eCFR editorial change effective 2022-10-25 · current text · last amended by T.D. 9965, 87 FR 52645, Aug. 26, 2022
(a) Definitions. For purposes of this section, the following definitions apply:
(1) Contracted rate means the total amount (including cost sharing) that a group health plan 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 or pharmacy benefit manager. Solely for purposes of this definition, a single case agreement, letter of agreement, or other similar arrangement between a provider, facility, or air ambulance provider and a plan, used to supplement the network of the plan for a specific participant or beneficiary in unique circumstances, does not constitute a contract.
(3) Eligible database means—
(i) A State all-payer claims database; or
(ii) Any third-party database which—
(A) Is not affiliated with, or owned or controlled by, any health insurance issuer, or a health care provider, facility, or provider of air ambulance services (or any member of the same controlled group as, or under common control with, such an entity). For purposes of this paragraph (a)(3)(ii)(A), the term controlled group means a group of two or more persons that is treated as a single employer under
sections 52(a),
52(b),
414(m), or
414(o) of the Internal Revenue Code of 1986, as amended;
(B) Has sufficient information reflecting in-network amounts paid by group health plans or health insurance issuers offering group or individual health insurance coverage to providers, facilities, or providers of air ambulance services for relevant items and services furnished in the applicable geographic region; and
(C) Has the ability to distinguish amounts paid to participating providers and facilities by commercial payers, such as group health plans and health insurance issuers offering group or individual health insurance coverage, from all other claims data, such as amounts billed by nonparticipating providers or facilities and amounts paid by public payers, including the Medicare program under title XVIII of the Social Security Act, the Medicaid program under title XIX of the Social Security Act (or a demonstration project under title XI of the Social Security Act), or the Children's Health Insurance Program under title XXI of the Social Security Act.
(4) Facility of the same or similar facility type means, with respect to emergency services, either—
(i) An emergency department of a hospital; or
(ii) An independent freestanding emergency department.
(5) First coverage year means, with respect to an item or service for which coverage is not offered in 2019 under a group health plan, the first year after 2019 for which coverage for such item or service is offered under that plan.
(6) First sufficient information year means, with respect to a group health plan—
(i) In the case of an item or service for which the plan does not have sufficient information to calculate the median of the contracted rates described in
paragraph (b) of this section in 2019, the first year after 2022 for which the plan has sufficient information to calculate the median of such contracted rates in the year immediately preceding that first year after 2022; and
(ii) In the case of a newly covered item or service, the first year after the first coverage year for such item or service with respect to such plan for which the plan has sufficient information to calculate the median of the contracted rates described in paragraph (b) of this section in the year immediately preceding that first year.
(7) Geographic region means—
(i) For items and services other than air ambulance services—
(A) Subject to paragraphs (a)(7)(i)(B) and (C) of this section, one region for each metropolitan statistical area, as described by the U.S. Office of Management and Budget and published by the U.S. Census Bureau, in a State, and one region consisting of all other portions of the State.
(B) If a plan does not have sufficient information to calculate the median of the contracted rates described in
paragraph (b) of this section for an item or service provided in a geographic region described in
paragraph (a)(7)(i)(A) of this section, one region consisting of all metropolitan statistical areas, as described by the U.S. Office of Management and Budget and published by the U.S. Census Bureau, in the State, and one region consisting of all other portions of the State.
(C) If a plan does not have sufficient information to calculate the median of the contracted rates described in
paragraph (b) of this section for an item or service provided in a geographic region described in
paragraph (a)(7)(i)(B) of this section, one region consisting of all metropolitan statistical areas, as described by the U.S. Office of Management and Budget and published by the U.S. Census Bureau, in each Census division and one region consisting of all other portions of the Census division, as described by the U.S. Census Bureau.
