Federal Judge Vacates IDR Provisions of the No Surprises Act

In what may be the first of multiple rulings on the controversial independent dispute resolution (IDR) process of the No Surprises Act, a federal judge in Texas has vacated provisions of the process that make the insurer-set qualified payment amount (QPA) the primary factor in resolving payment disputes between insurers and out of network providers.

Ruling on a lawsuit from the Texas Medical Association on February 23, Judge Jeremy Kernodle, of the U.S. District Court for the Eastern District of Texas, said the legislation’s interim final rule “conflicts with the unambiguous terms of the (No Surprises Act) in several key respects, including material alteration of statutory language, and cited a failure to provide appropriate time for notice and comment on the modifications of the IDR process.

“The (No Surprises act) instructs arbitrators to ‘consider’ the QPA and five other factors in deciding which offer to accept. … That’s it. The (interim final rule), in contrast, requires arbitrators to ‘select the offer closest to the (QPA)’ and deviate from that number only if ‘credible information clearly demonstrates’ that the QPA is ‘materially different from the appropriate out-of-network rate.’ … The (interim final rule) thus impermissibly rewrites statutory language by ascribing additional, material terms,” wrote Kernodle in his decision.

Kernodle added that the government departments’ failure to comply with the notice-and-comment requirement on the interim final rule changes “provides a second and independent basis to hold unlawful and set aside the (interim final rule changes) under the (Administrative Procedure Act).”

“The court’s sensible ruling is a win for patients and providers,” maintained Howard B. Fleishon, MD, MMM, FACR, chair of the American College of Radiology’s Board of Chancellors. “Insurers are already using the law’s mis-implementation to raise profits by narrowing provider networks, which can strip patients of access to their chosen providers, reduce overall access to care, and delay diagnosis and treatment of illness and injury.”

While Dr. Fleishon noted the Texas case is separate from the lawsuit filed earlier this year by the ACR, the American Society of Anesthesiologists and the American College of Emergency Physicians, he said the ACR is hopeful that “this ruling is the first of a series of decisions that will force the (government) agencies to implement the No Surprises Act exactly as Congress intended.”

(Editor’s note: For a related video interview with Thomas Hoffman, VP of legal for the ACR, and Josh Cooper, VP of congressional affairs for the ACR, click here.)

In a Bloomberg Law article, Katy Johnson, senior counsel of health policy for the American Benefits Council, questioned whether the decision in the Texas Medical Association case will apply nationally, or be restricted to the Eastern District of Texas or regionally under the U.S. Court of Appeals for the Fifth Circuit.

The ACR acknowledged a lack of clarity on how the ruling in the Texas Medical Association case will affect the current ACR lawsuit or implementation of the No Surprises Act’s IDR process. For now, the ACR maintained that this decision does apply nationally in vacating the challenged provisions of the IDR process but noted the possibility of appeal from the U.S. government.