Surprise Billing Final Rule Set to Take Effect Despite Ongoing Legal Challenges

On August 19, 2022, the U.S. Departments of Health and Human Services, Labor, and Treasury issued final rules titled, “Requirements Related to Surprise Billing: Final Rules.” The rules finalize requirements under the July 2021 interim final rules relating to information that group health plans and health insurance issuers offering group or individual health insurance coverage must share about the qualifying payment amount (“QPA”). These rules are set to take effect on October 25, 2022.

On February 23, 2022, in Texas Medical Association, et al. v. United States Department of Health and Human Services, and on July 26, 2022, in LifeNet, Inc. v. United States Department of Health and Human Services, the United States District Court for the Eastern District of Texas vacated portions of the October 2021 interim final rules related to payment determinations under the federal IDR process. In light of the court’s rulings and comments received, these Final Rules also finalize select requirements under the October 2021 interim final rules related to consideration of information when a certified IDR entity makes a payment determination.

The Final Rule attempted to address the issues with the interim final rule by removing the rebuttable presumption that the QPA is the appropriate payment amount and allowing the certified IDR entity to consider evidence when making the determination. While the presumption has been removed, there remains an emphasis on the QPA. The Final Rule instructs the IDR entities to consider the QPA first before considering the other information providers can submit to support a higher payment amount. IDR entities have been avoiding instances of double counting when they find that the QPA has already contemplated those factors (e.g., level of training, experience, and quality and outcomes measurements of the provider; market share held by provider or facility; acuity of the patient; teaching status; case mix and scope of services; and demonstration of good faith efforts made by the provider to enter into network agreements). Provider groups who had previously challenged the interim final rule continue to find this language unfair and contrary to the statute.

On September 22, 2022, Texas Medical Association filed a new suit (TMA II) in the U.S. District Court for the Eastern District of Texas alleging that the QPA is the de facto benchmark rate.¹ They are seeking to invalidate portions of the Final Rule, which “place a thumb on the scale for the QPA in the IDR Process.”² The American Hospital Association and the American Medical Association, who had previously challenged the interim final rule and the rebuttable presumption, have backed TMA’s challenge of the final rules.³ They voluntarily dismissed their lawsuit after the Departments released the Final Rules.⁴

Following legal challenges to the interim final rule, the Departments delayed implementation of the federal IDR process and delayed the portal rollout until April 15, 2022, several months after the implementation of the No Surprises Act. The Departments have issued several rounds of guidance to certified IDR entities and providers regarding batching and claims eligibility, with the most recent guidance being issued in August, shortly before the Final Rules were released.⁵ The Final Rules included a number of new provisions that were not addressed by this guidance. Providers have been submitting claims to the federal IDR process for more than six months, but the high volume of claims submitted and payor challenges to claim eligibility and batching requirements has resulted in a substantial backlog. It remains to be seen how the Departments will react to this latest round of challenges, but providers are eager to see some balance restored to the IDR approach.

[1] Complaint at 1, Texas Medical Assn v. U.S. Dept. of HHS et al., Case 6:22-cv-00372 (E.D. Tex., Sept. 9, 2022), available at https://www.texmed.org/uploadedFiles/Current/2016_Advocacy/TMA%20II%20Complaint.pdf?_zs=i97nQ1&_zl=ddkq6.

[2] Id. at 4.

[3] Press Release, American Medical Association, AMA & AHA Support Texas Suit Challenging Surprise Billing Rule Provision (Sept. 22, 2022), available at https://www.ama-assn.org/press-center/press-releases/ama-aha-support-texas-suit-challenging-surprise-billing-rule-provision.

[4] Press Release, American Hospital Association, AHA, AMA Move to Dismiss Challenge to No Surprises Act Interim Final Rule, Plan to ‘Make Voices Heard in Courts Very Soon’ on Final Rule (Sept. 20, 2022), available at https://www.aha.org/news/headline/2022-09-20-aha-ama-move-dismiss-challenge-no-surprises-act-interim-final-rule-plan.

[5] U.S. DEPT OF HEALTH & HUMAN SERVS., U.S. DEPT. OF LABOR, U.S. DEPT. OF TREASURY, Federal Independent Dispute Resolution (IDR) Process Guidance for Certified IDR Entities (Aug. 2022), available at https://www.cms.gov/files/document/TA-certified-independent-dispute-resolution-entities-August-2022.pdf.