The Known, Unknowns of the No Surprises Act IDR Process

The Known, Unknowns of the No Surprises Act IDR Process

The Known, Unknowns of the No Surprises Act IDR Process
Edward R. Gaines III

By Edward R. Gaines III, JD, CCP, vice president of regulatory affairs and industry liaison, Zotec Partners.

The limited and under-resourced infrastructure established by the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services to determine the disputes between physicians and hospitals versus the health plans known as independent dispute resolution (IDR), established under the No Surprises Act (NSA), has been overwhelmed. We also know that a federal judge in Texas has twice adjudicated HHS’ regulations in the past year to be contrary to the NSA statute.

The court ruled in favor of the Texas Medical Association (TMA) on February 6, 2023. It stated that HHS attempted once again to place its regulatory “thumb” on the scales of justice in favor of the health plans, which violated the express provisions of the NSA. The statute authorizes HHS, the U.S. Department of Labor, and the U.S. Department of the Treasury to issue implementation regulations.

Tens of thousands of backlogged IDR adjudications were made worse when CMS announced an immediate suspension of IDR decisions in light of the second TMA court decision. Also, the February 24, 2023, CMS announcement of the restart of certain pending IDRs with dates of service before October 25, 2022 — the effective date of the HHS final rule which was vacated in the TMA II case — will only partially address the tremendous backlog of IDR cases pending final determination by the IDR entity.

There are two additional lawsuits against the administration’s bungled implementation of the “batching rules” and qualifying payment amount calculations (TMA III). The qualifying payment amount is the median allowed amount by the health plan as of January 31, 2019, adjusted for inflation. Additionally, with the exorbitant, nonrefundable, still unaddressed fee increases (TMA IV), there remain many unknowns and issues regarding the resolution of the pending IDRs.

After grossly underestimating the number of IDRs that HHS expected and, in consequence, creating an under-resourced IDR system, the NSA has become extremely costly for the health care system. With millions of dollars tied up in the IDR process, it is particularly devastating for physician practices. Millions more have been awarded to hospitals and physicians; however, based on feedback from clients and industry associations, most insurance carriers, adjudicated as the loser in IDR, still haven’t paid what is owed.

Below is a summary of the many important questions and outstanding concerns that remain unanswered with severe consequences for healthcare physicians and organizations.

NSA Litigation 

  • TMA III: Qualifying payment amount and batching rules that are contrary to the NSA
  • TMA VI: Nonrefundable administrative fee increase of 600% not supported by the NSA
  • Amicus briefs filed by multiple hospital associations

 Noncompliance Issues

  • Absence of qualifying payment amount communication to the physician or hospital as required by law or during the open negotiation period
  • Lack of evidence that qualifying payment amounts are updated for inflation as required by law
  • Separate and potentially misleading communications from health plans regarding the mandated 30-day open negotiations process
  • Insufficient payment to physicians after the IDR is adjudicated against the carrier
  • Requests by health plans to reopen an entire IDR process, claiming not to have received the open negotiation period notice or other mandatory information.

IDR Entity Process

  • Will the IDR entity process resume before or after date of service October 25, 2022?

TMA II Implications

  • Will IDRs pursuant to a legal standard that is now vacated be reheard by the IDR entities?
  • What are the costs and timeline for a potential rehearing?

If the NSA is analogous to building or buying a new house, one could say that what’s known is the house has “good bones.” However, the good bones have been covered up by several HHS and CMS ill-fated decisions. Physicians and hospitals continue to successfully challenge these decisions to clean out the “rotten wood” and reconstruct the “house” that Congress intended with the NSA.

The punch list is long and still yet to be determined in TMA III and TMA IV. But once these issues are resolved, physicians and hospitals believe that the “good bones” of the house will show through. They believe they’ll have a meaningful and fair process to resolve reimbursement disputes with health plans.

by Scott Rupp Edward R. Gaines III, No Surprises Act IDR Process, Zotec Partners