Final Rule for the No Surprises Act

Barry F. Rosen and Darci M. Smith//May 9, 2023

Final Rule for the No Surprises Act

By Commentary:

//Barry F. Rosen and Darci M. Smith

//May 9, 2023

The No Surprises Act, effective Jan. 1, 2022, generally protects patients from receiving unanticipated bills for emergency care rendered by providers who do not participate with the patient’s insurance coverage (out-of-network providers), and includes a prohibition on certain out-of-network providers balance billing patients.

The law also requires that the patient’s insurer reimburse the out-of-network provider the rate provided either by a state All-Payer Model Agreement (such as Maryland’s All-Payer Model), other state law that sets the reimbursement rate for the service, or in the absence of both of those, an amount (1) agreed to by the insurer and the out-of-network provider or (2) determined through an independent dispute resolution (IDR) process.

The IDR process

The No Surprises Act provides a “baseball-style” IDR process to out-of-network providers and insurers to settle disputes over reimbursement rates under the law. The out-of-network provider and the insurer each submit a rate and an explanation for their proposed rate to the arbitrator who selects one of the rates as the appropriate reimbursement to be paid to the out-of-network provider.

The act requires that the arbitrator consider the qualified payment amount (QPA), as well as several other factors including training, experience, market share, and complexity of the service when selecting the appropriate rate. The QPA is typically the median rate the insurer would have paid for the service if provided by an in-network provider or facility.

The Departments of Health and Human Services, Labor and Treasury (Tri-Agencies) issued interim final rules providing additional guidance to the arbitrators on how to choose the appropriate reimbursement rate for the out-of-network provider. The interim final rule instructed the arbitrators to “select the offer closest to the [QPA] unless…credible information submitted by either party…demonstrates that the [QPA] is materially different from the appropriate out-of-network rate, or if the offers are equally distant from the [QPA] but in opposing directions.”

Provider backlash

Providers immediately filed suit against the Tri-Agencies’ interim final rule arguing that the it conflicted with the NSA by imposing a rebuttable presumption in favor of the offer closest to the QPA. One such case was Texas Medical Association v. Department of Health and Human Services.  In that case, the court agreed, holding that the Tri-Agencies failed to follow the text of the No Surprises Act by giving too much consideration to the QPA.

On August 19, 2022, the Tri-Agencies issued a final rule for the IDR process, addressing the factors the arbiter must consider when choosing the appropriate reimbursement rate for the out-of-network provider (Final Rule).

The Final Rule required the arbiter first to consider the QPA, but, unlike the IFR, the Final Rule did not require the arbiter to select the QPA if there was credible information demonstrating that the QPA is materially different from the appropriate out-of-network rate.

Legal challenges

The Final Rule went into effect on Oct. 25, 2022. However, the Texas Medical Association, the same association that challenged the prior version of the IDR rule, filed a new lawsuit arguing that the Final Rule continues impermissibly to require the IDR process to favor the QPA.

A federal district court in Texas decided that case on Feb. 6, 2023, holding that the Final Rule “conflicts with the unambiguous terms of the Act” which does not require the IDR to give more weight to the QPA than any other evidence it may consider. Accordingly, the court vacated the conflicting language from the Final Rule.

The Centers for Medicare and Medicaid Services issued statements on Feb. 24, 2023, and March 17, 2023, providing instructions to IDR entities as to how they should process claims for services provided prior to and after October 25, 2022 (the effective date of the Final Rule). Claims for services provided prior to Oct. 25, 2022, should be processed according to the independent final rule as amended by the prior Texas Medical Association lawsuit, and claims for services provided after Oct. 25, 2022, should be processed according to the Final Rule as amended by the newer Texas Medical Association lawsuit against the Final Rule.

Nevertheless, on April 11, 2023, the Department of Health and Human Services, not willing to know when to give up, filed an appeal of the most recent Texas Medical Association decision.

Barry F. Rosen is the chairman & CEO of the law firm of Gordon Feinblatt LLC, heads the firm’s health care practice group, and can be reached at 410-576-4224 or [email protected]  Darci M. Smith is an associate in Gordon Feinblatt’s health care practice group and can be reached at 410-576-4153 or [email protected]


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