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No Surprises Act Update: Federal Judge Strikes Portions of the No Surprises Act

Client Alert

In a win for providers, a Texas federal court granted the Texas Medical Association’s (TMA) motion for summary judgment and struck down portions of a federal rule that establishes a reimbursement rate arbitration process between payors and providers under the No Surprises Act (NSA). We have previously written about the requirements of the No Surprises Act and those articles can be found on our BMD Resources webpage.

The No Surprises Act

The goal of the No Surprises Act is to shield patients from surprise medical bills and provide a forum to resolve payment disputes over surprise bills, which arise most typically in emergency care settings. As it pertains to the present lawsuit, the NSA established an independent arbitration process (aka the independent dispute resolution, or IDR, process) to settle insurer-provider disputes over reimbursement amounts for emergency patient care and certain non-emergency inpatient care.

The Interim Final Rule implementing the IDR process requires the neutral party charged with resolving the payment dispute should start by assuming the appropriate amount is the median amount usually paid for that service in that geographic area (aka the qualifying payment amount or QPA). As a result, many providers and provider trade associations filed suit against the Department of Health and Human Services, arguing that the creation of this rebuttable presumption went against Congress’s original intention when drafting the NSA.

The Ruling at a Glance

One of these lawsuits, Texas Med. Ass’n v. Dep’t of Health and Human Serv., saw the Texas Medical Association (TMA)—a coalition of medical providers—challenge the QPA portion of the IDR process. TMA argued that Congress never meant for arbitrators to give QPAs presumptive weight because Congress explicitly provided the arbitrator with a multi-factor analysis. Thus, TMA argued that other factors like training and quality of care should be given equal weight to the QPA amount. The government, in response, asserted that TMA’s reading of the statute grants arbitrators “virtually unfettered discretion” to weigh competing factors when selecting an offer.

On Wednesday February 23, 2022, Judge Jeremy Kernodle, a federal district judge for the Eastern District of Texas, ruled for TMA and noted that the government failed to follow the NSA’s text and proper notice and comment procedures when it required arbitrators to select the amount closest to the QPA when settling insurer-provider payment disputes. In so ruling, he declared that the federal agencies “impermissibly altered the [No Surprises] Act’s requirements” in violation of core administrative law principles when they departed from the text of the No Surprises Act. He reasoned that the rule, as written, requires arbitrators to presume the correctness of the in-network median rate (QPA) as the amount for an insurer to pay a provider and then impose a heightened burden on the remaining factors to overcome that presumption. In his eyes, the rule as written conflicted with the “unambiguous” terms of the No Surprises Act that allowed arbitrators to consider a variety of factors in their arbitration decision and that the best way forward was to vacate the affected portions of the rule.

What Does the Ruling Mean for Providers?

As of now, this ruling means that the following provisions of the NSA’s IDR process are invalidated nationwide:

  • The requirement that the arbitrator select the offer closest to the QPA amount unless there is credible information to demonstrate that is not appropriate;
  • The requirement that additional information must be provided to show the QPA amount is materially different;
  • The definition of “material difference”;
  • All examples provided in the Interim Final Rule demonstrating how IDR entities choose an offer; and
  • The requirement that the IDR entity explain why it choose an offer that was not the closest to the QPA.

All other parts of the NSA, including the requirement for health care providers to provide patients with a good faith estimate of the cost of their care, remain in effect.

This ruling will likely be appealed, as arbitrations under the NSA were set to begin in March. Similar lawsuits across the United States are currently making their way through the courts, signaling that litigation over the NSA’s regulations is far from over. Additionally, HHS has indicated that it will issue a Final Rule by May 2022, so there is certainly more guidance to come.

To stay informed on the latest information about the No Surprises Act, contact Daphne Kackloudis at dlkackloudis@bmdllc.com or Ashley Watson at abwatson@bmdllc.com.

This alert does not constitute legal advice.


Valley National Bank/Trulieve Loan: A Big Step Out of the Shadows

In a late December press release, Trulieve announced that it had secured a $71.5 million commercial bank loan. In addition to the amount of the loan, which may be the largest commercial bank loan to date to a cannabis company, the release prominently identified Valley Bank and featured both a quote from Valley’s Senior Vice President, John Myers, and a description of the Bank’s service platform and commitment to the cannabis industry.

The End of Non-Competes? The Impact It Will Have on the Healthcare Industry

On January 5, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule that, if enacted, will ban employers from entering into non-compete clauses with workers (the “Rule”), and the Rule would void existing non-compete agreements. In their Notice, the FTC stated that if the Rule were to go into effect, they estimate the overall earnings of employees in the United States could increase by $250 billion to $296 billion per year. The Rule would also require employers to rescind non-competes that they had already entered into with their workers. For purposes of the Rule, the FTC has defined “worker” to also include any employees, interns, volunteers, and contractors.”

2022 Healthcare Recap and 2023 Healthcare Check-Up

As the country begins to return to a new “normal” following the COVID-19 pandemic, there are many healthcare rules changing on both the federal and state levels as a result. Thus, it is important for healthcare providers and their employers to be aware of these changing rules, and any implications they may have on their practice. Look back on healthcare in 2022 and find a checklist for 2023.

Direct Support Professional Retention Payments

On December 15, the Ohio Senate and House passed House Bill 45, which authorizes the Department of Developmental Disabilities (DODD), in conjunction with the county boards of developmental disabilities, to launch their initiative to issue retention payments to Direct Support Professionals (DSPs). These retention payments will be distributed quarterly to participating home and community-based waiver providers to address the workforce crisis in the direct provider sector. Governor DeWine needs to sign the Bill to begin the payments, but he is expected to do so by the end of 2022.

Real Estate Investors Position for 2023 Opportunities

Real estate investors weathered another year in a post-pandemic world, with the year closing with yet another interest rate increase coupled with both uncertainty and heightened interest carrying into 2023. Just last Wednesday, the Federal Reserve raised its benchmark interest rate 0.50 percentage points, shifting the target range to 4.25% to 4.50%. The new level is the highest the fed funds rate has been since December 2007 and marks the seventh rate hike this year. So what does this mean to investors, brokers, lenders, and others in the real estate world? Read a few perspectives below from stakeholders familiar with our BMD clients and the markets in which they do business.