Texas Court Sides With Providers A Second Time In Litigation Related To No Surprises Act IDR Process

• Jurisdiction: United States,Federal,Texas
• Law Firm: Manatt, Phelps & Phillips LLP
• Subject Matter: Litigation, Mediation & Arbitration, Food, Drugs, Healthcare, Life Sciences, Arbitration & Dispute Resolution
• Author: Harvey L. Rochman
• Published date: 16 February 2023

On February 6, a Texas federal district court sided with the Texas Medical Association (TMA) and health care providers vacating regulations issued by the Office of Personnel Management and the Departments of Health and Human Services, Labor, and the Treasury (Departments) to implement the No Surprises Act (NSA).¹ In TMA II, the court held that the regulations improperly tilt the balance in favor of health plans in the Independent Dispute Resolution (IDR) process established by statute to resolve disputes regarding payment for out-of-network services to which the NSA applies. In response to the ruling, on February 10, the Departments instructed arbitrators to immediately hold all payment determinations and recall any payment determinations made after the February 6 decision.

The IDR process is a baseball-style arbitration in which the provider and the plan submit proposed payment amounts and a certified IDR arbitrator selects one of the payment amounts based on the specific considerations identified in the NSA. One of the key issues is the weight that the arbitrator should place on a key piece of information that the plan must provide: the qualifying payment amount (QPA), which is a health plan's median contracted rate for the same service in the same geographic area, adjusted for inflation. In a prior decision, the same federal court vacated provisions of an interim final rule that established a rebuttable presumption that the QPA was the correct payment amount.²

The February 6 ruling focuses on the provisions of a final rule issued in August 2022 that governs the manner in which certified arbitrators must consider the information in the IDR process. (For more on the final rule, see the Manatt newsletter here.) In TMA I, the same court determined that interim regulations issued in July 2021 exceeded the Departments' statutory authority and were contrary to the text of the NSA due to the inclusion of a rebuttable presumption that the QPA'a health plan's median contracted rate for the same service in the same geographic area, adjusted for inflation'is the appropriate out-of-network rate for items and services covered by the NSA.

At issue in TMA II was whether the August 2022 final rule, which eliminated the rebuttable presumption in favor of the QPA and made other changes, cured the defects in the interim rule. The court concluded it did not. In the February 6 decision, the court found that the final rule continued to improperly favor health plans and...