On February 10, the administration announced that federal agencies are evaluating and updating federal independent dispute resolution (IDR) guidance following a district court ruling. In the latest decision, U.S. District Judge Jeremy D. Kernodle vacated all of the revised regulations challenged by the association, including the rule that arbiters must primarily consider the qualifying payment amount (QPA).

The No Surprises Act – the section of the Consolidated Appropriations Act of 2021 that included a ban on surprise billing – has faced several lawsuits from provider groups with grievances over the IDR process, with some rulings compelling CMS to make regulatory changes.

Throughout 2021, the agencies released interim final rules regarding implementation of the surprise-billing law. Initially, regulations utilized the QPA in an ideal fashion: When making a payment determination, arbitrators (referred to as independent dispute-resolution entities, or IDREs) must begin with the presumption that the QPA is the appropriate out-of-network amount. (The QPA is generally the plan or issuer’s median contracted rate for the same or similar service in the specific geographic area.) According to the early regulations released, for the IDRE to deviate from the offer closest to the QPA, additional information must be submitted to clearly demonstrate that the value of the item or service is materially different from the QPA. NABIP supported this method of IDR process.

The Texas Medical Association’s (TMA) first suit, filed in December 2021, argued that the IDR process outlined by the second IFR was “arbitrary and capricious.” Specifically, TMA challenged the final rule’s requirement that IDR entities presume that the qualified payment amount is the appropriate out-of-network payment amount. This part of the rule, they claimed, violates the Administrative Procedure Act and is beyond the reach of the agencies’ legal authority. In February 2022, Judge Kernodle sided with TMA, ruling that HHS cannot instruct mediators to “give rates insurers and providers contracted with in the past extra weight compared with other factors.” In light of this ruling, the agencies released the guidance stating that IDREs no longer need to select the offer closest to the QPA. While the IDRE must still begin the process by considering the QPA, IDREs should then consider additional information submitted by a party (or requested by the IDRE) to determine which offer best reflects the appropriate out-of-network rate.

In another lawsuit filed in December 2022, TMA specifically challenged the first IFR, once again focusing on the importance of the QPA in the IDR process. Specifically, the TMA alleged that the rule “artificially deflates” the QPA, resulting in unfairly low reimbursements for providers.

In the latest suit, TMA alleges the arbitration process favors insurers due to “boosted administrative fees,” which can impede upon a provider’s ability to obtain fair and reasonable reimbursement. The “boosted administrative fees” refer to guidance released a few months ago that increases the administrative fee for participating in the federal IDR process in 2023 as well as the allowable ranges for certified IDRE fees related to “single and batched determinations.” Under the new guidance, the administrative fee for the IDR process is increasing from $50 to $350 per party.

Like he did last year, Judge Kernodle once again sided with TMA and vacated the provisions of the regulations that prioritize the QPA. As a result of this decision, the departments announced that they are in the process of evaluating and updating federal IDR process guidance, systems and related documents to make them consistent with the TMA II decision. Effective immediately, CMS announced that certified IDREs should not issue new payment determinations until receiving further guidance Additionally, IDREs should also recall any payment determinations issued on or after February 6, 2023 (the date of Judge Kernodle’s ruling).

Source: National Association of Benefits and Insurance Professionals