Texas Court Vacates Provisions of Surprise Billing IDR Rule Again

On February 6, 2023, a Texas federal district court ruled in Texas Medical Association v. HHS that the federal agency failed to follow legislative intent when it issued the second version of its rules governing the surprise billing independent dispute resolution (IDR) process of the No Surprises Act (NSA). As a result, the court remanded the rulemaking to the agency for another revision.

This case is one of a series of lawsuits brought against HHS by the Texas Medical Association (TMA) challenging the agency’s IDR rules. The same judge decided against the agency in a previous case, as discussed in a March 3, 2022, article in Compliance Corner. In that case, the judge determined that the original rules required arbitrators in IDR proceedings to place too much emphasis on the qualifying payment amount (QPA), the median in-network rate for a given service in each market, when determining the appropriate amount to pay out-of-network providers. The judge ruled that this emphasis on the QPA did not comply with the NSA, which required arbitrators to consider a variety of factors when determining the appropriate payment. Because of that case, HHS issued revised final rules on August 19, 2022 (see the September 1, 2022, article in Compliance Corner).

In this case, TMA asserted that the revised rules continue to improperly restrict arbitrators’ discretion and unlawfully tilt the arbitration process in favor of the QPA. The judge agreed, noting that the new rules required arbitrators to consider the QPA first and restricted how they may consider information relating to the non-QPA factors. Under the rules, arbitrators must determine if the information provided outside the QPA is “credible,” that it “relates to the offer submitted by either party,” and is not “already accounted for by the QPA.” If the arbitrator relied on information other than the QPA, then they must explain why they did so in writing. The judge determined that these additional burdens resulted in a process that favored the QPA, and this emphasis was not in accordance with legislative intent. The judge remanded the rules back to the agency to revise the rules so that they do not favor consideration of the QPA over other factors.

This legal development adds uncertainty to a backlogged IDR process. Employers with self-insured plans that are involved in payment disputes with out-of-network providers should be aware of this development and consult with legal counsel if questions arise.

Texas Medical Association v. HHS »