On February 6, 2023, a federal judge in Texas ruled in favor of the Texas Medical Association (TMA) in their second suit challenging aspects of regulations related to the No Surprises Act’s Independent Dispute Resolution (IDR) process. In the latest ruling, the U.S. District Court for the Eastern District of Texas again decided against the Administration, vacating portions of the Final Rule issued in August 2022.

Why is the IDR process associated with the No Surprises Act still being debated?

In their first lawsuit, TMA successfully argued that the October 2021 interim final rule impermissibly treated the QPA as the primary factor for consideration by the arbitrator in the IDR process. In this second case, TMA challenged the Administration’s revised IDR provisions published in the August 2022 Final Rule. The plaintiffs claimed that the Final Rule still favors the Qualifying Payment Amount (QPA) rate over additional factors that must be considered during IDR.

U.S. District Judge Jeremy Kernodle agreed with the Texas Medical Association (TMA) that the IDR guidelines “improperly restrict arbitrators’ discretion and unlawfully tilt the arbitration process in favor of the QPA.” The court incorporated into its ruling TMA’s arguments that these portions of the Final Rule conflict with the clear statutory text of the NSA and therefore exceed the administration’s authority. As a result, Judge Kernodle vacated portions of the IDR procedure that give primacy to QPA during arbitration.

Specifically, the rules for arbitration no longer require that IDR Entities consider QPA first, and only then consider additional factors. IDR Entities may also consider the additional factors without assessing credibility, and no longer need to include additional explanations in their written decisions about why they concluded the additional factors were not already reflected in the calculated QPA value.

The effect of this ruling is immediate and applies nationwide. The government has 60 days to decide whether to appeal Judge Kernodle’s ruling. Appealing does not guarantee that the lower court’s decision will be overturned.

What this means for MultiPlan

We see this second ruling as further challenging the integrity of the QPA as a benchmark for reasonable out-of-network reimbursement. However, MultiPlan’s sophisticated IDR and postpay negotiation processes, which leverage state-of-the-art analytics, were designed to anticipate any of the considerations that the lawmakers cited and to be nimble. Therefore, as the law around NSA continues to evolve, MultiPlan will be positioned to support your claims. We already have analytic tools and language that counter, where applicable, any of the market share, severity, complexity and other arguments that could be raised.

Related lawsuits

TMA has two other NSA-related lawsuits pending: one challenging aspects of how the QPA must be calculated, and another filed last week challenging the rate hike for IDR administrative fees and rules around how claims may be batched for IDR. The administrative fee issue seems to be at the forefront of concerns currently being raised around the NSA and the rules around arbitration. In support of TMA, several other associations including the American College of Emergency Physicians, American College of Radiology and American Society of Anesthesiologists filed a joint amicus brief with the court.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes. If you have questions about how the No Surprises Act applies to your organization, please consult your legal counsel.