(ii) For air ambulance services—
(A) Subject to
paragraph (a)(7)(ii)(B) of this section, one region consisting of all metropolitan statistical areas, as described by the U.S. Office of Management and Budget and published by the U.S. Census Bureau, in the State, and one region consisting of all other portions of the State, determined based on the point of pick-up (as defined in
42 CFR 414.605).
(B) If a plan does not have sufficient information to calculate the median of the contracted rates described in
paragraph (b) of this section for an air ambulance service provided in a geographic region described in
paragraph (a)(7)(ii)(A) of this section, one region consisting of all metropolitan statistical areas, as described by the U.S. Office of Management and Budget and published by the U.S. Census Bureau, in each Census division and one region consisting of all other portions of the Census division, as described by the U.S. Census Bureau, determined based on the point of pick-up (as defined in
42 CFR 414.605).
(8) Insurance market is, irrespective of the State, one of the following:
(i) The individual market (other than short-term, limited-duration insurance or individual health insurance coverage that consists solely of excepted benefits).
(ii) The large group market (other than coverage that consists solely of excepted benefits).
(iii) The small group market (other than coverage that consists solely of excepted benefits).
(iv) In the case of a self-insured group health plan, all self-insured group health plans (other than account-based plans, as defined in
§ 54.9815-2711(d)(6)(i), and plans that consist solely of excepted benefits) of the same plan sponsor, or at the option of the plan sponsor, all self-insured group health plans administered by the same entity (including a third-party administrator contracted by the plan), to the extent otherwise permitted by law, that is responsible for calculating the qualifying payment amount on behalf of the plan.
(9) Modifiers mean codes applied to the service code that 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.
(10) Newly covered item or service means an item or service for which coverage was not offered in 2019 under a group health plan, but that is offered under the plan in a year after 2019.
(11) New service code means a service code that was created or substantially revised in a year after 2019.
(12) Provider in the same or similar specialty means the practice specialty of a provider, as identified by the plan consistent with the plan's usual business practice, except that, with respect to air ambulance services, all providers of air ambulance services are considered to be a single provider specialty.
(13) Same or similar item or service means a health care item or service billed under the same service code, or a comparable code under a different procedural code system.
(14) Service code means the code that describes an item or service using the Current Procedural Terminology (CPT) code, Healthcare Common Procedure Coding System (HCPCS), or Diagnosis-Related Group (DRG) codes.
(15) Sufficient information means, for purposes of determining whether a group health plan has sufficient information to calculate the median of the contracted rates described in paragraph (b) of this section—
(i) The plan has at least three contracted rates on January 31, 2019, to calculate the median of the contracted rates in accordance with
paragraph (b) of this section; or
(ii) For an item or service furnished during a year after 2022 that is used to determine the first sufficient information year—
(A) The plan has at least three contracted rates on January 31 of the year immediately preceding that year to calculate the median of the contracted rates in accordance with
paragraph (b) of this section; and
(B) The contracted rates under
paragraph (a)(15)(ii)(A) of this section account (or are reasonably expected to account) for at least 25 percent of the total number of claims paid for that item or service for that year with respect to all plans of the sponsor (or the administering entity as provided in
paragraph (a)(8)(iv) of this section, if applicable) that are offered in the same insurance market.
(16) Qualifying payment amount means, with respect to a sponsor of a group health plan, the amount calculated using the methodology described in paragraph (c) of this section.
(17) Underlying fee schedule rate means the rate for a covered item or service from a particular participating provider, providers, or facility that a group health plan uses to determine a participant's or beneficiary's cost-sharing liability for the item or service, when that rate is different from the contracted rate.
(b) Methodology for calculation of median contracted rate
(1) In general. The median contracted rate for an item or service is calculated by arranging in order from least to greatest the contracted rates of all group health plans of the plan sponsor (or the administering entity as provided in
paragraph (a)(8)(iv) of this section, if applicable) 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 and selecting the middle number. If there are an even number of contracted rates, the median contracted rate is the average of the middle two contracted rates. In determining the median contracted rate, the amount negotiated under each contract is treated as a separate amount. If a plan or issuer has a contract with a provider group or facility, the rate negotiated with that provider group or facility under the contract is treated as a single contracted rate if the same amount applies with respect to all providers of such provider group or facility under the single contract. However, if a plan or issuer has a contract with multiple providers, with separate negotiated rates with each particular provider, each unique contracted rate with an individual provider constitutes a single contracted rate. Further, if a plan or issuer has separate contracts with individual providers, the contracted rate under each such contract constitutes a single contracted rate (even if the same amount is paid to multiple providers under separate contracts).
