On December 9, 2021 the American Hospital Association (“AHA”), American Medical Association (“AMA”) along with other health care providers filed a complaint in the United States District Court for the District of Columbia challenging part of the Departments of Health and Human Services (“HHS”), Labor and Treasury and the Office of Personnel Management (collectively, the “Departments”) recent rulemaking implementing the No Surprises Act signed into law in December 2020. Specifically, the AHA and AMA asked the court to set aside a provision of the Departments’ interim final rule published in the Federal Register on October 7, 2021 (the “Rule”) that requires Certified Independent Dispute Resolution Entities (“IDR Entities”) to employ a presumption in favor of the Qualifying Payment Amount (“QPA”) when determining the payment owed to an out-of-network (“OON”) provider from a payer through the No Surprises Act independent dispute resolution (“IDR”) process.
This challenge comes only a few weeks before the January 1, 2022 effective date of the relevant part of the Rule.
Background
Generally speaking, the No Surprises Act protects patients from certain surprise medical bills, including when a patient receives OON emergency services or non-emergency services from an OON provider at an in-network facility. In these situations, the No Surprises Act and its implementing regulations require that a patient only be charged their in-network cost-sharing amount for the OON item or service. For further discussion of the surprise billing prohibition and patient cost-sharing protections under the No Surprises Act, please refer to our previous article available here.
The No Surprises Act also established a “baseball style” IDR process in which an IDR Entity settles payment disputes between payers and OON providers regarding the OON rate for items/services subject to the surprise billing protections under the Act. This process is completely independent of the patient cost-sharing protections and is only available if the OON rate for such items/services is not otherwise determined based on a specified state law or an All-Payer Model Agreement, and if the parties fail to come to an agreement through a mandated informal good faith negotiation period. For further discussion regarding the IDR process under the No Surprises Act, please refer to our article here.
In the October 7, 2021 Rule, the Departments specified that an IDR Entity must “begin with the presumption that the QPA is the appropriate out-of-network rate” for the item or service in question. Note, the QPA is defined under the law as an amount that is equal to the applicable health plan’s median contracted rate on January 31, 2019, for (a) the same or similar item or service; (b) furnished by a provider in the same or similar specialty; and (c) in the same geographic region, increased annually for inflation. The Rule also requires that the IDR Entity “must select the offer closest to the QPA unless the certified IDR entity determines that credible information submitted by either party clearly demonstrates that the QPA is materially different from the appropriate out of-network rate.”
Legal Challenge
The AHA and AMA complaint challenges the Departments’ authority to create the presumption in favor of the QPA. As the AHA and AMA note in the complaint, the No Surprises Act includes six (6) mandatory factors IDR Entities must consider when settling payment disputes between payers and providers. This list includes the QPA but does not appear to give the QPA any greater weight than the other enumerated factors. This is in stark contrast to the Rule that establishes a required presumption in favor of the QPA, that can only be overcome by showing “credible information” that “clearly demonstrates that the QPA is materially different from the appropriate OON rate.”
The AHA and AMA argue in the complaint that the presumption in favor of the QPA is inconsistent with the No Surprises Act and beyond the statutory authority granted to the Departments by the No Surprises Act. The complaint also argues that providers will suffer irreparable harm if the presumption in favor of the QPA is unchanged and that the presumption is contrary to public interest.
The AHA and AMA are seeking declaratory and injunctive relief setting aside the presumption in favor of the QPA as described in the Rule. Given that the effective date of the relevant part of the IFR Part II is January 1, 2022, the parties also filed a motion requesting a stay pending judicial review. The AHA and AMA are seeking judicial relief by March 1, 2022, noting that this is the earliest approximate date that payment disputes between providers and payers would reach the IDR process.
Timing and Practical Takeaways
- The complaint is a serious escalation and first significant legal challenge to the Departments’ rulemaking on the No Surprises Act. Providers should closely monitor this litigation as it moves forward;
- The timing of the complaint, however, leaves open the real possibility that no relief will be granted prior to the upcoming January 1, 2022 effective date, so providers should continue to prepare accordingly;
- Finally, it is important to note that the scope of the legal challenge is narrow – focusing only on the presumption in favor of the QPA during the IDR process. The complaint does not address or challenge other aspects of the No Surprises Act or IFR Part I or Part II. Providers should continue to diligently prepare to comply with the many other requirements included in the No Surprises Act regulations as the effective date draws closer.
For more information on surprise billing, please contact:
- Ben Fee at (720) 282-2030 or bfee@hallrender.com;
- Lisa Lucido at (248) 457-7812 or llucido@hallrender.com;
- Matthew Reed at (317) 429-3609 or mreed@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
