And the lawsuits have started…

The Texas Medical Association (TMA) was the first to challenge the No Surprises Act. On October 28, 2021, TMA filed a Complaint in the United States District Court for the Eastern District of Texas seeking to vacate certain provisions of Part I of the Requirements Related to Surprise Billing (Part I) and Part II of the Requirements Related to Surprise Billing (Part II). The Association of Air Medical Services (AAMS) was a close second, filing its Complaint in the United States District Court for the District of Columbia challenging the No Surprises Act on November 16, 2021.

Both the TMA and AAMS primarily take issue with the “rebuttable presumption” that requires the Independent Dispute Resolution (IDR) entities to select the offer closest to the Qualifying Payment Amount. Pursuant to Part II, the IDR entities “must select the offer closest to the QPA [Qualifying Payment Amount] unless the [IDR entity] determines that credible information submitted by either party clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate,” based on the additional factors set forth in the Code of Federal Regulations. Those factors include the level of training, experience, and quality and outcomes measurements of the provider or facility, the market share held by the provider or plan in the geographic region where the service was provided, the acuity of the plan participant, the teaching status, case mix, and scope of services of the provider, and any good faith efforts made by the parties to enter into network agreements.

TMA and AAMS assert that the legislative intent was not to select one factor as the primary factor, but rather, that each factor should be considered (the IDR entity should have discretion to consider all of the factors).

A challenge to the No Surprises Act on these grounds was expected. However, both TMA and AAMS make additional arguments that are a bit more interesting.

TMA makes the following additional allegations:

• The QPA should be calculated based on each payment, rather than each contract. It argues that basing the QPA on payments rather than contracts is more likely to reflect market rates (by including risk sharing, bonus and incentive payments, among other reasons).
• All information necessary for calculation of the QPA is held by the payer and providers cannot verify the accuracy of the calculation.
• The Department of Health and Human Services (HHS) unnecessarily and improperly circumvented the notice and comment procedures of the Administrative Procedures Act in promulgating Part I and Part II. It argues that HHS could have either met the deadlines and allowed notice and comment or could have delayed enforcement (as it did with other provisions of the No Surprises Act) during the notice and comment period.

TMA seeks an order vacating Part II to the extent it requires IDR entities to employ the rebuttable presumption that the offer closest to the QPA is the appropriate reimbursement amount and an order declaring that Part I and II were improperly promulgated under the Administrative Procedures Act.

Meanwhile, AAMS makes the following additional allegations:

• Part I intentionally depresses the QPA for air ambulances because the QPA calculation does not take into account single case agreements. According to AAMS, air ambulance providers primarily have single case agreements and should be included in the QPA because, by definition, they are contracts.[1]
• Part I defines geographic region too broadly (the Departments define “‘geographic region’ to mean Census-defined metropolitan statistical areas (which are derived without any consideration of the factors that actually affect air ambulance services or pricing), extending the relevant geographic regions for determining region-specific QPAs by hundreds of miles, far beyond what common sense and experience support” – Complaint, Paragraph 16).

AAMS also seeks an order vacating Part II to the extent it requires IDR entities to employ the rebuttable presumption that the offer closest to the QPA is the appropriate reimbursement amount. Additionally, AAMS seeks an order vacating Part I to the extent it excludes single-case agreements from the definition of “contracted rate,” as well as Part I with respect to the definition of “geographic region.”

Both cases are at the beginning stages of litigation. However, the TMA case has been set for expediting briefing on motions for summary judgment. (https://justsayyes.org) Initial briefings are due on December 10, 2021. More to come…

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[1] If this argument is successful and single-case agreements are included in the QPA calculations, more reference-based pricing plans are likely to subject to the IDR process set forth in the No Surprises Act.