Departments Issue New Guidance on No Surprises Act in Response to Texas Court Ruling

On October 6, 2023, the DOL, HHS, and IRS (the departments) issued new FAQs on the status of the No Surprises Act rules and their application to the Independent Dispute Resolution (IDR) process. The guidance follows the August 24, 2023, Texas District Court decision in Texas Medical Association vs. HHS (the TMA case), which is the latest ruling in the series of ongoing disputes between the parties regarding implementation of the No Surprises Act. The FAQs are intended to help stakeholders understand the laws and promote compliance.

In July 2021, the departments issued No Surprises Act interim final rules that provided that cost-sharing requirements for out-of-network emergency services cannot be greater than the requirements that would apply if the services were provided by a participating provider or participating emergency facility and must be calculated based on the “recognized amount.” If there is no established amount set by an All-Payer Model Agreement under the Social Security Act and there is no state law on the applicable amount, then the recognized amount, according to the interim final rules, would be the lesser of billed charges or the qualifying payment amount (QPA).

On August 24, 2023, in the TMA case, the Texas District Court held that several provisions of the regulations were unlawful and vacated and remanded them for further consideration. Some of the QPA determination provisions that the court vacated were allowing the inclusion of “ghost rates” (rates for services that a particular provider has not provided) and rates for providers outside the applicable specialty, excluding bonus or other incentive provisions from the rate calculation, and allowing self-insured plan calculations to be based on the rates of other self-insured plans administered by the same TPA.

The October 6, 2023, FAQs were released in reaction to the TMA case. In the FAQs, the departments acknowledge that the August 24, 2023, Texas District Court ruling is the current law and that they would appeal the decision. In the meantime, the departments instruct plans and issuers to calculate QPAs using a good faith, reasonable interpretation of the applicable statutes and regulations that remain in effect after the TMA case. To address some concerns from plans and issuers that the TMA case might require all the independent reviews prior to August 24, 2023, to be revisited and the QPAs re-calculated, the departments will exercise their “enforcement discretion” for any payment dispute that uses a QPA calculated in accordance with the methodology under the July 2021 interim final rules (in effect immediately before the decision in the TMA case) for items and services furnished before May 1, 2024 (the first day of the calendar month that is six months after the issuance of the FAQs Part 62).

Although the IDR process is typically handled by insurers and TPAs, employers should be aware of the recent guidance and monitor future developments.

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