(2) Calculation rules. In calculating the median contracted rate, a plan must:
(i) Calculate the median contracted rate with respect to all plans of such sponsor (or the administering entity as provided in
paragraph (a)(8)(iv) of this section, if applicable) that are offered in the same insurance market;
(ii) Calculate the median contracted rate using the full contracted rate applicable to the service code, except that the plan must—
(A) Calculate separate median contracted rates for CPT code modifiers “26” (professional component) and “TC” (technical component);
(B) For anesthesia services, calculate a median contracted rate for the anesthesia conversion factor for each service code;
(C) For air ambulance services, calculate a median contracted rate for the air mileage service codes (A0435 and A0436); and
(D) Where contracted rates otherwise vary based on applying a modifier code, calculate a separate median contracted rate for each such service code-modifier combination;
(iii) In the case of payments made by a plan that are not on a fee-for-service basis (such as bundled or capitation payments), calculate a median contracted rate for each item or service using the underlying fee schedule rates for the relevant items or services. If the plan does not have an underlying fee schedule rate for the item or service, it must use the derived amount to calculate the median contracted rate; and
(iv) Exclude risk sharing, bonus, penalty, or other incentive-based or retrospective payments or payment adjustments.
(3) Provider specialties; facility types.
(i) If a plan has contracted rates that vary based on provider specialty for a service code, the median contracted rate is calculated separately for each provider specialty, as applicable.
(ii) If a plan has contracted rates for emergency services that vary based on facility type for a service code, the median contracted rate is calculated separately for each facility of the same or similar facility type.
(d) Information to be shared about qualifying payment amount. In cases in which the recognized amount with respect to an item or service furnished by a nonparticipating provider, nonparticipating emergency facility, or nonparticipating provider of air ambulance services is the qualifying payment amount, the plan must provide in writing, in paper or electronic form, to the provider or facility, as applicable—
(i) The qualifying payment amount for each item or service involved;
(iii) A statement to certify that, based on the determination of the plan—
(A) The qualifying payment amount 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
(B) Each qualifying payment amount shared with the provider or facility was determined in compliance with this section;
(iv) A statement that if the provider or facility, as applicable, wishes to initiate a 30-day open negotiation period for purposes of determining the amount of total payment, the provider or facility may contact the appropriate person or office to initiate open negotiation, and that if the 30-day negotiation period does not result in a determination, generally, the provider or facility may initiate the independent dispute resolution process within 4 days after the end of the open negotiation period; and
(v) Contact information, including a telephone number and email address, for the appropriate person or office to initiate open negotiations for purposes of determining an amount of payment (including cost sharing) for such item or service.
(2) In a timely manner upon request of the provider or facility:
(i) Information about whether the qualifying payment amount for items and services involved included contracted rates that were not on a fee-for-service basis for those specific items and services and whether the qualifying payment amount for those items and services was determined using underlying fee schedule rates or a derived amount;
(ii) If a plan uses an eligible database under
paragraph (c)(3) of this section to determine the qualifying payment amount, information to identify which database was used; and
(iii) If a related service code was used to determine the qualifying payment amount for an item or service billed under a new service code under paragraph (c)(4)(i) or (ii) of this section, information to identify the related service code; and
(iv) If applicable, a statement that the plan's contracted rates include risk-sharing, bonus, penalty, or other incentive-based or retrospective payments or payment adjustments for the items and services involved (as applicable) that were excluded for purposes of calculating the qualifying payment amount.
(e) Certain access fees to databases. In the case of a plan that, pursuant to this section, uses an eligible database to determine the qualifying payment amount for an item or service, the plan is responsible for any costs associated with accessing such database.