{"id":4564,"date":"2022-03-21T16:06:00","date_gmt":"2022-03-21T16:06:00","guid":{"rendered":"https:\/\/www.dinsmore.com\/?post_type=publications&p=4564"},"modified":"2025-11-24T20:03:33","modified_gmt":"2025-11-24T20:03:33","slug":"surprise-the-no-surprises-act-changes-again","status":"publish","type":"publications","link":"https:\/\/www.dinsmore.com\/publications\/surprise-the-no-surprises-act-changes-again\/","title":{"rendered":"Surprise! The No Surprises Act Changes Again"},"content":{"rendered":"\n
\"Person<\/figure>\n\n\n\n

The No Surprises Act (Act), which became effective Jan. 1, 2022, is the latest health care law passed with the best of intent: to create consumer protection from unexpected out-of-network medical bills and to create a federal independent dispute resolution (IDR) process to resolve payment disputes between payers and out-of-network providers. Unfortunately, the Act, especially the U.S. Department of Health and Human Services\u2019 (HHS) implementation of the IDR process, also creates a new administrative burden for health care providers. Providers and medical associations filed lawsuits in multiple jurisdictions to challenge HHS\u2019 implementation of the IDR process and the constitutionality of the Act before it was even in effect.<\/p>\n\n\n\n

On Feb. 24, 2022, the United States District Court for the Eastern District of Texas granted the Texas Medical Association\u2019s Motion for Summary Judgement to vacate select IDR requirements. The Court found that HHS’ interim final rule\u2019s IDR process, intended to resolve payment disputes regarding reimbursement for out-of-network emergency services and out-of-network services provided at in-network facilities, was contrary to the clear language of the Act[1]<\/a> (Rule).<\/p>\n\n\n\n

In general, the Act[2]<\/a> requires health insurance payers (Insurers) to reimburse providers for certain out-of-network services at a statutorily calculated \u201cout-of-network rate.\u201d[3]<\/a> Where an All-Payer Model Agreement or specified state law does not exist, to set such a rate, an Insurer must issue an initial out-of-network rate decision and pay such amount to the providers within 30 days after the out-of-network claim is submitted.[4]<\/a> If the provider disagrees with the Insurer\u2019s proposed out-of-network reimbursement rate, the provider has a 30-day window to negotiate a different payment rate with the Insurer.[5]<\/a> If these negotiations fail, the parties can proceed to the IDR process.[6]<\/a> <\/p>\n\n\n\n

Congress adopted a baseball-style arbitration model for the Act\u2019s IDR process. The Insurer and provider each submit a proposed out-of-network rate with limited supporting evidence. The arbitrator picks one of the offers while taking into account specified considerations, including the \u201cqualified payment amount,\u201d the provider\u2019s training, experience, quality, and outcomes measurements, the provider\u2019s market share, the patient\u2019s acuity, the provider\u2019s teaching status, case mix, and scope of services, and the provider\u2019s\/Insurer\u2019s good-faith attempts to enter into a network agreement.[7]<\/a> The \u201cqualifying payment amount\u201d (QPA), is designed to represent the median rate the Insurer would pay for the item or service if it were provided by an in-network provider.[8]<\/a><\/p>\n\n\n\n

The Rule requires the IDR arbitrator to select the proposed payment amount that is closest to the QPA unless \u201cthe certified IDR entity [arbitrator] determines that credible information submitted by either party \u2026 clearly demonstrates that the [QPA] is materially different[9]<\/a> from the appropriate out-of-network rate.\u201d[10]<\/a> This is a clear departure from the analysis set forth in the Act.<\/p>\n\n\n\n

The Texas Medical Association challenged the Rule under the Administrative Procedures Act (APA), arguing that the Departments exceeded their authority by giving \u201coutsized weight\u201d to one statutory factor over the others specified by Congress, and that the Departments failed to comply with the APA\u2019s notice and comments requirements in promulgating the Rule. In turn, the Departments argued that the plaintiffs did not have standing to bring the claims.<\/p>\n\n\n\n

After dispensing with defendant\u2019s standing arguments, the Eastern District of Texas Court ruled in favor of the plaintiff\u2019s Motion for Summary Judgment and determined that \u201cthe Act unambiguously establishes the framework for deciding payment disputes and concludes that the Rule conflicts with the statutory text.\u201d Under the Act, the arbitrators (or certified IDR entities) \u201cshall consider \u2026 the qualifying payment amounts\u201d and the provider\u2019s level of training, experience, and quality outcomes, the market share held by the provider, the patient\u2019s acuity, the provider\u2019s teaching status, case mix, and scope of services, and the demonstrated good faith efforts of both parties in entering into a network agreement.\u201d[11]<\/a> The Act did not specify that any one factor should be considered the \u201cprimary\u201d or \u201cmost important\u201d factor. The Rule, in contrast, requires arbitrators to \u201cselect the offer closest to the [QPA]\u201d unless<\/em> \u201ccredible\u201d information, including information supporting the \u201cadditional factors,\u201d \u201cclearly demonstrates that the [QPA] is materially different from the appropriate out-of-network rate.\u201d[12]<\/a> The Departments characterized the other factors as \u201cpermissible additional factors\u201d that may be considered only when appropriate.[13]<\/a> The Court found that the Department\u2019s Rule was inconsistent with the Act and that since Congress had spoken clearly on the factors to be considered in the arbitration process, the Department\u2019s interpretation of the Act was not appropriate and had exceeded the Department\u2019s authority.[14]<\/a><\/p>\n\n\n\n

