On August 3, the U.S. District Court for the Eastern District of Texas again struck down portions of the regulations governing the arbitration process created by the No Surprises Act (NSA) to settle payment disputes between out-of-network healthcare providers and payers. This decision in Texas Medical Association, et al. v. United States Department of Health and Human Services, Case No. 6:23-cv-59-JDK (TMA IV) is the latest in a series of successful challenges brought by providers against the implementation of the Independent Dispute Resolution (IDR) process by the Departments of Health and Human Services, Labor, and Treasury (the Departments). The Departments have temporarily suspended the IDR process due to the decision.
In TMA IV, the Texas Medical Association and other providers challenged the following two aspects of the IDR process:
- Increased administrative fees to participate in the process.
- The rules governing when providers can “batch” related claims in a single IDR complaint.
The court did not address the merits of the policies and whether they were consistent with the NSA. Instead, the court vacated both policies on procedural grounds because the Departments did not go through the notice and comment process and did not solicit feedback on their proposals, as required by the Administrative Procedure Act (APA).
In response to the decision, the Departments posted a notice on the IDR website stating, “Effective immediately, the Departments have temporarily suspended the Federal IDR process, including the ability to initiate new disputes until the Departments can provide additional instructions.” The Departments also said in an email they are reviewing the decision and evaluating updates needed to comply with the court’s order. The Departments also paused the Patient-Provider Dispute Resolution Process used by uninsured and self-pay patients to dispute charges.
The successful challenge to the batching rules is particularly welcome news for providers who have complained the Departments’ batching policy made it more difficult to initiate disputes and resulted in a higher volume of disputes. The batching rule vacated by the court required that, for providers to batch multiple claims in a single IDR proceeding, the batched items and service must be of “the same or similar items and services” as demonstrated by being billed under the same CPT or comparable billing code. Because providers regularly furnish multiple procedures as part of the same service that are billed under different CPT codes, the rules required providers to submit multiple disputes for the same service. Providers will likely urge the Departments to consider these concerns if they propose new batching rules.
Meanwhile, several other lawsuits brought by providers against the IDR process are pending. The federal district court for the Eastern District of Texas is considering a challenge against the Departments’ regulations on calculating the qualifying payment amount (QPA), which is key to IDR determinations (TMA III). The Departments have also appealed to the United States Court of Appeals for the Fifth Circuit a February 2023 decision finding unlawful the Departments’ instructions for how arbitrators should make payment determinations (TMA II).
We will continue to monitor developments related to the NSA and the Departments’ implementation. Please contact the authors if you have any questions.