No Surprises Act Update – New IDR Guidance

On April 14, 2022, the Centers for Medicare & Medicaid Services (CMS) issued new guidance on the Independent Dispute Resolution (IDR) process, created under the No Surprises Act (NSA) to provide a mechanism for payers and providers to resolve disputes as to appropriate payment amounts for certain out-of-network claims. In addition, the Departments of Health and Human Services, Labor and the Treasury launched two online portals– one to host the IDR process for providers and payers and one to host the patient-provider dispute resolution process for self-pay and uninsured patients.

This new guidance replaces earlier instruction from the agency on how the IDR process would operate and what the independent arbitrator was required to consider. The prior guidance was withdrawn after a successful legal challenge to the interim final rule implementing the No Surprises Act provisions on the IDR process, specifically with respect to the weight to be given to the Qualifying Payment Amount (QPA). The QPA is essentially the payer’s median contracted rate for similar services. The QPA is used to calculate patient cost sharing and must be considered by the independent arbitrator in resolving a payment dispute between a payer and an out-of-network provider. Initially, regulators directed arbitrators to use the QPA as a baseline, and when choosing between the parties’ proposed payment offers to choose the amount closest to the QPA unless one of the parties submitted credible information demonstrating that the appropriate payment amount was materially different from QPA.

The provider community took issue with this interpretation, arguing that it improperly favored payers and did not reflect the language in the statute. Groups such as the Texas Medical Association, American Hospital Association, and the American Medical Association filed suit. In late February, a federal judge in the Eastern District of Texas agreed with the challengers and vacated the sections of the agency rules related to QPA. Several other suits are pending in federal courts across the country, including one challenging regulations regarding the IDR process for out-of-network air ambulance services brought by the Association of Air Medical Services.[1]

The most notable difference between the prior and the new guidance is not in what was added, but what was removed—namely, the discussion of the importance of “qualifying payment amounts” (QPA). Interestingly, CMS did not remove or revise the guidance document’s direction to arbitrators to more heavily weight QPA in deciding payment disputes between payers and out-of-network providers of air ambulance services. The case challenging the related regulatory provisions on IDR for air ambulance services is still pending on a motion for summary judgment in the United States District Court for the District of Columbia.

Also of note, CMS has stated its intent to issue a revised IDR regulation by early summer. If CMS follows the same approach it used in revising the IDR guidance, the new rule may be largely the same but without the detailed provisions on the weight the arbitrator must give to QPA versus other relevant information submitted. Stay tuned.

[1] Association of Air Medical Services v. HHS; 1:21-cv-03031-RJL.