median contracted rate for the first sufficient information year.
Qualifying Payment Amount (QPA) – Database Eligibility Requirements
Where a plan or issuer does not have sufficient information to calculate a median contracted rate, the plan or issuer must determine the QPA using an eligible database.
A third-party database may be an eligible database if it satisfies all of the following conditions:
o No conflicts of interest.
o Has sufficient information regarding in-network allowed amounts paid to a health care providers or facilities for relevant items/services furnished in the applicable geographic region.
o Has the ability to distinguish amounts paid to participating providers and facilities by commercial payers from all other claims data.
State all-payer claims databases have been deemed categorically eligible.
Determining the QPA Using an Eligible Database
To calculate the QPA for an item or service furnished during 2022 (or for newly covered items or services, in the first coverage year) using an eligible database, a plan or issuer must:
- First, identify the rate in the database that is equal to the median of the in-network allowed amounts for the same or similar item or service in the geographic region in the year immediately preceding the year in which the item or service is furnished (or for a newly covered item or service, the year immediately preceding the first coverage year).
- Then, increase the median in-network allowed amount by the percentage increase in the CPI–U over the preceding year.
For each subsequent year before the first sufficient information year, the plan or issuer must increase the QPA applicable in the immediately preceding year by the percentage increase in the CPI–U over the preceding year.
Consistency requirement: A plan or issuer that uses a database to determine the QPA for an item or service must use the same database to determine the QPA for that item or service through the last day of the calendar year.
- If a different database is selected for some items or services, the basis for that selection must be one or more factors not directly related to the rate of those items or services (e.g., the sufficiency of data for those items or services).
Plan or issuer is responsible for the costs associated with using an eligible database to determine the QPA.
New Plans or Coverage
In cases where a sponsor of group health plan or a health insurance issuer is newly offering a plan or coverage in a geographic region in a year after 2019:
- If the plan or issuer otherwise has sufficient information to calculate a median contracted rate in 2019 in the geographic region where the item or service is furnished (e.g., where the sponsor or issuer has sufficient existing provider contracts under other current coverage in the geographic region), the QPA is determined using the standard methodology.
- If the plan or issuer does not have sufficient information to calculate a median contracted rate in 2019 in the geographic region (e.g., where the sponsor or issuer did not offer any plan or coverage in 2019), for items and services in the first year in which the plan or coverage is offered in the geographic region, the QPA is determined according to the rules that generally apply when there’s insufficient information to calculate a median contracted rate, or for newly covered items and services, including the use of an eligible database.
To calculate the QPA for items and services furnished in a subsequent year, the plan or issuer must increase the QPA for items or services furnished in the immediately preceding year by the percentage increase in the CPI–U over the previous year.
New Service Code
Defined as a service code that was created or substantially revised in a year after 2019.
In situations in which a plan or issuer is billed for a covered item or service using a new service code, the plan or issuer must determine the QPA as follows:
- Step 1: Identify a reasonably related service code that existed in the immediately preceding year (e.g., another service code within the same family of codes, or a code for
services that represent similar relative value units).
- Step 2: Calculate the applicable relativity ratio.
- If the Medicare program has established a payment rate for an item or service billed under the new service code, the plan or issuer must: calculate the ratio of the Medicare payment rate for the item or service billed under the new service code compared to the Medicare payment rate for the item or service under the related service code (with both rates disregarding any adjustments for value-based purchasing arrangements).
- If the Medicare program has not established a payment rate for an item or service billed under the new service code, the plan or issuer must calculate the ratio of the rate that the plan or issuer pays for an item or service billed under the new service code compared to the rate that the plan or issuer pays for an item or service under the related service code.
3. Step 3: Multiply the ratio in step 2 by the QPA for the related service code for the year in which the item or service is furnished.
Information To Be Shared About the QPA: Required Disclosures
The July 2021 interim final rules require that plans and issuers make certain disclosures with each initial payment or notice of denial of payment, and that plans and issuers must provide additional information upon request of the provider, facility, or provider of air ambulance services.
• First, a plan or issuer must provide the QPA for each item or service involved.
• Second, a plan or issuer must provide a statement certifying that:
(1) The QPA applies for purposes of the recognized amount (or, in the case of air ambulance services, for calculating the participant’s, beneficiary’s, or enrollee’s cost sharing), and
(2) each QPA shared with the provider, facility, or provider of air ambulance services was determined in compliance with the methodology outlined in the July 2021 interim final rules.
• Third, a plan or issuer must provide a statement informing the provider, facility, or provider of air ambulance services that they may initiate the 30-day open negotiations period, and if that fails to produce a determination, they may initiate the federal IDR process within 4 days of the end of open negotiations.
• Fourth, the plan or issuer must also provide contact information for the appropriate office or person to initiate open negotiations.
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