On February 6, the U.S. District Court for the Eastern District of Texas struck down key regulations implementing the federal arbitration process created under the No Surprises Act (NSA) to settle out-of-network payment disputes between payers and providers, referred to as the independent dispute resolution (IDR) process. The regulations required arbitrators to first consider the payer’s median in-network rate when assessing each party’s offer and only then consider additional information submitted by providers. Providers argued these regulations would tilt the IDR process in favor of payers.

The court sent the regulations back to the government for further consideration and suggested that, in the meantime, arbitrators could decide disputes based on the language in the NSA, which directs arbitrators to consider both the median in-network rate, referred to as the qualifying payment amount (QPA), and additional information submitted by providers. In response to the decision, the federal agencies responsible for implementing the IDR process announced they are evaluating and updating their guidance to make the IDR process consistent with the decision and, in the meantime, IDR entities should not issue new payment determinations for healthcare items or services furnished on or after October 25, 2022.

A revised IDR process consistent with the court’s decision would be welcome news for providers, as it could remove barriers that have made it difficult for arbitrators to consider information submitted by providers in support of a payment amount higher than the QPA. Absent instructions from the government limiting how arbitrators can consider information, arbitrators would have more discretion to weigh the information submitted and evaluate. A revised IDR process could also address concerns raised by providers that payers are reducing in-network payment rates to no more than the QPA because the IDR process favors the QPA as the appropriate payment amount. We will continue to monitor several other cases featuring provider challenges to the IDR process regulations.

If you have any questions about out-of-network payment disputes, please contact the authors.

In January 2023, Bass, Berry & Sims released its 2023 Healthcare Private Equity Outlook & Trends piece. This content briefly explores issues and topics that could impact the healthcare private equity market in the coming months. Click here to read the 2023 Healthcare Private Equity Outlook & Trends.