Texas Med. Ass’n. v. HHS, 2023 WL 1781801 (E.D. Tex. 2023)
In an ongoing dispute between an association of health care providers and HHS, a federal trial court has vacated key portions of the final regulations implementing the surprise billing independent dispute resolution (IDR) provisions of the Consolidated Appropriations Act, 2021 (CAA, 2021). As background, the CAA, 2021 expanded patient protections to shield individuals from surprise medical bills for certain out-of-network emergency and non-emergency services (see our Checkpoint article). The DOL, HHS, and IRS jointly issued interim final regulations addressing, among other things, participant cost-sharing for services subject to the CAA, 2021, in most situations using the “qualifying payment amount” (QPA), which is based on the plan’s median in-network rate (see our Checkpoint article). The regulations also addressed procedural aspects of plan payments to nonparticipating providers and explained the role of certified IDR entities and the factors they may consider in selecting a payment amount (see our Checkpoint article). This same federal trial court invalidated portions of the interim regulations that prioritized the QPA over other factors in determining the payment amount for out-of-network emergency and non-emergency services (see our Checkpoint article) and for out-of-network air ambulance services (see our Checkpoint article). The agencies then finalized the IDR portions of the regulations, removing the invalidated provisions and specifying that certified IDR entities should select the offer that best represents the value of the item or service under dispute after considering the QPA and all permissible information submitted by the parties (see our Checkpoint article). The association challenged the final regulations, arguing that they conflict with the CAA, 2021 in the same manner as the vacated portions of the interim regulations.
The court has now vacated the final regulations as well, agreeing with the association that the regulations still unlawfully tilt the IDR negotiation process in favor of the QPA. The court explained that the final regulations conflict with the CAA, 2021 because they require certified IDR entities to consider the QPA before considering non-QPA factors and then limit the circumstances under which non-QPA factors may be considered. For example, other factors may be considered only if the additional information is credible, relates to a party’s offer, and is not already reflected in the QPA. In addition, certified IDR entities that rely on non-QPA information must provide a written explanation justifying its use. The court concluded that, while the final regulations avoid an explicit presumption in favor of the QPA, they nevertheless continue to “place a thumb on the scale for the QPA” by imposing restrictions that appear nowhere in the CAA, 2021. Accordingly, the final regulations are vacated and returned to HHS for further consideration.
EBIA Comment: In a recent report on the IDR process, the agencies described a growing backlog of disputes due to an unexpectedly high demand for IDR and the need for substantial manual processing of submissions (see our Checkpoint article). Continuing litigation may cause the backlog to worsen as the agencies reconsider the regulations in light of the court’s opinion. For more information, see EBIA’s Health Care Reform manual at Section XII.B.3 (“Surprise Medical Billing: Emergency and Non-Emergency Services”). See also EBIA’s Group Health Plan Mandates manual at Section XIII.B (“Patient Protections”) and EBIA’s Self-Insured Health Plans manual at Section XIII.C (“Federally Mandated Benefits”).
Contributing Editors: EBIA Staff.