Federal District Court Strikes Down Some Surprise Billing Rules: What It Means for No-Surprise Law | Faegre Drinker Biddle & Reath LLP
On February 23, 2022, the United States District Court for the Eastern District of Texas struck down portions of Part II of the Interim Final Rule (“IFR”) issued by the U.S. Departments of Health and Human Services, Labor, and Treasury (“Tri-agency”), implementing the dispute resolution provisions of the No Surprises Act (“NSA”) ). While the decision in the case, Texas Medical Association v. US Department of Health and Human Servicesmay impact medical plan costs, it does not substantially affect consumer protections against surprise medical billing added by the NSA, which went into effect in 2022.
As a backdrop, Congress enacted the NSA to address “surprise medical bills,” that is, out-of-network fees charged by providers when an individual receives treatment at an out-of-network facility in a situation emergency, or when an individual is treated by an off-grid provider in an on-grid facility. The NSA prohibits surprise medical billing, establishes a legal framework for determining the “out-of-network fee” to be paid by a health plan to a provider or facility, and creates an independent dispute resolution (“IDR”) process to health plans and providers negotiate payment rates after a health plan pays the provider an upfront payment amount for out-of-network services.
The off-grid rate is determined using one of three methods:
- By reference to a model agreement applicable to all payers under Section 1115A of the Social Security Act.
- In some states, off-grid pricing may be specified by law.
- If there is no applicable standard all-payers agreement and no applicable state law, the out-of-network rate may be determined by agreement between the health plan and provider.
If none of the three methods apply, a health plan or provider can invoke the IDR process. IDR under the NSA is “baseball-style arbitration” in which the provider and the health plan each submit an out-of-network rate proposal to the arbitrator, and the arbitrator must select one of two proposals, taking into account certain defined factors. by status.
The complainants in texas medical challenged certain parts of the IFR related to the IDR process that govern the discretion the arbitrator has to assess the relevant factors in deciding which out-of-network rate (i.e. the provider’s proposal or the health plan) must be used. Specifically, the plaintiffs argued that the IFR created a rebuttable presumption in favor of a single factor, the “qualifying payment amount” (“QPA”) rate (generally the median rate the plan would have paid for the service if it had been provided by a non-network provider or facility), rather than allowing the arbitrator to determine at its discretion how to weigh the various factors.
the texas medical The court ruled in favor of the plaintiffs, invalidating the disputed parts of the IFR and concluding that the three bodies had exceeded their authority by publishing those parts of the IFR.
Although the ruling applies nationwide, its substance is narrow – it invalidates only the specific language of the IFR that creates the rebuttable presumption in favor of the QPA. This means that the IDR process in general remains intact and can be invoked by providers and plans, as the DOL clarified in a note issued shortly after the court’s decision. However, since arbitrators cannot invoke a presumption in favor of APQ, plans using the IDR process could see increased costs depending on the out-of-network rates chosen by arbitrators. The court’s decision also does not affect any other methods the NSA provides for calculating the permitted out-of-network rate, nor does the decision affect consumer protections under the NSA in general.
The Tri-Agencies previously issued Part I of the IFR, generally to implement consumer protections against surprise medical bills provided by the NSA. Our discussion of IFR Part I can be found here.