Another Win For Providers: Texas Federal District Court Again Vacates Independent Dispute Resolution Rule For The No Surprises Act

• Jurisdiction: United States,Federal
• Law Firm: Sheppard Mullin Richter & Hampton
• Subject Matter: Litigation, Mediation & Arbitration, Food, Drugs, Healthcare, Life Sciences, Arbitration & Dispute Resolution
• Author: Carmen Jule
• Published date: 15 February 2023

On February 6, 2023, the United States District Court for the Eastern District of Texas ruled in favor of the Texas Medical Association¹ and vacated portions of the final rule adopted in August 2022 (the "August 2022 Final Rule") that applied to the Independent Dispute Resolution ("IDR") process created by the No Surprises Act (the "Act").² The August 2022 Final Rule was adopted by the Departments of Labor, Treasury and Health and Human Services (the "Departments") and addressed, in part, the specific factors arbitrators must consider in resolving disputes between out-of-network ("OON") health care providers/facilities and air ambulance providers (collectively, "Providers"), and health insurance plans, under the Act. This is the second time portions of final rules for the IDR decision-making methods have been vacated by this Court as a result of litigation brought by impacted Providers.

The October 2021 Interim Final Rule

The Departments had previously adopted interim final rules in October 2021³ with respect to the IDR process, portions of which were partially vacated in October 2022.⁴ In that litigation, the same Texas Court held that portions of the interim final rules (i) violated the Administrative Procedures Act ("APA") due to a lack of public notice and comment period; and (ii) improperly directed IDR entities to give more weight to the Qualified Payment Amount ("QPA") - which is determined by the insurer, pursuant to a statutorily prescribed methodology - than to other required considerations. Those additional considerations, include (as applicable): the level of training, experience, and quality and outcomes measurements of the provider/facility; the market share held by the provider/facility or the plan in the geographic region; the acuity of the patient or the complexity of furnishing the items/services; good faith efforts (or lack thereof) by the parties to enter into network agreements; and previously contracted rates between the provider and the insurer, for the past 4 years (if and as applicable).

The August 2022 Final Rule

This past summer, the Departments again adopted rules addressing the IDR process (this time, with public notice and comment). Under the (now vacated) portions of the August 2022 Final Rule, a Federal IDR entity was required to weigh specific considerations and select the offer that "best represents the value of the qualified IDR service or item" as the OON rate. Specifically, the IDR entity was instructed to consider the...