A federal judge in Texas has vacated part of the arbitration process that is a major aspect of the No Surprises Act, the federal law enacted to reduce surprise medical bills.  In the wake of this ruling, the Department of Health and Human Services has directed the entities charged with mediating payment disagreements to stop making decisions.

In the Texas case challenging the fairness of the independent dispute resolution process that is a key component of the surprise billing law’s implementation, the federal judge found that the arbitration process unfairly favored payers over providers, most notably by placing undue emphasis on the qualified payment amount (QPA) that is a major part of the arbitration process.  The decision explains that

The Court first held that the interim rule improperly “places its thumb on the scale for the QPA, requiring arbitrators to presume the correctness of the QPA and then imposing a heightened burden on the remaining statutory factors to overcome the presumption.” 

The judge’s decision also explained that

The interim rule, moreover, characterized the non-QPA factors as “permissible additional factors” that
an arbitrator may consider only “when appropriate.”  The interim rule thus conflicted with the Act, which unambiguously requires arbitrators to consider “all the specified information in determining which offer to select” and nowhere instructs them “to weigh any one factor or circumstance more heavily than the others.”

The decision means HHS now must work to revise the regulation – a need the Centers for Medicare & Medicaid Services acknowledged on its “Payment disputes between providers and health plans” web page, writing that

…the Departments are in the process of evaluating and updating Federal IDR process guidance, systems, and related documents to make them consistent with the TMA II decision. Effective immediately, certified IDR entities should not issue new payment determinations until receiving further guidance from the Departments. Certified IDR entities also should recall any payment determinations issued after February 6, 2023 [emphasis in original]. Certified IDR entities should continue working through other parts of the IDR process as they wait for additional direction from the Departments.  

To learn more about the decision, the federal response, and what’s next, see the judge’s decision in the case and the post on the CMS web site.