Victory for Providers: Court Vacates a Portion of the No Surprises Act’s Informal Dispute Resolution Rule



Several provisions of the No Surprises Act took effect on January 1, 2022, including prohibitions on out of network providers balance billing patients for emergency services provided by out of network providers and facilities or non-emergency services provided by out of network providers at in-network facilities (such as a surgeon who is out of network providing a surgery at an in-network hospital). In such cases, health insurers must pay the out of network providers a “qualified payment amount,” which is the median rate the insurer would have paid for the item or service if provided by an in-network provider.

Informal Dispute Resolution

If providers do not want to accept the qualified payment amount as payment in full, they cannot balance bill the patient unless a limited exception applies for prior waiver and consent of the patient. Instead, to dispute the insurer’s payment the provider must initiate an open negotiation period with the insurer, and if that does not result in an agreement, proceed with informal dispute resolution (“IDR”) before a certified IDR entity that will determine the appropriate amount to be paid to the out of network provider by the insurer. Notably, the interim final rule requires the certified IDR entity to assume that the properly determined “qualified payment amount” is appropriate and places the burden on the provider to demonstrate it is not.

On February 23, 2022, a federal district court invalidated the provisions in the interim final rule which require the certified IDR entities to give deference to the qualified payment amount and assume it is the correct amount.

According to the court, giving insurers this deference is not supported by the language in the No Surprises Act and certified IDR entities should not give more weight to the qualified payment amount than other permissible factors to be considered.

Factors Certified IDR Entities Must Consider

The court instructed certified IDR entities to defer to the No Surprises Act’s express language regarding the factors that may be considered in making a decision relating to payment amounts for out of network providers which include:

  • Level of training, experience, and quality outcomes of the out of network provider;
  • The market share held by the out of network provider;
  • The acuity of the patient and the complexity of services;
  • Teaching status, case mix, and scope of services for a nonparticipating facility; and
  • Demonstration of good faith efforts or lack thereof made by the out of network provider or the insurer to enter into network agreements during the prior four-year period.

The Act prohibits the certified IDR entity from considering the provider’s usual and customary charges, the amount that would have been billed in the absence of the Act, or the amount that would have been paid by Medicare, Medicaid, Children’s Health Insurance Program, or Tricare.

Bottom Line

The case is largely seen as a victory for providers and is effective immediately. Rather than having to assume the insurer’s qualified payment amount is appropriate, the certified IDR entity is to give the same weight to other factors outlined above, making it more likely a provider may prevail in a challenge to the qualified payment amount than under the Biden Administration’s interim final rule.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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