REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
January 23, 2024
FROM
WILLIAM L. GILBERT, Director, Arrowhead Regional Medical Center
SUBJECT
Title
Open Negotiations Phase and Independent Dispute Resolution Process under the Federal No Surprises Act
End
RECOMMENDATION(S)
Recommendation
Authorize the Director or the Chief Financial Officer of Arrowhead Regional Medical Center to approve the submittal of offers in the Open Negotiations Phase and Independent Dispute Resolution process under the Federal No Surprises Act for individual claims up to $4,000,000 for emergency and post-stabilization services for a period of five-years from January 23, 2024, through January 22, 2029.
(Presenter: William L. Gilbert, Director, 580-6150)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Operate in a Fiscally-Responsible and Business-Like Manner.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost) as the item will provide authority to the Arrowhead Regional Medical Center (ARMC) Director or ARMC Chief Financial Officer (CFO) to approve the ARMC Patient Accounts Department’s submittal of offers in the Open Negotiations Phase and the Independent Dispute Resolution (IDR) process under the Federal No Surprises Act (NSA), which will bring additional revenue to ARMC.
There are fees for participating in the Federal IDR process which includes, an administrative fee of $115 per dispute for 2024 and a fee as established by the certified IDR entity, when they are contracted to evaluate settlement offers from each party. The IDR entity fee is refunded to the prevailing party in a dispute.
BACKGROUND INFORMATION
Under federal law, ARMC is required to provide emergency medical care to patients that come to its emergency room, regardless of their insurance status or ability to pay. To the extent the patient has insurance through a health plan, ARMC will bill the health plan for services provided to the patient based on ARMC chargemaster rates. If ARMC has a contract with that health plan, the health plan will pay ARMC the contracted rate for the medical care provided to its member. If ARMC does not have a contract with the patient’s health plan, the health plan is generally obligated to pay the reasonable and customary value for the services.
The reasonable and customary value of the services is not fixed, and is dependent on a number of factors outlined in law. Because of this, health plans have generally not paid ARMC the full amount of billed charges when ARMC is an out-of-network provider. Instead, the health plans have made payment on what they considered reasonable and customary based on their internal formulas. If ARMC believed that the payment made by the health plan was too low, ARMC’s only recourse was to appeal the decision through the plan’s internal administrative process or file a lawsuit against the plan.
On December 27, 2020, the No Surprises Act (NSA) was signed into federal law. The NSA provides federal protections against surprise billing by limiting out-of-network cost sharing and prohibiting balance billing in many of the circumstances in which surprise bills most frequently arise. The NSA also added new requirements relating to the timing of payments and notices of denial of payments by health plans for emergency and post-stabilization services furnished by out-of-network providers.
Effective January 1, 2022, the NSA also created an Open Negotiations Phase and IDR process that is utilized if state law does not establish a method for resolving payment disputes and the out-of-network provider seeks additional compensation for services rendered to a health plan member. Because California law sets payment for out-of-network emergency services by health plans licensed by the Department of Managed Health Care at the reasonable and customary value of services, the NSA process applies only to claims for emergency and post-stabilization services where certain types of health plans (Covered Plan) are responsible for payment, including, but not limited to plans that are self-funded, out-of-state, Department of Insurance plans, and federal employee health benefits program plans. ARMC has continued to follow the Board approved collections process while policy for the NSA Open Negotiations and Independent Resolution process has been drafted.
Under the NSA, if an out-of-network provider (Provider) is not satisfied with a payment made by a Covered Plan for emergency or post-stabilization services rendered to its member, the Provider is required, within 30 business days of the initial payment or denial, to send an open negotiation notice to the Covered Plan. A 30-business-day Open Negotiation Phase is then started in which the parties have an opportunity to negotiate a resolution. By the end of the Open Negotiation Phase, if the parties are unable to reach a resolution, the Provider, within four business days must provide written notice to the Covered Plan of its intent to initiate the formal IDR process.
Once a certified IDR entity is selected to adjudicate the dispute, each party will submit one offer to the IDR entity, along with any documentation to support their position, on what they believe is the reasonable value of the services provided. Within 30 days after selection of the IDR entity, the IDR entity will select the winning offer, and the parties will then have 30 additional days to reconcile the payments based on the offer selected by the IDR entity. The IDR entity is required to select the winning offer based on several enumerated factors identified in the NSA.
The foregoing process is currently the exclusive process that ARMC must utilize to seek additional payments from Covered Plans for emergency and post-stabilization services provided by ARMC to Covered Plan members. In the event ARMC fails to timely comply with this process or fails to make an offer in the Open Negotiations Phase or the IDR process, ARMC may be barred from seeking additional payments from the Covered Health Plan for the emergency or post-stabilization services rendered to the plan members.
Approval of the Recommendation will authorize the ARMC Director or the ARMC CFO to approve the submittal of offers in the Open Negotiations Phase and IDR process under the NSA for individual claims up to $4,000,000 for emergency and post-stabilization services. Claims exceeding $4,000,000 will be brought to the Board for approval prior to the submission of an offer. This delegation of authority by the Board of Supervisors (Board) will be for a five-year period, from January 23, 2024, through January 22, 2029. The ARMC Director and ARMC CFO will ensure that the offers are fiscally-responsible and consistent with the financial needs and operations of the hospital. The offers will be made fairly without taking into consideration a patient’s race, gender, religion, disability, or other legally protected status. ARMC will report on an annual basis to the Joint Conference Committee through a summary of claim resolutions under the Open Negotiation Phase and IDR process.
ARMC has developed policies and procedures relating to the Open Negotiations Phase and IDR process, which is being presented as a companion item to the Board for approval on the same meeting date of January 23, 2024.
PROCUREMENT
Not Applicable.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Charles Phan, Deputy County Counsel, 387-5455) on December 27, 2023; ARMC Finance (Chen Wu, Finance Budget Officer, 580-3165) on December 27, 2023; Finance (Jenny Yang, Administrative Analyst, 387-4884) on December 28, 2023; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387-5423) on December 28, 2023.