The Texas Medical Association (TMA) has filed its fourth lawsuit relating to the No Surprises Act (NSA). This time TMA is contesting the steep increase to the administrative fee charged for using the independent dispute resolution (IDR)  process, which jumped from $50 to $350, as well as the rule for batching multiple similar claims for the IDR process announced in the October, 2021 Interim Final Rule (October IFR).  TMA makes technical arguments about the lack of notice and comment related to the regulatory process, as well as substantive arguments about how the fee increase and the batching rule negatively impact providers’ access to the IDR process and should be vacated by the court.

Challenges to Administrative Fee Change

The NSA requires plans and providers to each pay an administrative fee to CMS that was set at $50 per party, and to pay an IDRE fee to the Independent Dispute Resolution Entity assigned to make a payment determination on their case.  The administrative fee is intended to cover the costs to CMS to administer its part of the IDR process.  In October 2022, CMS announced that the administrative fee would remain at $50 through 2023, but in December CMS amended the October guidance and increased the fee to $350 effective January 1, 2023.   The December amended guidance cited the increasing number of disputes and the resources necessary to manage the disputes were significantly higher than expected.

In its suit, TMA says the higher rate “will not only make the process significantly more expensive for all IDR participants but will make it cost-prohibitive for many providers to access IDR at all.” TMA argues that the charges providers are disputing often could be less than the $350 IDR fee so even if they win, they “would come out behind.”  Consequently, this increased administrative fee may act as a minimum threshold for providers’ access to the IDR process, which is contrary to the intent of the NSA.

TMA also notes that the significant increase to the administrative fee was announced just four business days before it went into effect.

Challenges to the Batching Rule

The NSA establishes that claims may not be jointly considered during the IDR process unless they satisfy the batching requirements:  (a) same provider; (b) same payor; (c) claims for services in same 30 business day period; and (d) claims are for services “related to the treatment of a similar condition.”   The October IFR, when elaborating on these batching requirements, expressed the fourth condition as “the same or similar” services, which TMA argues is both a narrower category, and a different way to group claims together than in the NSA.  TMA argues that the NSA language would allow claims from an episode of care to be handled together in one batched IDR process, while the October IFR wrongfully requires those claims to be submitted by service code.

TMA’s Previous Lawsuits

  • In February 2022, TMA filed a suit claiming portions of the October 2021 Interim Final Rule favored payors because it gave too much weight to the qualifying paying amount (QPA). A federal court in Texas ruled in favor of TMA (TMA 1).
  • In September 2022, TMA filed a related lawsuit to challenge portions of the August 2022 Final Rule that they argue require arbitrators to consider the QPA first and not give any weight to other factors unless certain criteria are met (TMA 2).  We expect a hearing on cross-motions to for summary judgement in February or early March.
  • In November 2022, TMA filed its third lawsuit targeting provisions of the July 2021 Interim Final Rule (“July IFR”).  Specifically, TMA argued that several July IFR provisions detailing how the QPA must be calculated artificially deflate reimbursement (TMA3). We expect a hearing on cross-motions to for summary judgement in April or early May.

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