Originally posted on August 29, 2023 and updated on September 1, 2023
On August 9, a federal court in DC ruled for the administration on several challenges to regulations related to the No Surprises Act (NSA), while on August 24, 2023, a federal court in Texas largely ruled for the Texas Medical Association (TMA) in its third-filed and fourth-decided lawsuit challenging NSA regulations.
TMA 3 and AAMS Challenges to the NSA Regulations and Guidance
In its third suit, TMA challenged multiple aspects of how the administration implemented the NSA with respect to the calculation of QPA, the payment timeframe for air ambulance claims, the bifurcation of IDR processes for each air ambulance transport, the treatment of geographic regions to be used for air ambulance QPA calculation, and the exclusion of single-case agreements from the calculation of QPA for air ambulance services.
The Association of Air Medical Services (AAMS) also challenged the exclusion of single-case agreements and the geographic regions for air ambulance QPA calculations.
Given the various challenges to aspects of how QPA is calculated, it is worth revisiting the statutory definition from the NSA. The NSA defines Qualifying Payment Amount (QPA) as:
“the median of the contracted rates recognized by the plan or issuer, respectively (determined with respect to all such plans of such sponsor or all such coverage offered by such issuer that are offered within the same insurance market) as the total maximum payment (including the cost-sharing amount imposed…) under such plans or coverage, respectively, on January 31, 2019, for the same or a similar item or service that is provided by a provider in the same or similar specialty and provided in the geographic region in which the item or service is furnished…”
Several of the challenges by TMA and AAMS focus on how to interpret portions of the above definition of QPA.
Below MultiPlan provides a summary of changes to NSA regulations and guidance as a result of these decisions.
Changes to NSA Regulations and Guidance
Ghost Rates Are Not Permitted in QPA Calculation
The TMA challenged the way the Interim Final Rule described QPA calculation in relation to services “provided by a provider,” which the judge agreed would allow plans to include standard or default rates that are included in all provider contracts. The court concluded that providers may not negotiate certain rates if they have no intention to provide those particular services. Including such “ghost rates,” the court determined, would depress the median. The court ruled the NSA “requires calculating the QPA using only rates for items and services that are actually supplied or provided by that particular provider.
QPA Must Always Be Calculated by Specialty
The TMA argued the Interim Final Rule required plans to calculate QPAs by specialty only when a plan routinely varies its contracted rates based on specialty or if a plan determines there is a material difference in median contracted rates between specialties. The court in TMA 3 found the NSA’s plain language requires QPA to be calculated by discrete specialty, regardless of whether there is variation in rates among specialties.
QPA Calculation Must Include Incentives, Bonuses, and Risk-Sharing Payments
This challenge to the NSA regulations claims the Interim Final Rules impermissibly allow plans to exclude bonuses, incentives, or other risk-sharing elements of reimbursement that may increase the total amount paid to a provider. The TMA 3 Court determined the NSA’s definition of QPA as the median of the plan’s “total maximum payment… under such plan or coverage” requires plans to include reimbursement components that may increase the payment in order to determine the total maximum contract rate to be included in the QPA.
Plan Sponsor QPAs May Not Be Aggregated by TPAs with Other Plan Sponsors
The NSA requires plan sponsors to calculate the QPA across all their plans in the applicable market, but the Interim Final Rules interpreted this obligation to allow TPAs to calculate QPAs on behalf of plan sponsors, and to calculate the QPA for all plans that are administered by that TPA. The plaintiffs in TMA 3 argued that plans are “likely to calculate alternative QPAs and choose the lower amount if available.” The court agreed and vacated portions of the regulations permitting TPAs to calculate QPAs across multiple plan sponsors based on the NSA requirement that limits the QPA to include “all such plans of such sponsor.”
Air Ambulance Claims Must Be Paid or Denied within 30 Days of Receipt of Bill (Not Clean Claim)
The TMA argued that allowing plans to measure their 30-day timeline to deny or pay an initial payment from receipt of all the information needed to process the claim – or, from receipt of a “clean claim” – “extends indefinitely” the timeline required by the law. The TMA 3 Court determined the NSA itself does not use the widely understood words that align with “clean claim” but instead require the denial or initial payment to be made “not later than 30 calendar days after the bill for such services is transmitted by such provider.” This portion of the ruling applies only to air ambulance claims coved by the NSA.
Air Ambulance IDR Processes Should Not Be Bifurcated for the Two Service Codes
Guidance released by the administration in August, 2022, and instructions to IDR Entities required the two service codes associated with each air ambulance transport to be handled separately for the Independent Dispute Resolution (IDR) process. Because the NSA defines air ambulance transport as a single service, the TMA 3 Court rejected the administration’s requirement of two separate IDR determinations for each air ambulance transport.
Air Ambulance Single-Case Agreements and the QPA
Both the TMA 3 Court and the AAMS Court addressed this issue, and they came down on opposite sides. The NSA requires QPA to include all “contracted rates” for the plan/issuer, and the July Interim Final Rule expressly excluded single-case agreements from the definition of contracted rates used to calculate the QPA. The plaintiffs in both lawsuits challenged this exclusion, arguing that air ambulance providers in particular have a high proportion of single-case agreements, and that those agreements should be considered contracts for the purposes of calculating the median contract rate.
The AAMS Court upheld the Interim Final Rule’s exclusion of single-case rates, while the TMA 3 Court determined these single-case rates must be included for the calculation of air ambulance QPAs. The TMA 3 ruling came later in time, and that court expressly rejected the determination of the AAMS Court on this issue. The TMA 3 decision vacates the offending provision of the regulations. This portion of the ruling applies only to air ambulance claims coved by the NSA.
NSA Regulations Upheld by the Courts
Required Disclosures Related to QPA
The court in TMA 3 evaluated the NSA’s requirements and the regulations by the administration and found the information that plans must disclose related to the QPA is appropriate. The court rejected the challenge to these disclosure regulations.
Geographic Regions for Determining Air Ambulance QPAs
The AAMS Court and the TMA 3 Court agree the administration’s rule regarding geographic regions for air ambulance QPA calculation is reasonable and sufficiently explained, and rejected challenges to this portion of the regulations.
All Air Ambulance Providers Are a Single Specialty
The AAMS Court rejected plaintiff’s argument that hospital-owned air ambulance providers should be treated separately from independently owned air ambulance providers for the purposes of the NSA, and confirmed that all air ambulance providers are the same “specialty” under the NSA, whether as part of a hospital or independently owned.
IDR Portal temporarily closed
The administration has closed the IDR portal and instructed IDREs to halt work in response to the ruling, so that they can update and publish guidance in accordance with the changes noted above. MultiPlan expects a more substantive response from CMS with timelines to update and restore the portal soon.
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.