Court strikes down parts of surprise billing IDR regulations, again

In an ongoing dispute between a health care provider association and HHS, a federal trial court struck down key parts of the final regulations implementing the surprise billing independent dispute resolution (IDR) provisions of the Appropriations Act. Consolidated for 2021 (CAA, 2021). As background, the CAA, 2021 expanded patient protections to protect individuals from surprise medical bills for certain out-of-network emergency and non-emergency services (see our Checkpoint article). The DOL, HHS, and IRS jointly issued interim final regulations addressing, among other things, participant cost sharing for services subject to the CAA, 2021, in most situations using the “qualified payment amount.” (QPA), which is based on the plan’s average in-network fee (see our Checkpoint article). The regulations also addressed the procedural aspects of the plan’s payments to non-participating providers and explained the role of IDR-certified entities and the factors they may consider when selecting a payment amount (see our Checkpoint article). This same federal trial court invalidated portions of the interim regulations that prioritized QPA over other factors in determining the amount of payment for out-of-network emergency and non-emergency services (see our Checkpoint article) and for out-of-network air ambulance services (see our Checkpoint article). The agencies then finalized the IDR portions of the regulations, removing the invalidated provisions and specifying that certified IDR entities must select the offer that best represents the value of the disputed item or service after considering the QPA and all admissible information. presented by the parties (see our control point article). The association challenged the final regulations, arguing that they conflict with the CAA, 2021 in the same way as the overturned portions of the interim regulations.

The court has now struck down the final regulations as well, agreeing with the association that the regulations still illegally tilt the IDR trading process in favor of the QPA. The court explained that the final regulations conflict with CAA, 2021 because they require IDR certified entities to consider the QPA before considering non-QPA factors and then limit the circumstances under which non-QPA factors can be considered. Q PA. For example, other factors may be considered only if the additional information is credible, relates to one of the parties’ offer, and is not already reflected in the QPA. In addition, certified IDR entities that rely on non-QPA information must provide a written explanation justifying their use. The court concluded that while the final regulations avoid an explicit presumption in favor of the QPA, they continue to “put a finger on the QPA scale” by imposing restrictions that do not appear anywhere in the CAA, 2021. Accordingly, the final ruling regulations are overturned and returned to HHS for further consideration.

EBIA Comment: In a recent report on the IDR process, agencies described a growing backlog of disputes due to unexpectedly high demand for IDRs and the need for substantial manual processing of submissions (see our Checkpoint article). Continued litigation may make the backlog worse as agencies reconsider the regulations in light of the court’s opinion. For more information, see EBIA’s health care reform manual at Section XII.B.3 (“Surprise Medical Bill: Emergency and Non-Emergency Services”). Also see EBIA’s Group Health Plan Mandates Manual in Section XIII.B (“Patient Protection”) and EBIA’s Self-Insured Health Plan Manual in Section XIII.C (“Mandated Federal Benefits”).

Contributing editors: EBIA staff.