HHS files notice to appeal ruling in No Surprises Act dispute resolution process

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The Department of Health and Human Services and other federal agencies have filed a notice to appeal a February ruling that affects the dispute resolution process in the No Surprises Act. HHS and other departments filed the notice on Friday in United States District Court in Texas opposing a summary judgment issued February 23 in favor of the plaintiffs in the case, Texas Medical Association and Adam Corley v. HHS et al.

The Texas Medical Association is a trade association representing more than 55,000 physicians and Dr. Adam Corley is a Tyler, Texas, physician. They challenged a September 30, 2021 interim final rule of the No Surprises Act governing the arbitration process for resolving payment disputes between out-of-network providers and health plans.

The court called it "baseball style" arbitration in which both provider and payer submit a proposed payment amount and explanation to the arbitrator, who must select one.

The qualifying payment amount is generally the median of the contracted rates recognized by the plan or insurer, typically the amount of the in-network rate as of January 31, 2019, the court said. "And because insurers had ultimate say on what in-network rates they accepted in 2019, insurers now hold ultimate power, and are charged by regulation, to calculate the QPA (qualifying payment amount)," according to the February ruling.

The departments argued that the plaintiffs did not have standing to challenge the rule because their alleged injuries were speculative and that they practice through corporations, and therefore, have not been personally harmed by the rule. The departments also claimed there was no harm because they would soon issue a final rule incorporating the plaintiffs' comments. 

But the court said the departments' failure to comply with the notice-and-comment requirement provided a second and independent basis to hold unlawful and set aside the rule. Federal Judge Jeremy D. Kernodle said that vacatur, or vacating the rule, and remand, was the proper remedy. 

WHY THIS MATTERS

While the federal government has given notice of its intent to appeal, three major medical associations said they would continue to press their challenge to block the implementation of parts of the Surprise Billing Interim Final Rule.

The American College of Emergency Physicians, American College of Radiology and the American Society of Anesthesiologists want to prevent what they called the insurer's use of the rule's independent dispute resolution process to raise profits by narrowing medical networks.

The case does not affect the No Surprises Act patient protections against out-of-network medical bills, the medical organizations said. Neither case would raise patient out-of-pocket costs.

THE LARGER TREND

The No Surprises Act was enacted on December 27, 2020 to address surprise medical bills. It limits the amount an insured patient will pay for emergency services at an out-of-network provider and limits what will be paid for certain non-emergency services from an out-of-network provider at an in-network facility. The Act requires insurers to reimburse out-of-network providers at a calculated out-of-network rate.

If the provider disagrees with the insurer's determination, the provider may initiate a 30-day period of open negotiation with the insurer over the claim. If the parties cannot resolve the dispute through negotiation, the parties may then proceed to independent dispute resolution arbitration, which is the subject of the lawsuits.

In December 2021, the American Hospital Association and American Medical Association also sued HHS and the other federal agencies over implementation of the No Surprises Act.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org