IRS Adjusts 2023 Qualifying Payment Amount Calculation Under No Surprises Act
Published December 21, 2022
The Internal Revenue Service (IRS) released Notice 2023-04 providing the percentage increase for calculating the qualifying payment amounts for items and services furnished in 2023 under Sections 9816 and 9817 of the Internal Revenue Code. The qualifying payment amount (QPA) calculation is required in the case of a plan or issuer that does not have sufficient information to calculate the median of the contracted rates for the same or similar item or service provided in a geographic region.
For such an item or service furnished in a subsequent year (before the first sufficient information year for the item or service with respect to such plan or coverage or before the first year for which an eligible database has sufficient information to calculate a rate under 29 CFR 2590.716-6(c)(3)(i), and 45 CFR 149.140(c)(3)(i) in the immediately preceding year), the plan or issuer must calculate the QPA by increasing the QPA amount determined for the item or service for the year immediately preceding the subsequent year, by the percentage increase in the U.S. city average consumer price index (CPI-U) over the preceding year.
The percentage increase in the CPI-U for items and services provided in 2023 over the preceding year is the average CPI-U for 2022 over the average CPI-U for 2021. Pursuant to this calculation, the percentage increase from 2022 to 2023 is 1.0768582128. Plans and issuers may round any resulting qualifying payment amounts to the nearest dollar.
The guidance provides example calculations for the following:
- Adjusting qualifying payment amounts based on January 31, 2019 rates
- Adjusting qualifying payment amounts based on 2021 rates
- Calculating qualifying payment amounts when 2023 is the first coverage year (when 2023 is the first coverage year for the item or service with respect to the plan or coverage).