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No Surprises Act Update: HHS on the Losing Side Again

August 21, 2023

Summary

The back-and-forth battle between the Texas Medical Association and the federal government over the implementation of the No Surprises Act has led to yet another court decision against the government. The result is a dramatic drop in the independent dispute resolution fee amount—at least for now.

You know you’re having a bad day when you’ve just lost your third lawsuit in a row to the same group of plaintiffs. That’s especially irksome when you represent the almighty federal government and you’ve just been beaten again by a group of Texas doctors. So much for not being able to successfully fight city hall.

The context of this series of legal contests lies in the No Surprises Act (NSA), which became national law on Jan. 1, 2022. It established a federal framework for protecting in-network patients from being balance billed by out-of-network medical providers in an otherwise in-network facility. It also contained certain safeguards for self-pay and uninsured patients, such as requiring doctors and other billing practitioners to provide such patients with a good faith estimate (GFE) of the cost of the service prior to surgery.

Leadup to the Latest

One of the provisions of the NSA involves the establishment of a mediation system that the aforementioned non-participating providers can access when they believe that insurance companies have not provided them with reasonable reimbursement for services rendered. The independent dispute resolution (IDR) process allows either party to bring their complaint to a government-certified IDR mediator to make a final determination as to the appropriate payment for the medical service in question.

But, of course, going down the IDR route would not be free. In the original regulatory provision addressing the cost of the IDR process, the administrative fee for each party was set at $50. But, months later, the Centers for Medicare and Medicaid Services (CMS) increased this fee to $350, reflecting a 600 percent increase. The Texas Medical Association (TMA), which had previously brought successful suits against the U.S. Department of Health and Human Services (HHS) and CMS for what it believed to be improper NSA regulations, decided it was time to take action once more against what they felt was the latest example of government overreach.

In their January 2023 lawsuit, the TMA alleged that the change in the IDR fee “not only will make the process significantly more expensive for all IDR participants but will make it cost-prohibitive for many providers to access IDR at all.” It now appears that a federal court is singing from the same songbook.

Bringing Down the Gavel

On August 3, a judge for the U.S. District Court for the Eastern District of Texas held that HHS acted improperly when it failed to follow “notice and comment” requirements prior to its announcement of the IDR fee increases. As a result, the $350 fee was vacated by the court.

In its suit, the TMA had also disputed interim final rules that narrowed the NSA’s stipulations on “batching” claims for arbitration. The plaintiffs asserted that Congress had authorized batching to encourage efficiency and minimize costs in the IDR process and that the interim final rules had undercut this legislative intent. In his ruling, Judge Jeremy Kernolde invalidated the agency’s attempt to narrow the batching of claims.

As a result of these determinations by a federal court, the IDR process was suspended until federal agencies were able to provide additional instructions commensurate with the August 3rd decision. The interested parties wouldn’t have to wait long to hear from the government.

The Government’s Response

In the wake of this latest federal court ruling, CMS issued a set of FAQs on August 11 as a means of providing interim guidance on the IDR process. According to the FAQs, the administrative fee for disputes that were initiated or unpaid on or after August 3 will be $50 per party until the federal departments take action on a new fee amount. For disputes initiated between January 1 and August 2 that have been paid, the fee remains $350. The judge’s order does not require a refund on administrative fees paid before Aug. 3.

Following the judge’s ruling, HHS said it temporarily suspended the initiation of new IDR actions until the federal agencies can provide additional instructions. CMS said the federal departments tasked with overseeing the IDR process “intend to reopen the portal to permit the submission of new disputes soon and will notify interested parties at that time.”

So, what are the takeaways regarding the government’s response to its latest legal defeat? First, we are faced with yet another period of “interim” rules while the government regroups to find a more permanent fix. In other words, more rulemaking is on the way. Second, even though the court vacated the $350 IDR fee, that doesn’t mean we’re back to $50 fees forever. The government said it is in the process of deciding a “new fee amount.” It will be interesting to see if the government’s response to all this will be to simply follow the notice and comment requirements in connection with a new announcement of the same $350 fee amount. After all the court’s decision to strike down the fee was based on the government’s failure to follow this technicality. So, HHS may be thinking, “all we’ve got to do is dot this “i” and cross this “t” and we’re back in business again”—that is, until the next legal challenge from Texas.

We will keep you apprised of the next developments in this ongoing story. Until then, you can access the full set of CMS’ FAQs by going to the following link: IDR Admin Fees FAQs (cms.gov). If you have any questions on this topic, please reach out to your account executive.

With best wishes, 

Rita Astani
President—Anesthesia

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