Litigation Update: No Surprises Act

aequum is mindful that government agencies adopt regulations that may extend the reach of or may conflict with the original text of the legislation. This update provides an overview and recent legal challenges to a portion of the law.

According to research by the Kaiser Family Foundation and others, about 1 in 5 emergency department visits result in a “surprise bill” because the doctors or other providers were not in the contracted network of the patient’s health plan. Nonemergency patients also receive surprise bills when they receive care from in-network facility or set of providers but don’t know that some specialists — anesthesiologists or radiologists, for example — are not in their health plan’s network.



The No Surprises Act (NSA) was signed into federal law in late 2020 after years of negotiation between health plan insurers, employers, and providers. According to The National Law Review, this bill  limits provider billing for certain “out-of-network” services.

The NSA is intended to eliminate “surprise” medical bills.  “Surprise” is defined as “balance billing” of a patient for expenses for certain services provided by an out-of-network provider. Those services include certain emergency expenses as well as services provided by an out-of-network provider in a network facility.   This is referred to as “balance billing” because the out-of-network provider bills a patient directly for any charges that exceed what the plan covers  (the balance).

According to research by the Kaiser Family Foundation, in the past, about 1 in 5 claims for emergency treatment resulted in a “surprise” medical bill. Typical non-emergency “surprise” bills result from out-of-network specialists – anesthesiologists or radiologists, for example — providing services at in-network facilities.

As of January 1, 2022, the NSA covers all participants in employer-sponsored health plans and aims to provide protection from “surprise” medical bills for certain emergency services as well as care received from out-of-network providers at an in-network facility.


Texas Medical Association vs United States Department of Health and Human Services

On Feb 23, 2022, Eastern District of Texas Judge Jeremy Kernodle sided with the Texas Medical Association (TMA), a trade association representing more than 55,000 physicians, deciding that the Department of Health and Human Services (HHS) interim final rule governing the Independent Dispute Resolution (IDR) process conflicted with the No Surprises Act statute when it created a rebuttable presumption that the Qualifying Payment Amount (QPA) (which is typically the median in-network rate) was the appropriate out-of-network rate for purposes of the IDR process.

The court found that the federal agencies exceeded their authority by instructing IDR  arbitrators to favor some factors over others in determining the QPA. In response to the litigation, the departments issued a memorandum withdrawing the vacated provision and indicating that IDR arbitration should not otherwise be affected by the court’s decision.

On April 22nd, the Biden Administration appealed the ruling to the U.S. Court of Appeals for the Fifth Circuit and then requested that the appeal be stayed pending ongoing rulemaking. The new rules were supposed to be issued sometime in May, but they have yet to be released and are now expected in early summer.

In the meantime, the departments have opened the arbitration portal – confirming that due to a pause necessary to address litigation, “there may be a backlog of IDR requests and high case volume.”

Prior to the Court’s ruling, the IDR arbitrator would have had to select the offer closest to the QPA absent extraordinary circumstances. TMA was able to show that the rules deprived them of the NSA’s arbitration process  and that the rules would unfairly pressure providers to lower their offers to increase the likelihood their offer would be selected. Further, TMA was able to show harm based on HHS assertion that the rules would “systematically reduce out-of-network reimbursement compared to an IDR process without such a presumption.”

The Court determined that the NSA unambiguously establishes the framework for deciding payment disputes and concluded that the rule conflicts with that statutory text.

Additional Lawsuits

So many entities are invested and interested in the outcome of this litigation, as it will shape health care in the U.S. for many years to come. Some of the additional key cases are discussed below.

Association of Air Medical Services v. U.S. Department of Health and Human Services and American Medical Association v. U.S. Department of Health and Human Services

Pending in the U.S. District Court for the District of Columbia, these cases were consolidated because they were pending in the same court and address many of the same issues. Cross Motions for Summary Judgment are pending. Plaintiffs’ Motions argue:

  • The rebuttable presumption created by Part II of the Rules is inconsistent with NSA’s  statutory text;
  • The QPA calculation method  in Part I of the Rules impermissibly excludes certain contracts such as single case agreements;
  • The QPA calculation method  in Part I of the Rules treats air ambulance services furnished by different specialties the same; and
  • The QPA calculation method  uses overbroad geographic regions.

Briefing is complete and oral arguments were held. No decision has been issued by the Court.

American Society of Anesthesiologists, et al. v. U.S. Department of Health and Human Services

Pending in the U.S. District Court for the Northern District of Illinois, Plaintiffs argue that (1) that the creation of the rebuttable presumption exceeds Defendants’ statutory authority; and (2) that the Administrative Procedures Act notice and comment rulemaking requirements were violated. On March 3rd, HHS filed an unopposed Motion to Stay Proceedings. The stay has been extended until July 7th.

Georgia College of Emergency Physicians, et al. v. U.S. Department of Health and Human Services

Like the Plaintiffs in the other cases, Georgia College of Emergency Physicians (GCEP) alleges that HHS overstepped by creating the rebuttable presumption in direct contravention of the language of the NSA. GCEP seeks: (1) a declaration that HHS acted unlawfully in promulgating rules creating a rebuttable presumption, (2) an order vacating those provisions; (3) an injunction barring enforcement of those provisions; and (4) an injunction barring replacement provisions absent compliance with the notice and comment period.

This case is stayed until July 5th.

Haller v. U.S. Department of Health and Human Services

This case, filed in the Eastern District of New York, asserts that the NSA violates the Fifth and Fourteenth Amended by restricting the amount that physicians are entitled to be paid for their services, delegating authority to determine the payment amount to the IDR Entity, and prohibiting physicians from being able to balance bill patients. Many legal analysts believe Haller has an incredibly weak legal case.

Currently, the parties are briefing a Motion to Dismiss filed by the U.S. Department of Health and Human Services. This case is not stayed. However, it will be some time before a decision is entered on the Motion to Dismiss.

Solution Strategy for Self-Funded Plans

The IDR process added by the NSA triggers a new risk for self-funded health plans that use RBP with a network of providers or plans that directly contract with providers and facilities. We believe the most effective way to address NSA legislation, particularly elements of the IDR process, is to adopt a pure RBP plan – a strategy designed to moderate costs by establishing a benchmark fee schedule and payment ceiling in lieu of a traditional provider network. (Ambien) Pure RBP plans that do not contract with providers should remain unaffected by NSA because there aren’t any out-of-network claims; nor any determination of a median in-network rate.

Your Medical Billing Partner

aequum receives requests for guidance from payers and plans on how to navigate new federal and state healthcare regulations and compliance with the good faith standard.

Our white paper No Surprises Act: What Every Plan Sponsor Needs to Know serves as a valuable resource for employer-sponsored health plan administrators. It offers benefits professionals guidance regarding the NSA’s provisions and interim final rules – encouraging plan sponsors to respond with an approach that is both strategic and compliance oriented. A dual approach will minimize compliance challenges, reduce cost of coverage for both the employer and employees, and improve both the perceived and actual value of health coverage.

For more information and support, visit or contact us at