Compliance with the No Surprises Act (NSA) remains a priority for employer-sponsored health plans The NSA ends surprise medical billing, also known as balance billing, in certain situations – such as emergency care or services from out-of-network providers at in-network facilities.
Physicians and other payers continue to challenge agency regulations implementing NSA, specifically provisions that are part of the Independent Dispute Resolution (IDR) process. In Texas Medical Association (TMA) v. United States Department of Health and Human Services (HHS), the U.S. District Court for the Eastern District of Texas ruled that HHS failed to follow the Administrative Procedures Act notice and comment rulemaking requirements. The following day, the agency announced that “effective August 3, 2023, the Departments have temporarily suspended the Federal [IDR] process.” Effective August 8, 2023, IDR processing was resumed for most disputes initiated before August 3, 2023. Processing of other disputes remains temporarily suspended.
On August 24, 2023, the same U.S. District Court declared illegal the regulatory guidance outlining the method to use in determining the Qualified Payment Amount (QPA).
Independent Dispute Process
When claims subject to NSA provisions are adjudicated, the claims administrator reduces the covered charge to the QPA and processes the expenses as if submitted by an in-network provider. The QPA is determined based on a benchmark, such as the median in-network rate for the same or similar services in the geographic area, adjusted for inflation since 2019
Payers and providers then have 30 days to resolve any billing and payment disputes that claim additional amounts are due. If an agreement can’t be reached, both parties submit a preferred amount to a third-party arbitrator, which then chooses one—a process referred to as Independent Dispute Resolution (IDR).
Fees for Independent Dispute Resolution Returned to 2022 Levels
The court order vacates the $350 IDR administrative fee per party. TMA had argued in its lawsuit that CMS’ increase in administrative fees was “arbitrary and capricious” and would curtail certain physician organizations’ ability to contest a health plan’s reimbursement offer. CMS said its fee increase was necessary to cover expenses related to the arbitration process.
CMS has now reverted the fee from $350 back to $50, where it will remain for disputes initiated on or after Aug. 3, until the departments decide to set a new amount. The cost will remain $350 for already-paid administrative fees pertaining to disputes initiated between Jan. 1 and Aug. 2 of this year, and the court order does not require refunds for such invoices.
Qualified Payment Amount and The Rebuttable Presumption
On Feb 23, 2022, an Eastern District of Texas Judge sided with the Texas Medical Association that represent its 55,000 member physicians, deciding that the Department of Health and Human Services interim final rule governing the IDR process conflicted with the NSA statute when it created a rebuttable presumption that the QPA 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. Despite the litigation and ongoing controversy, 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.
That litigation removed the requirements that favored the QPA amount as the baseline so that the IDR entities are required to apply the plain language of the statute and determine the out-of-network fees without giving the QPA special weight.
The IDR process has been roundly criticized. In its latest brief, Healthcare Dive highlights a new survey conducted by the Americans for Fair Health Care (AFHC) which reveals allegations that payers, specifically large health insurers, are not complying with certain provisions set forth by the final rules of the No Surprises Act (NSA).
According to physician survey respondents, many payers are ignoring Independent Dispute Resolution (IDR) rulings or are failing to pay them in full. Physicians also cite delays with this process and challenges when attempting to enforce collection of their awards. Many believe the NSA has malfunctioned – that it fails to achieve intended a fair and amicable resolution of the interests of all involved.
Qualified Payment Amount Process Ruled Illegal – IDR Portal Suspended … Again!
TMA also initiated an additional lawsuit challenging the methodology used to calculate the QPA. TMA asserted that the QPA is an arbitrary, statutorily determined amount, and that the definition in the regulations is inconsistent with the statute. The plaintiffs contend that several aspects of the QPA methodology combine to artificially deflate the QPA and, by extension, covered charges by out-of-network providers. And, because the QPA is the maximum allowable amount, changing the QPA definition will impact not only benefits paid by the plan, but also participant-paid out-of-pocket costs.
On August 24, 2023, the U.S. District Court for the Eastern District of Texas issued an opinion and order in Texas Medical Association, et al. v. United States Department of Health and Human Services, Case No. 6:22-cv-450-JDK (TMA III), vacating certain portions of QPA regulations and related guidance documents. After Thursday’s ruling vacated the provisions at issue, the U.S. Departments of Health and Human Services (HHS), Labor and Treasury will have to publish new guidance.
As a result of this decision, the Departments have temporarily suspended all Federal IDR process operations until the Departments can provide additional instructions.
Despite the suspension, existing QPAs can continue to determine patient cost-sharing until a new methodology is identified. However, the court identified a number of issues with the current regulations that specified the QPA determination process which allowed insurers to:
- Incorporate provider rates from providers who don’t offer that service,
- Include rates for providers of different specialties,
- Exclude risk-sharing, bonus and other incentive amounts, and
- Allowing self-insured plans to include rates for all plans where the same TPA was the claims administrator.
Litigation is expected to continue, perhaps indefinitely. Given the uncertainty, employee benefit experts believe a larger number of self-insured plans will consider options designed to avoid both the QPA determination process and the administratively cumbersome and costly IDR process.
Value of Legal Advocacy in a Medical Billing Partnership
Patient advocacy groups could also potentially bring legal challenges if they believe that the law is not adequately protecting patients from surprise billing or if they perceive gaps in its implementation.
aequum, meaning ‘what is fair and just,’ supports employer-sponsored health plans with legal advocacy and defense of plan participants engaged in medical billing disputes through Its sister organization, Koehler Fitzgerald LLC. Since our inception, we have represented more than 425 self-insured health plan sponsors and their participants and resolved (to date) 10,000+ claims for more than 5,000 member patients – saving nearly $40 million ($39.99m).
As your partner, aequum can help lower costs, achieve savings, enhance member experience, and maximize your plan’s success in 2023/24 and beyond. Please contact us if you have any questions or need support.