Federal court strikes down steep fee hike and batching rules in latest NSA case

August 22, 2023

A federal court judge in Texas has again sided with the Texas Medical Association (TMA) in its latest lawsuit against the federal government over its misguided implementation of the No Surprises Act, which governs the resolution of payment disputes between out-of-network physicians and insurers. 

The most recent lawsuit — the fourth filed by TMA challenging provisions of the rule — objects to a 600% hike in administrative fees for those seeking dispute resolutions. The lawsuit argues that the steep jump in fees has dramatically curtailed many physicians’ ability to seek independent dispute resolution when a health plan offers insufficient payment for out-of-network care.

The federal agencies set the initial administrative fee at $50, saying last October the fees would remain at that rate through this year. However, just two months later, the agencies announced the fee would jump to $350 beginning in January 2023.

The lawsuit also challenged interim final rules that narrowed the No Surprises Act's stipulations on "batching" claims for arbitration. Congress authorized batching of services that are related to the treatment of a similar condition to encourage efficiency and minimize costs in the independent dispute resolution process.

The district court judge ruled that federal agencies did not follow the Administrative Procedures Act (APA) when hiking administrative fees. He also invalidated certain rules narrowing batching claims for arbitration. The court, however, denied TMA’s request to retroactively refund all providers that already paid the $350 administrative fee. Further, the court declined to extend the IDR filing deadlines for providers who had decided not to pursue IDR due to the fees.

"While the court declined to provide deadline extensions and certain other requested relief, we remain pleased with the overall outcome," TMA President Rick Snyder II, M.D., said in an Aug. 4 statement. "[The] decisions on batching rule provisions and administrative fees will aid in reducing barriers to physician access to the law’s arbitration process, which is vital to both patient access to care and practice viability."

The Departments of Health and Human Services, Labor and the Treasury subsequently released a set of frequently asked questions regarding the NSA Independent Dispute Resolution (IDR) administrative fee and how the agencies will handle the administrative fee in accordance with the court’s order. As of August 3, 2023, the administrative fee is $50, unless the departments take action to set a new administrative fee amount.

Following the ruling, the departments temporarily paused the IDR process, citing the court’s decision. CMS said it is “reviewing the court’s decision and evaluating current IDR processes, templates, and system updates that will be necessary to comply with the court’s order.” The departments have announced that they intend to reopen the IDR portal to permit the submission of new disputes soon, but no date has been determined. NSA disputes filed before August 3, 2023, that had been suspended pending the outcome of this case have already been resumed.

Senator Cassidy Urges HHS to Implement the Law as Congress Intended

Senator Bill Cassidy, M.D., ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, once again called on the U.S. Department of Health of Human Services (HHS) to properly implement the NSA. “… HHS has continued to ignore and deviate from statutory instructions explicitly included in the legislation, creating confusion and uncertainty for patients, health care providers, and other stakeholders.”

Senator Cassidy cited multiple examples in which he believes federal agencies have failed to properly implement the law, including: failing to provide clear instructions to IDR entities on how to resolve billing disputes; providing inconsistent guidance that disregards the statute on how to calculate and communicate the contracted rates that make up the Qualifying Payment Amount; and unlawfully increasing administrative fees. Read the full letter here.


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