Portions of the No Surprises Act Regulations Have Been Invalidated
How Surprising:
Portions of the No Surprises Act Regulations Have Been Invalidated
The No Surprises Act (the Act) continues to bump through its initial implementation phase. We've seen plenty of discussion elsewhere about how out-of-network physicians and facilities (OON Providers), and their allies, are pushing back against portions of the recently issued interim final rule with comment period (the Interim Rule). Most recently, they succeeded in doing so when the Texas Medical Association, a trade association representing more than 55,000 physicians, and Dr. Adam Corley filed and won a lawsuit against the Departments of Health and Human Services (HHS), Labor, and Treasury, and the Office of Personnel Management (collectively, the Departments). The plaintiffs successfully argued that the Interim Rule unfairly protects group health plans and health insurance issuers (collectively, Plans) to the detriment of patients and OON Providers.
On February 23, 2022, Judge Jeremy D. Kernodle of the US District Court for the Eastern District of Texas issued a decision and final judgment holding that the portions of the Interim Rule relating to the creation of an Independent Dispute Resolution (IDR) process must be set aside.
More specifically, the court invalidated the portion of the IDR process that hampered OON Providers’ efforts to negotiate payment rates by essentially creating a rebuttable presumption in favor of a Plan’s median contracted rate for the service, known as the qualifying payment amount (QPA). The Interim Rule required the QPA be selected first unless credible information clearly demonstrated that the QPA is materially different from the appropriate out-of-network rate.
Nevertheless, the remaining provisions of the Interim Rule and the Act are still in effect and may be used by the certified IDR entity when determining the framework for resolving payment disputes.
On February 28, 2022, HHS addressed how the decision would impact implementation of the Act by issuing a memorandum for consumers. HHS reassured consumers that the Texas ruling does not impact other portions of the Act. For example, “consumers continue to be protected from surprise bills for out-of-network emergency services, out-of-network air ambulance services, and certain out-of-network services received at in-network facilities.”
The Departments are reviewing the court's decision and considering next steps.
A Department of Labor announcement serves as a notification to health care providers, emergency facilities, providers of air ambulance services, group health plans, health insurance issuers, Federal Employees Health Benefits (FEHB) Carriers ("Disputing Parties"), and certified IDR entities of steps the Departments are taking to conform to the court's order.
Specifically, the Departments will:
- - Effective immediately, withdraw guidance documents that are based on, or that refer to, the portions of the Rule that the court invalidated. Once these documents have been updated to conform with the court's order, we will promptly repost the updated documents.
- - Once these documents are updated to conform with the court’s order, the Departments will repost them.
- - Provide training on the revised guidance for certified IDR entities and Disputing Parties. This training will be offered through webinars and roundtable discussions, and will occur after the above-referenced documents are updated.
- - Open the IDR process for submissions through the IDR Portal. For disputes for which the open negotiation period has expired, the Departments will permit submission of a notice of initiation of the IDR process within 15 business days following the opening of the IDR Portal.
From here, DOJ will presumably appeal Judge Kernodle’s decision and final judgment to the Fifth Circuit and perhaps request a stay while the case is on appeal. If a stay is not granted, the court’s decision remains in effect, meaning the IDR provisions noted above are unlawful and set aside. The IDR process will still be available and is expected to begin in earnest in March 2022. But the ruling increases the risk that some providers will try to leverage the federal IDR process to obtain higher rates than are warranted, potentially leading to higher health care costs and premiums.
Meanwhile... the other five lawsuits could proceed as scheduled—or the plaintiffs might ask for a stay or hold given the TMA decision. The two cases in the District of Columbia—one led by the Association of Air Medical Services and the other led by the American Medical Association—have been consolidated and briefing is complete. These challenges seem more likely to be heard because the air ambulance issues are broader than the IDR rule. In the three cases in Georgia, Illinois, and New York, briefing is ongoing or could begin soon. The plaintiffs in those cases could (but are not required to) ask for a stay as the other litigation proceeds.
We recommend conferring with your legal team for guidance in adhering to the IDR process during this constantly changing legal enviroment.
