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Court Rejects No Surprises Act IDR Rule

February 25, 2022

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CONTACTS
Ivy Baer, Senior Director and Regulatory Counsel

The U.S. District Court for the Eastern District of Texas issued a decision on Feb. 23 that the No Surprises Act is unambiguous regarding the independent dispute resolution (IDR) process in stating that the qualifying payment amount (QPA) is only one of several factors to be considered in resolving a billing dispute between an out-of-network provider and an insurer. The decision was issued in response to a challenge filed by the Texas Medical Association (TMA) to the IDR process that was finalized as part of the No Surprises Act interim final rule.

The court also agreed with the TMA’s contention that the Department of Health and Human Services should not have issued an interim final rule but should have complied with the Administrative Procedures Act which requires notice and comment rulemaking. The judge vacated the IDR portion of the interim final rule, meaning that it is no longer in effect nationwide. The TMA lawsuit is similar to the lawsuit filed by the American Hospital Association (AHA) and the American Medical Association (AMA) which has not yet been decided. The AAMC and other hospital associations filed an amicus brief in support of the AHA and AMA lawsuit [refer to Washington Highlights, Dec. 17, 2021].

The No Surprises Act, which took effect Jan. 1, limits the amount that out-of-network providers can bill patients for emergency services and has requirements related to non-emergency services provided by out-of-network providers at in-network facilities. It also includes the IDR process to resolve disputes between providers and insurers regarding the amount to pay for these services.

The law lists the QPA and additional circumstances such as the acuity of the patient; the teaching status, case mix, and scope of services furnished; and the level of training, experience, and quality and outcomes measurements of the provider or facility as factors to be considered during the IDR process. However, the interim final rule strongly favored the QPA, which in earlier rulemaking determined the median in-network rate as the correct amount when the IDR is invoked.

In reaching its decision that the interim final rule does not reflect what is provided in the statute, the court noted the IDR “places its thumb on the scale for the QPA, requiring arbitrators to presume the correctness of the QPA and then imposing a heightened burden on the remaining statutory factors to overcome that presumption.”

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