UPDATED: Texas Medical Association Lawsuits Related to Implementation of the No Surprises Act

UPDATED: Texas Medical Association Lawsuits Related to Implementation of the No Surprises Act 

After passage of the No Surprises Act (NSA) in December 2020 three federal Departments – HHS, Labor, and Treasury – were charged with writing the regulations required for implementation of the NSA. Regulations related to the Independent Dispute Resolution (IDR) process were published in October 2021 and amended in August 2022. Multiple organizations representing emergency medicine found these regulations to be extremely problematic as they did not accurately reflect the wording or intent of the NSA statute. As a result, numerous comment letters and complaints were filed with the Departments.

Although some successes were achieved, the IDR process has proven to be drastically tilted in favor of health insurance companies, especially in matters related to factors to be considered by the Independent Dispute Resolution Entity (IDRE), calculation of the Qualifying Payment Amount (QPA), and the financial ability to submit claims to the IDRE.

Numerous lawsuits were filed by medical associations claiming that the regulations did not reflect Congressional intent of the NSA. Most of the lawsuits were withdrawn in deference to lawsuits filed in the Eastern District of Texas by the Texas Medical Association (TMA) in conjunction with different medical providers. Judge Jeremy Kernodle presided over all four cases. Judgements in all four lawsuits were favorable to the TMA, with the last two decisions issued in August. Following is a description of the primary facts of each lawsuit and the judgements in the four cases.

TMA Lawsuit #1

The first TMA lawsuit was filed on October 28, 2021. The plaintiff argued that the Departments had incorrectly created a rebuttable presumption that the insurer determined QPA is the correct reimbursement amount for the IDRE to consider during the IDR process. The court agreed with the plaintiff and granted summary judgement against the Departments that vacated the rebuttal presumption portion of the regulation as a factor for the IDRE to consider.

TMA Lawsuit #2

The second TMA lawsuit was filed on September 22, 2022. In the Final NSA rule, published on August 26, 2022, the Departments offered new language for factors that the IDRE should consider. In this new language, the QPA was no longer a rebuttable presumption. Instead, the Departments stated that the IDRE must first consider the insurer determined QPA and only consider additional factors if they were deemed “credible.” Additionally, the Departments created other barriers to the use of non-QPA factors. The plaintiff argued that the Departments had again created guidance for the IDRE that did not comport with the intent of the NSA. The court agreed with the plaintiff and granted summary judgement against the Departments that vacated the portion of the regulation that spoke to the revised factors. On March 17, 2023, the Departments released new guidance that called for the IDRE to consider the QPA and additional factors introduced as allowed in the NSA.

The Departments appealed the TMA 2 ruling, and emergency medicine organizations have submitted amicus briefs in support of the ruling. A hearing is pending.

TMA Lawsuit #3

The third TMA lawsuit was filed on November 30, 2022, and was heard on April 19, 2023. The plaintiff claimed that the Department’s methodology guidance for calculating the QPA allows for artificial reduction of the insurer calculated QPA, making it inconsistent with the intent of the NSA. Included in the plaintiff’s list of guidance items that are flawed were the allowance of “ghost” rates and inclusion of specialties that rarely use certain CPT codes. The plaintiffs sought injunctive relief to vacate that portion of the regulations that deal with QPA calculation.

On August 24, 2023, the court released its ruling almost entirely in favor of the vacatur (TMA) stating, “Here, the seriousness of the deficiencies weighs heavily in favor of vacatur. As explained above, the challenged portions of the regulations conflict with the unambiguous terms of the Act in several key respects. There is therefore nothing the Departments can do on remand to rehabilitate or justify the challenged portions of the Rule as written.”

 The ruling then vacated almost all the key portions of the regulations that describe how the QPA is to be calculated and remanded the Departments to revise the language in such a manner as to comport with the intentions of the NSA.

TMA Lawsuit #4

Filed on January 30, 2023, the fourth TMA lawsuit was also heard on April 19th. This case involved a $350 non-refundable fee for every batch of claims submitted. The plaintiffs sought a declaration that the challenged provisions of the September Rule and the December 2022 Fee Guidance’s $350 administrative fee are unlawful. Again, the plaintiffs requested injunctive relief to vacate the guidance language related to the non-refundable arbitration fee.

On August 3, 2023, the court released its ruling almost entirely in favor of the vacatur (TMA). The order vacated the $350 administrative fee per party established by the Amendment to the Calendar Year 2023 Fee Guidance for the Federal Independent Dispute Resolution Process Under the No Surprises Act: Change in Administrative Fee issued on December 23, 2022.

Immediately after the ruling, the Departments suspended new claim submission into the IDR portal. At the time of publication of this newsletter, the IDR portal remains closed for new claim submission.

Discussion

We are now twenty months into implementation of the No Surprises Act. From its inception, emergency medicine organizations have strongly disagreed with the regulatory language regarding payment for out-of-network services and the independent dispute resolution process. At the same time, emergency medicine has strongly supported the patient protection provisions of the NSA. While regulatory relief has not been forthcoming despite countless interactions with the Departments, legal relief has been far more satisfying. Through four lawsuits filed by the Texas Medical Association, the Departments have been mandated to rewrite regulatory language to comport with Congressional intent in the NSA. Although the government has appealed one TMA ruling, and almost certainly will appeal TMA 3, the court has provided emergency medicine with important temporary relief.

Simultaneous to the TMA lawsuits, emergency medicine organizations are vigorously lobbying Congress to either pressure the administration to enact regulatory language consistent with Congressional intent or amend the NSA in a manner that directs the administration to rewrite such regulations.

Numerous operational problems remain with the NSA implementation. The IDR process is extremely flawed even after the TMA 1 and TMA 2 lawsuits. Despite winning in the IDR process, providers are not receiving the adjudicated payment amounts. To make matters worse, the IDR portal is now suspended for new claims submission, with no anticipated date set for reopening.

Worse yet, health insurers are routinely cancelling long-term agreements that they have with providers in the expectation that low out-of-network payment amounts will force providers to renegotiate agreements at much lower payment amounts. The provider victory in TMA 3 may signal an end to the one-sided insurer favoritism in the NSA regulations, and possibly place providers in a more favorable negotiating position. Time will tell.