On Feb. 23, 2022, the U.S. District Court for the Eastern District of Texas granted a motion for summary judgment in favor of the Texas Medical Association (TMA), which contended that the Independent Dispute Resolution (IDR) process laid out in the Interim Final Rule Part II conflicted with the No Surprises Act’s statutory requirements.
The No Surprises Act was issued on December 27, 2020, and directs a provider and a health plan, in the absence of agreeing to a negotiated rate, to each submit a payment offer to a certified IDR entity, who will select one of the offers based on several factors, including the QPA (generally the health plan’s median contract rate for the item or service in the geographic area), the provider’s level of training and experience, quality and outcomes measurements, the acuity of the patient receiving the item or service, and the complexity of furnishing such item or service to such individual.
In comparison, the Interim Final Rule Part II, issued on September 30, 2021, declared that the certified IDR entity must select the payment 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 out-of-network rate, or if the offers are equally distant from the QPA in opposing directions.
The TMA argued that it was unsuitable to weigh the QPA so heavily in the IDR process because it would ultimately give payors power and control over reimbursement rate pricing. The TMA also maintained that, while the No Surprises Act includes the QPA in a list of factors that certified IDR entities should consider when rate setting, the legislation intended for each listed factor to be weighed as relevant in each case. Furthermore, the court found that implementation of the rule was improper because Health and Human Services (HHS) failed to comply with the notice and comment requirements of Administrative Procedure Act (APA).
As a result of these findings, the Departments of Health and Human Services, Labor, and the Treasury (the “Departments”) have withdrawn all previous guidance related to the IDR process and are creating updates to reflect the court’s decision. All other elements of the surprise balance billing provisions remain intact. Once the documents related to the IDR process are updated, training will be provided to certified IDR entities and disputing parties, via webinars and roundtable discussions. The IDR portal will then be opened to accept submissions and for those disputes for which the open negotiation period has expired, submission of a notice of initiation of the IDR process will be permitted within 15 business days following the opening of the IDR Portal.
What This Means for Group Health Plans
At this time, the court ruling does not impact how WebTPA determines the initial payment to out-of-network providers, for services with surprise balance billing protections. We will continue to calculate and apply the QPA as the initial payment for such claims. As we receive updated QPA guidance related to the IDR process, we will share the guidance and any WebTPA process changes with you.