In a victory for providers, the Fifth Circuit Court of Appeals has affirmed the District Court opinion striking down the rules governing how payments for out-of-network payments should be determined in arbitrations under the No Surprises Act.
Congress passed the No Surprises Act to prevent patients from being surprised by bills for out-of-network cost sharing amounts and balance bills for services provided by out-of-network providers after treatment for an emergency service or for treatment for a non-emergency service by an out-of-network provider at an in-network facility. The Act also provided for a “baseball-style” arbitration to resolve disputes regarding the out-of-network payment amount in which the provider and the insurer each submit an offer and the arbitrator selects one of the two offers.
The No Surprises Act did not establish a benchmark amount for determining out-of-network payment amounts, but rather set various factors to be considered, including the qualified payment amount (“QPA”), which is the median in-network contract amount, the level of training and experience of the provider, the market share of the non-participating provider and insurer, the acuity of the patient, the teaching status or case mix of the provider, and the good faith efforts (or lack thereof) of the parties to enter into a network agreement.
In previous litigation, the Texas Medical Association (“TMA”) and providers were successful in overturning rules creating a rebuttable presumption that the QPA – the in-network payment amount – was the appropriate out-of-network payment. As a result, the government enacted new rules, which required arbitrators to consider the QPA first, and only thereafter consider the other factors, and which limited arbitrators’ consideration of these other factors. The District Court struck down the rules, stating: “While avoiding an explicit presumption in favor of the QPA, the Final Rule nevertheless continues to place a thumb on the scale of the QPA….”
The Fifth Circuit affirmed relying on the recent Supreme Court decision in Loper Bright Enters. v. Raimondo, which overturned long-standing deference courts have given to agency decisions under Chevron v. National Resources Defense Council. Citing Loper Bright, the Fifth Circuit stated:
Where a statute delegates authority to an agency, ‘the role of the reviewing court under the APA is’ to ‘fix the boundaries of [the] delegated authority’ and ensur[e] the agency has engaged in ‘reasoned decisionmaking’ within those boundaries.’
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But nothing in the Act instructs arbitrators to weigh any one factor or circumstance more heavily than the others, nor does the Act authorize the Departments to superimpose regulatory rules on the clear statutory mandate. The Final Rule therefore exceeds the Departments’ authority.
The Fifth Circuit also affirmed the District Court’s determination that TMA had standing to bring the lawsuit.
The case, Tex. Med. Ass’n v. U.S. Dep’t of Health & Human Services, is linked here. Whatley Kallas, LLP’s earlier article on the underlying District Court opinion is linked here.