On January 14, 2025, the Departments of Labor, Health and Human Services, and the Treasury (the Departments) issued new FAQs regarding the implementation of the No Surprises Act (NSA) and the Transparency provisions of the Consolidated Appropriations Act, 2021 (CAA). The FAQs address qualifying payment amount (QPA) enforcement discretion, required NSA disclosures to providers and parameters of the gag clause prohibition.
Impact of TMA III decision and appeal
As discussed in a prior alert, the August 24, 2023 Texas Medical Association III decision by the United States District Court for the Eastern District of Texas vacated several provisions of the July 2021 interim final rules and related guidance documents regarding calculation. This decision had significant implications for the QPA methodology, and the Departments deferred enforcement of the new methodology until November 1, 2024 (see related alert).
On October 30, 2024, the Fifth Circuit reversed several of the key holdings of the district court. This again upended the QPA requirements in a third iteration of the methodology just as payors had spent more than a year ensuring compliance with the TMA III district court’s calculation rules. The appeal reinstated some 2021 QPA provisions while other critical calculation rules remained vacated by the 2023 decision. However, the Fifth Circuit’s mandate has not yet issued because a motion for rehearing en banc is currently pending.
To address these challenges, the FAQs provide that the Departments have extended enforcement discretion for payors using the original 2021 methodology to August 1, 2025. Payors may also continue to rely on QPAs calculated using a good faith, reasonable interpretation of the district court’s 2023 methodology until the Fifth Circuit's mandate issues. Once the mandate is issued, enforcement discretion will also apply to QPAs calculated using the 2023 methodology for dates of service before August 1, 2025.
Required disclosures to providers and open negotiation periods
The FAQs address required disclosures to providers with the initial payment or notice of denial. The NSA requires payors to determine coverage and send an initial payment or notice of denial of payment to nonparticipating providers within 30 calendar days after receiving a claim. Plans and issuers must provide a statement certifying that the QPA applies for purposes of the recognized amount and that each QPA was determined in compliance with applicable regulations. Given the uncertainty of three alternative QPA methodologies being applied during the enforcement discretion period, enforcement discretion will similarly apply to disclosures if the QPA was calculated using the 2021 or 2023 methodology for dates of service before August 1, 2025.
However, the FAQs address the scenario where disclosures are provided after the initial payment or notice of denial. The Departments note that payors’ inability to send the disclosures electronically “does not relieve [them] from the requirement to provide required disclosures” and that they “are aware of instances where [providers receive disclosures] many days later than they receive the initial payment or notice of denial of payment.” The FAQs clarify that if the required disclosures are received later than the initial payment or notice of denial of payment, the period to initiate open negotiation will end 30 business days after receiving both the initial payment or notice of denial of payment and the required disclosures.
Cost-sharing adjustments following IDR are prohibited
The Departments warn payors against adjusting member cost-sharing after a payment determination in independent dispute resolution (IDR). They remind payors that cost-sharing must be based upon the “recognized amount,” which, unless separately set by the state, is the lesser of QPA and billed charges. The recognized amount does not change based on a payment determination in IDR, so adjustment of member cost-sharing following IDR is prohibited.
Gag clause prohibition and scope of impermissible access restrictions
In the FAQs, the Departments issued additional guidance regarding the CAA’s gag clause prohibition. Specifically, the CAA prohibits group health plans and health insurance issuers from entering into agreements with health care providers, networks, TPAs or other service providers that restrict the plan or issuer from:
- Making provider-specific cost or quality of care information available to participants, beneficiaries, enrollees, plan sponsors or referring providers
- Electronically accessing de-identified claims and encounter information or data for each participant, beneficiary or enrollee
- Sharing such information or data with a business associate, consistent with applicable privacy regulations
The Departments reiterate that plans and issuers must ensure that their agreements with TPAs or other service providers do not indirectly restrict the plan or issuer from sharing relevant information or data. This includes ensuring that downstream agreements entered into by TPAs or service providers do not contain prohibited gag clauses. They encourage plans and issuers to include provisions in their direct contracts with TPAs or service providers that prohibit entering into downstream agreements that restrict the sharing of information or data.
The FAQs also address what restrictions on access would run afoul of the gag clause prohibition statute. As an example, the Departments state that allowing a plan to share data with a business associate only within the discretion of the service provider could be an impermissible restriction on access. Other examples noted by the Departments include limiting access to a “minimum necessary number of de-identified claims, limiting access to specific narrow purposes, unreasonably limiting the frequency of claims reviews or providing de-identified data only on the service provider’s physical premises.
Finally, the Departments address the annual attestation requirement in the case of non-compliance. Plans and issuers must annually submit an attestation of compliance with the gag clause prohibition. The first attestation was due by December 31, 2023, covering the period from December 27, 2020, through the date of attestation. Subsequent attestations are due by December 31 of each year, covering the period since the preceding attestation.
If a plan or issuer is aware of an agreement that violates the gag clause prohibition and has been unable to remove the non-compliant provision, they must identify the non-compliant provision as part of their attestation. This includes providing details about the prohibited gag clause, the TPA or service provider involved, and the steps taken to achieve compliance. Plans and issuers that do not submit an attestation may be subject to enforcement action.
Conclusion
The January 14, 2025 FAQs provide critical guidance on the implementation of the NSA and the gag clause prohibition. The extended enforcement discretion for QPA calculations and the detailed requirements for disclosures and gag clause attestations highlight the importance of diligent compliance efforts in navigating the evolving regulatory landscape.
For further information or assistance with compliance, please contact Alex Lucas or the Reed Smith attorney with whom you normally work.
Client Alert 2025-014