No Surprises Act Final Rule Process Struck Down by Federal Court

On Monday, Judge Jeremy Kernodle of the U.S. District Court for the Eastern District of Texas handed down a decision that would remove major portions of the final rule for the No Surprises Act.

In 2021, the Texas Medical Association (TMA) filed suit against an interim final rule that would instruct independent arbiters to rely on the median in-network rate offered by providers, Inside Health Policy explains. Independent arbiters are tasked with managing the independent dispute resolution (IDR) process between insurers and providers

After a ruling in favor of TMA, the Biden administration altered the rule to instruct arbiters to take all factors listed by statute into consideration but ensure that there was no additional information added into the qualifying payment amount (QPA). TMA and other provider groups challenged this adjustment, claiming the rule only compounded the original issues of the interim final rule.

In Monday’s ruling, Judge Kernodle told the U.S. Department of Health and Human Services that it would need to go back to the drawing board for regulating the dispute resolution process. As Modern Healthcare notes, these legal issues aren’t going away, a backlog of unresolved cases is piling up with nearly 90,000 requests made between April and September.

The TMA applauded the decision, and appeared to be just warming up; it has four more pending cases challenging the No Surprises Act.

From Dr. Gary Floyd, TMA President:

This is an important step after [TMA] successfully challenged an interim final rule that similarly skewed the [IDR] process in health plans’ favor. This decision is a major victory for patients and physicians. It is also a reminder that federal agencies must adopt regulations in accordance with the law.

One of TMA’s other lawsuits has to do with the nonrefundable administrative fee for IDR participation. According to HealthLeaders, the cost jumped from $50 to $350 in January after the Biden administration discovered increasing expenditures in the process. The American College of Emergency Physicians, the American College of Radiology and the American Society of Anesthesiologists filed a joint amicus brief in support of TMA’s challenge.

For a more detailed look at the final rule and other dispute process challenges, law firm McDermott, Will and Emery offers three major takeaways from the initial report on the IDR process.