New Court Ruling Dismisses Aspects of the No Surprises Act: Implications for Payers and Providers

By Matthew Albright, Chief Legislative Affairs Officer, Zelis
Twitter: @ZelisHealthcare

The issue of surprise billing has long plagued the U.S. healthcare system. The need for legislation to protect individuals from surprise billing is strikingly clear, as studies reveal that one in five emergency room visits result in an unexpected bill for patients. As of January 1, 2022, federal regulations require the healthcare industry to be in compliance with the No Surprises Act (NSA), which protects patients from receiving surprise and often hefty medical bills, typically for emergency care. Yet, with recent lawsuits challenging aspects of the NSA, and a new court ruling striking out multiple paragraphs from the NSA regulations, implications for payers and providers continue to evolve.

What Happened?

On February 23, 2022, the US District Court for the Eastern District of Texas ruled in favor of the Texas Medical Association (TMA), which represents over 55,000 physicians. As part of the ruling, the court required sections of the NSA regulations that established considerations for the Independent Dispute Resolution (IDR) process be removed. 

What Does This Mean?

The newly implemented federal NSA IDR process is meant to resolve payment disputes between payers and providers regarding certain out-of-network charges. Under the NSA Part 2 Regulation, IDR arbitrators were to consider the Qualifying Payment Amount (QPA), or, roughly, the median rate paid to in-network providers, as the default appropriate reimbursement rate.

However, critics like the TMA, as well as other major provider organizations such as the American Hospital Association and American Medical Association, claimed the IDR process, as put forth in the regulation, unfairly benefits payers. They argued the QPA shouldn’t be the most important factor in an arbitrator’s decision on a claim’s proper reimbursement.

With the new ruling in providers’ favor, the arbitrators will now need to evaluate additional elements when deliberating on reimbursement, including

  • Patient acuity
  • Provider experience and expertise
  • Provider and payer market share
  • Past network contract negotiation

For providers, this ruling is a “win,” giving them a greater opportunity to ask for higher payments both in negotiations with the plan and in the IDR process. This decision also adds more ambiguity, more factors, and more complexity into the reimbursement process for the entire healthcare ecosystem.

Looking Ahead

The good news is, this ruling will not impact patients, who will still be protected from balance billing and unexpected medical bills for emergency and non-voluntary circumstances. The decision only affects arbitration – and, by implication, negotiations – between providers and payers on reimbursement.

Looking ahead, it is likely that more providers will dispute the initial reimbursement and ask for negotiations under the revamped QPA policy, bringing considerations other than the QPA to justify a different price.

As a result, health plans will need to do more than just reimburse providers based on a QPA and expect providers will accept the payment. Health plans need to think about how to defend their reimbursements by bringing in the other considerations that will now be part of negotiations and arbitrations.

With similar lawsuits currently making their way through the court system, some uncertainty remains regarding the final word on IDR considerations. In the meantime, both payers and providers will need to be more strategic about meeting the changes brought about by this ruling.