Following the Court\u2019s decision, the Departments issued a memorandum<\/a> on Feb. 28, 2022, clarifying the Act\u2019s requirements for providers and Insurers. The memo specifically noted that the Court\u2019s decision would not, in their opinion, affect the patient-provider dispute resolution process.[15]<\/a> The Departments also stated they would withdraw any guidance inconsistent with the Court\u2019s Opinion, provide additional training for interested parties, and keep the IDR process portal open to resolve disputes. The Departments also will be considering further rulemaking to address the IDR process.<\/p>\n\n\n\n

The No Surprises Act continues to surprise us all with more adaptations. Enforcement of this new law remains uncertain in light of the numerous legal challenges, including at least one constitutionality challenge.<\/p>\n\n\n\n

Dinsmore will continue to monitor these developments. Please contact your Dinsmore & Shohl LLP health care attorney if you have any questions or concerns regarding the No Surprises Act, Good Faith Estimates, or your attendant obligations.<\/p>\n\n\n\n

\n\n\n\n

[1]<\/a> Requirements Related to Surprise Billing: Part II, 86 Fed. Reg. 55,980 (Oct. 7, 2021).<\/p>\n\n\n\n

[2]<\/a> Consolidated Appropriations Act of 2021, Pub. L. No. 116-260, div. BB, tit. I, 134 Stat. 1182, 2758-2890 (2020).<\/p>\n\n\n\n

[3]<\/a> 300gg-111(a)(1)(C)(iv)(II) and (b)(1)(D).<\/p>\n\n\n\n

[4]<\/a> 300gg-111(a)(1)(C)(iv) and (b)(1)(C).<\/p>\n\n\n\n

[5]<\/a> 300gg-111(c)(1)(A).<\/p>\n\n\n\n

[6]<\/a> 300gg-111(c)(1)(B).<\/p>\n\n\n\n

[7]<\/a> 300gg-111(c)(5).<\/p>\n\n\n\n

[8]<\/a> 300gg-111(a)(3)(E)(i)(I)-(II).<\/p>\n\n\n\n

[9]<\/a> \u201cMaterial difference\u201d is defined as \u201ca substantial likelihood that a reasonable person with the training and qualifications of a certified IDR entity making a payment determination would consider the submitted information significant in determining the out-of-network rate and would view the information as showing that the [QPA] is not the appropriate out-of-network rate. 149.510(a)(2)(viii).<\/p>\n\n\n\n

[10]<\/a> 45 C.F.R. 149.510(c)(4)(ii).<\/p>\n\n\n\n

[11]<\/a> 300gg-111(c)(5)(C)(i)-(ii).<\/p>\n\n\n\n

[12]<\/a> 45 C.F.R. 149.510(c)(4)(ii)(A).<\/p>\n\n\n\n

[13]<\/a> 86 Fed. Reg. 56,080.<\/p>\n\n\n\n

[14]<\/a> Because the Departments had exceeded their statutory authority, no Chevron<\/em> deference was owed to their regulations. Chevron U.S.A. v. Natural Resources Defense Council, Inc.<\/em>, 468 U.S. 837 (1984).<\/p>\n\n\n\n

[15]<\/a> This is a separate dispute resolution process designed to address disputes between patients and providers when bills for uninsured and self-pay patients are inconsistent with the good faith estimate provided by the health care provider.<\/p>\n","protected":false},"excerpt":{"rendered":"

The No Surprises Act (Act), which became effective Jan. 1, 2022, is the latest health care law passed with the best of intent: to create consumer protection from unexpected out-of-network medical bills and to create a federal independent dispute resolution (IDR) process to resolve payment disputes between payers and out-of-network providers. Unfortunately, the Act, especially\u2026<\/p>\n","protected":false},"author":8,"featured_media":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"tags":[],"publication-type":[8],"class_list":["post-4564","publications","type-publications","status-publish","format-standard","hentry","publication-type-articles"],"acf":[],"yoast_head":"\nSurprise! The No Surprises Act Changes Again - Dinsmore & Shohl<\/title>\n<meta name=\"description\" content=\"Surprise! 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