Providers Win Lawsuit Over No Surprises Act’s Independent Dispute Resolution Rule

Healthcare providers recently secured a significant legal victory regarding the No Surprises Act (NSA) and its independent dispute resolution (IDR) process. While the NSA was designed to protect patients from surprise medical bills, disputes between providers and insurers have persisted, particularly when it comes to the IDR process used to settle payment disagreements. A recent court ruling struck down parts of the IDR rule, handing a win to providers.

The NSA, which took effect in January 2022, was created to protect patients from unexpected medical bills when they receive care from out-of-network providers, especially in emergencies. These surprise bills usually happen when patients unknowingly receive care from out-of-network providers at in-network hospitals or when they don’t have control over which provider they see, typically during an emergency. In general, the NSA stops group health plans and health insurers from billing patients more than their in-network cost-sharing amount for certain out-of-network services, including:

• Emergency services,
• Non-emergency services provided by out-of-network providers at in-network facilities, and
• Air ambulance services from out-of-network providers.

When a provider and an insurer disagree on the payment for these out-of-network services, the NSA’s independent dispute resolution process comes into play. The IDR uses a “baseball-style” arbitration, where both the provider and the insurer submit payment offers, and a neutral arbitrator chooses one of the proposed amounts.

While the NSA’s intent to protect patients is largely undisputed, the IDR process has been a point of contention between providers and insurers. Providers felt that the rule behind the IDR process unfairly favored insurers by placing too much emphasis on the qualifying payment amount (QPA), which is typically the median contracted rate in a specific area. They argued that prioritizing the QPA undervalued the actual cost of care and didn’t account for case complexity or regional cost variations. Several provider groups challenged the IDR rule, arguing that it wasn’t in line with the NSA’s intent. They contended that the rule improperly prioritized the QPA and didn’t give fair weight to other factors like the level of care provided, the complexity of cases, and the actual cost of delivering services.

In August 2024, a federal court agreed with the providers, ruling that the IDR rule placed too much emphasis on the QPA. The court found that the rule didn’t follow the NSA’s requirement to consider multiple factors in determining the payment amount. By overly prioritizing the QPA, the rule was seen as skewing the arbitration process in favor of insurers. As a result of this ruling, the government will have to revise the IDR process so that arbitrators take all relevant factors into account, not just the QPA. This ruling is a big win for providers, as it ensures that the IDR process will be more balanced moving forward. With the court ruling, arbitrators will now have to consider a wider range of factors when determining payment amounts, potentially leading to fairer reimbursement for providers. However, while this ruling is good news, it’s important to emphasize that this situation is still evolving. The government will need to revise the IDR rule, and there may be further developments or challenges down the line. Providers should stay informed about these changes and understand their rights and options when confronting reimbursement disputes subject to the NSA.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, including Medicare audits, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.