Challenges to the Final August 2022 No Surprises Act Independent Dispute Resolution Rule

Health Highlights

Controversy continues to surround the independent dispute resolution (IDR) provisions of the No Surprises Act (NSA). On November 18, bipartisan leadership of the House Ways and Means Committee sent a letter to the Secretaries of the Departments of Health and Human Services, Labor, and Treasury (Departments) stating that leadership is “severely disappointed” to find that the August 2022 final rule implementing the IDR process violates the NSA in the same ways as the prior interim final rule with comment period.

Under the NSA, if a provider and a health plan cannot reach agreement on the amount the plan will pay for a service to which the NSA applies, the provider and the health plan must resolve the dispute through the new federal IDR process. The original October 2021 interim final rule stated that arbitrators implementing the IDR process should apply a “rebuttable presumption” that the qualifying payment amount (QPA)—a health plan’s median contracted rate for the same service in the same geographic area, adjusted for inflation—is the most appropriate rate for the service. Health care providers contended the rule favored health plans in the IDR process by giving extra weight to the amount that the plans had already agreed to pay—the median contracted rate. The Texas Medical Association (TMA) and others sued the Departments, asserting that the presumption was contrary to the text of the NSA, which TMA contended requires arbitrators to give equal consideration to all of the factors expressly identified in the NSA as relevant to determining the appropriate payment. TMA prevailed, and the district court vacated multiple provisions of the interim final rule with comment period implementing the rebuttable presumption.

In the August 2022 final rule, the Departments asserted that they had fixed the rule by removing the rebuttable presumption in favor of the QPA. TMA disagreed and filed a second lawsuit in September 2022 seeking to vacate provisions of the final rule that it contends continue to violate the NSA by improperly tipping the balance in favor of the QPA. Although the letter from the House Ways and Means Committee chairman and ranking member does not mention the second TMA lawsuit, it adopts some of TMA’s reasoning in that complaint, accusing the Departments of including new provisions in the final rule that perpetuate the flaws in the interim final rule. Specifically, the letter contends that a “double counting test” in the final rule improperly directs the arbitrators to give no weight to information related to a factor if the certified IDR entity determines that the information was already accounted for in the calculation of the QPA. Ways and Means Committee leaders state that this provision fails to implement the intent of the NSA because it skews the determination in favor of the QPA, creating a heightened burden for consideration of the other factors expressly identified as relevant in the NSA, such as patient acuity and complexity of furnishing the service, and adopting a standard that would be impossible for providers to meet because the methodologies for calculating the QPA are a “complete mystery” to everyone other than the health plans. A hearing on the TMA’s second lawsuit, which is supported by other provider associations, including the American Medical Association and the American Hospital Association, is expected on December 20, 2022.

Information regarding the IDR process recently released by the Centers for Medicare & Medicaid Services highlights the importance of properly implementing the IDR process. Between the April 15, 2022 launch of the federal IDR portal and September 30, 2022, more than 90,000 disputes were initiated. On an annualized basis, that would be more than 11 times the number of IDR disputes that the Departments estimated would be filed in 2022. Moreover, the disputes are more complex than the Departments expected, with more than half (over 41,000) involving challenges to the eligibility of the dispute for resolution under the IDR process. Of those, over 22,000 were found to be ineligible for the IDR process. Strikingly, despite the highly streamlined nature of the IDR process, only about 3,500 payment determinations were made by IDR arbitrators.

Stay tuned for further updates regarding implementation of the IDR process and related litigation on this important issue for plans and providers.



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