Newly published NSA audits reveal QPA miscalculations

CareSource's large-scale miscalculation

The CareSource audit revealed a blatant calculation error for the median rates in all 952 QPA determinations reviewed in the audit sample. The payer systematically substituted actual negotiated in-network contracts with so-called usual-and-customary rates, leading to inaccurate rates based on the law. The sample was notably limited to claims in Indiana.

Usual-and-customary rates are commonly used to determine the allowed amount for out-of-network care, similar to the QPA. However, payers individually determine these rates, unlike the legally set formula for the QPA.

CareSource said it was using the usual-and-customary rates at the time, based on Indiana's own surprise billing law. However, the CMS stated in December 2021 that the state law did not qualify as a valid specified law under the NSA.

Despite this news, CareSource said it made a business decision to continue using the usual-and-customary rates rather than recalculate QPAs, due to concerns that doing so would negatively affect member cost-sharing partway through the 2022 plan year. The rates in some cases were higher than they should have been, resulting in overcharges.

CareSource was also dinged for failing to include required QPA information when it sent initial payment or denial notices to providers (735 instances in the audit sample) and for sending delayed responses to providers' QPA information requests.

The organization said it has already implemented several fixes, including a full corrective action plan to recalculate QPA rates per the law's standards. It told auditors that corrected rates went live in its systems on October 2, 2024, and affected claims from Oct. 2, 2022, were reprocessed.

However, CCIIO still wants CareSource to complete a self-audit of every affected claim, identifying root causes behind compliance failures and the fixes implemented. It must also identify and refund any consumers who were overcharged because of the flawed QPA calculations.

Additionally, CCIIO strongly recommended that the organization implement the corrective actions across all its affiliated plans, not just in Indiana.

Ohio SERS audit exposes ghost rate wrinkle

The Ohio SERS audit analyzed just a handful of specialized air ambulance claims eligible for dispute under the NSA. For the six claims audited, CCIIO found that the sponsor failed to identify two that were actually subject to the NSA, causing those consumers to lose surprise billing protections. The audit also uncovered incomplete QPA disclosures to providers.

However, CCIIO also observed in the audit that SERS excluded negotiated rates associated with active contracts that had generated no claims during the measurement period. These are otherwise known as ghost rates, or contractual line items that exist in contracts but do not reflect the services that a provider actually furnishes to patients.

The NSA requires all rates to be considered when determining a QPA, even if a contract did not yield claims for that service. Excluding those rates would skew the median rate needed for the QPA.

The audit highlighted SERS' method of calculating the QPA as noncompliant with the NSA, although a newer legal ruling has vacated the specific language that requires ghost rates to be included in the formula.

The ruling remains under litigation, CCIIO clarified, but SERS exclusion of unused contracted rates for the audited claims could be defensible if the courts decide to scrap that language in the NSA.

Providers, such as the Texas Medical Association, which filed the lawsuit, want ghost rates excluded from QPA calculations. They argue that their inclusion artificially lowers the median rate IDR entities use to make payment determinations, giving health plans an unfair advantage.

They have also complained since the IDR process launched in 2022 that payers have gamed the system to artificially deflate QPAs, which is a plan's median in-network contract rate as of Jan. 31, 2019, for a specific service in a given region, adjusted for inflation.

This has led to lowball anchors for IDR payment determinations, since the QPA is the key factor for arbitrators, according to providers.

The courts seem to agree on the ghost rate issue, but recent reports show that providers win the majority of IDR disputes at rates typically much higher than the QPA. These high payouts have contributed to $22 billion in additional costs from the IDR process, according to researchers at Georgetown University.

The CCIIO still wants SERS to self-audit claims to ensure compliance with the NSA's QPA provisions, although it told auditors that Aetna has already updated systems to address the actual compliance failures identified in the report.

Jacqueline LaPointe is an Executive Editor at Xtelligent Healthcare Media, covering revenue cycle management, healthcare payers, health policy, and health IT since 2016.