On February 23, 2022, a Texas district court found that portions of the No Surprises Act regulations implementing the provider–payor independent dispute resolution (IDR) process are invalid. The vacated regulatory text conflicts with the Act’s requirements on how disputes between providers and payors should be resolved. While the law lists multiple factors that could determine the appropriate reimbursement rate, the regulations created a presumption in favor of the payor-calculated qualifying payment amount (QPA) to the exclusion of all other factors.
The court called the regulations treating the QPA as the default payment amount “unlawful” and vacated all portions of the regulations that created a presumption in favor of the QPA. The court explained that while the law lists multiple factors that could determine the appropriate reimbursement rate, the regulations created a presumption in favor of the QPA to the exclusion of all other factors. While federal agencies may appeal this ruling, arbiters are now able to consider all information submitted by providers when determining the appropriate reimbursement amount for out-of-network services, as Congress intended.
Note: Because this decision deals directly with the regulatory text, it applies to all provider–payor IDR under the No Surprises Act. This decision solely impacts the federal IDR regulations, not any others including regulations concerning good faith estimates and balance billing prohibitions.
The court vacated certain provisions of the IDR regulations from the regulatory text. The order is directed to the federal agencies responsible for the regulations and therefore is immediately in effect nationwide for all provider–payor IDR under the No Surprises Act.
Under the revised regulations, arbiters are directed to consider all relevant information equally when determining which offer to select. The QPA remains one of the factors but is no more important than any other information.
HHS and the other federal agencies that created the IDR regulations can appeal the court’s decision and seek to have the stricken regulatory language reinstated. If they appeal, they will also likely ask for the district court’s decision not to be implemented immediately but held until a higher court is able to review.
There are other lawsuits pending in different courts concerning the same issues raised by the Texas Medical Association, including a similar lawsuit filed by the American Medical Association and American Hospital Association in the D.C. District Court. While other courts may find the Texas decision useful and persuasive, they are not required to reach the same conclusion or provide the same remedy.
Watch for updates to the No Surprises Act IDR process. To date, the IDR portal allowing providers to request arbitration is not available.
In the meantime, continue preparing for IDR, including opening negotiation periods with payors and gathering information to submit to the arbiter.
*The case is Texas Medical Association v. HHS, Case No. 6:21-cv-425-JDK in the Eastern District of Texas.
Kathryn Beard is a Manager of Regulatory Compliance focusing on the physician business for R1 RCM.