On February 6, 2023, the United States District Court for the Eastern District of Texas ruled in favor of the Texas Medical Association and vacated portions of the final rule adopted in August 2022 that applied to the Independent Dispute Resolution (“IDR”) process created by the No Surprises Act. The August 2022 Final Rule was adopted by the Departments of Labor, Treasury and Health and Human Services addressed the specific factors arbitrators must consider in resolving disputes between out-of-network health care providers/facilities and air ambulance providers and health insurance plans, under the Act. This is the second time portions of final rules for the IDR decision-making methods have been vacated by this Court because of litigation brought by impacted providers.
Court Decision
For the second time in 12 months, a federal district court has set aside provisions of the No Surprises Act’s Independent Dispute Resolution Final Rule on the grounds that the portions of the rule that provide guidance to arbitrators on how to weight price submissions violate the statute’s requirements. The decision from Judge Jeremy D. Kernodle for the U.S. District Court for the Eastern District of Texas in a group of challenges to the rule, follows closely on the Requirements Related to Surprise Billing Final Rule issued in August 2022, which sought to address earlier criticisms of the independent dispute resolution process, and marks the second time that the rule has been vacated in part and sent back to the three agencies for another chance.
In both that instance and in this one, the court took issue with the prominence of the “qualifying payment amount” or QPA. The QPA is a statutorily defined payment rate that represents the median contracted rates recognized by an insurer for the same or similar items or services in the same geographic area.
That earlier remand faulted the three agencies that authored the initial rule for using what the court saw as a de facto rebuttable presumption in favor of the QPA during the arbitration process and effectively putting a thumb on the scale in favor of insurers during arbitration disputes. After that remand, the agencies appealed to the U.S. Court of Appeals for the Fifth Circuit, but later asked for that appeal to be dismissed pending the second rulemaking process. That rulemaking process generated the August Rule at issue in this most-recent case.
Because the August Rule required an arbitrator to first consider the QPA and then consider the other information presented, Judge Kernodle again found that the agencies were promoting the QPA to a higher status than other factors required to be considered by the No Surprises Act statute.
CMS Response
As a result of the decision, CMS has asked parties involved in surprise billing disputes to put payment determinations on hold. The government is currently in the process of evaluating and updating independent dispute resolution guidance, systems and documents to make them consistent with the judge’s decision, according to a CMS notice on February 10. Along with pausing new determinations, arbiters should recall any determinations made after February 6, CMS said. Arbiters can continue working through other parts of the dispute resolution process as they wait for further guidance from federal regulators.
California Medical Association Response
Donaldo Hernandez, M.D., president of the California Medical Association (CMA), issued a statement in response to the ruling. “CMA physicians welcome this second federal court ruling against HHS’s flawed interpretation of the No Surprises Act. As the District Judge in the case noted, the arbitration process developed by HHS placed a thumb on the scale in favor of health plans. HHS’s interpretation of the Act would have allowed insurers to set de facto benchmark payment rates for all independent dispute resolution cases rather than allowing independent arbiters to review a range of market payment factors – thereby allowing insurers to boost profits at the expense of physicians and patients.”
“The Court’s decision is in keeping with the clear language of the No Surprises Act and Congress’ intent to provide a balanced process for health plans and physicians to resolve out-of-network payment disputes. By ruling in TMA’s favor, the Court has ensured that the No Surprises Act will not be upended by regulations that undermine the adequacy of physician networks and patient access to emergency care.”
Fourth Lawsuit
The Texas Medical Association filed a fourth lawsuit over the No Surprise Act on January 30, this time focusing on boosted fees both parties must pay for an independent arbritration process to solve billing disputes between providers and payers. CMS increased the administrative fee for arbitration, or IDR, processes — from $50 to $350 — at the start of the year. The TMA alleges the change will “not only will make the process significantly more expensive for all IDR participants but will make it cost-prohibitive for many providers to access IDR at all,” according to the suit. The suit also challenges the laws’ restrictions on batching claims, which allows arbritration processes only on claims with the same service code, requiring providers to go through a separate payment dispute process for each claim related to an individual’s care episode, according to the suit.