In Texas Med. Assoc. v. HHS, 2022 WL 542879 (E.D. Tex. 2022), the court upheld a challenge by health care providers to portions of the interim final regulations implementing the No Surprises Act. Congress passed the No Surprises Act in 2021 as part of the Consolidated Appropriations Act, to apply to all plan years beginning on or after January 1, 2022. The regulations at issue are related to the independent dispute resolution (IDR) process for resolving conflicts over appropriate payment amounts between out-of-network plans, insurers, and healthcare providers.
The Internal Revenue Service (IRS), Department of Labor (DOL), and Department of Health and Human Services (HHS) issued two sets of collaborative interim regulations to put the No Surprises Act into place. Part I addressed participant cost-sharing for services subject to the law; in most cases, the cost comes from the qualifying payment amount (QPA) or the plan’s median in-network rate. Part I also covered procedures for plans to pay out-of-network rates to nonparticipating providers.
Part II addressed the details of the IDR process, which include a list of approved certified IDR entities, the parties’ submissions of proposed payment amounts and supporting documents, and payment of IDR fees. Part II also discusses the issue that providers challenged in this suit – the factors that the certified IDR entities consider in selecting a payment amount. Providers argue that the regulations created a presumption that the QPA is the correct out-of-network rate when determining the payment amount. In Part II, certified IDR entities must choose the provider’s offer that is nearest in amount to the QPA unless other information “clearly demonstrates” that the value of the item or service is “materially different” from the QPA.
The Court Decision
The court upheld the providers’ challenge to the regulations outlined in Part II, finding that the CAA required certified IDR entities to consider five other circumstances other than the QPA in determining the payment amount. By creating a presumption in favor of the QPA, the regulations conflict with the CAA, which places no greater weight on the QPA than on any of the other five listed factors. The court ruled that the agencies should have adopted the regulations through the notice-and-comment rulemaking process, rather than simply issuing an interim final rule, which allowed no input from the public.
The Federal Agencies’ Memorandum
Upon receiving the court’s decisions, the IRS, DOL, and HHS issued their Memorandum Regarding Continuing Surprise Billing Protections for Consumers (Feb. 28, 2022). They acknowledged the court’s decisions and indicated that they were reviewing their next steps in light of the decision. Part of their quick response to the court’s decision was to rescind already-issued guidance to modify the guidance to meet the parameters of the court order. The agencies also confirmed that the remainder of the Part II guidance that the court did not invalidate or address remains in full force and effect.
As such, the agencies have pressed ahead with opening the IDR process for submissions through the IDR Portal.
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