While health plans, insurers, and providers are busy understanding and implementing the new requirements under the No Surprises Act, a U.S. District Court recently vacated an essential portion of the interim regulations carrying out the Act.  While this decision applies nationwide, the court only vacated a portion of the interim regulations affecting the new dispute resolution system created under the Act—leaving the rest of the Act and its interim regulations intact.

The Ruling

Among the No Surprises Act’s requirements is a new binding arbitration system to handle disputes between plans/insurers and providers about the cost of out-of-network services.  Under the Act, if the parties cannot agree informally, they submit a proposed payment amount and explanation to an arbitrator.  The arbitrator then must select one of the two proposed payment amounts—taking into account the qualifying payment amount (QPA) and other considerations enumerated in the Act.  The QPA is generally the median rate the plan/insurer would have paid for the service if an in-network provider or facility provided it.

The main issue raised in the Texas case focuses on the interim regulations issued to carry out this new arbitration process.  The interim regulations effectively create a presumption that the amount closest to the QPA is the proper payment amount to be selected by the arbitrator to resolve the dispute.  The court held this presumption is contrary to the Act’s plain language, which requires the arbitrator to evaluate multiple considerations in determining the appropriate payment amount, including but not limited to the QPA.  According to the court, that presumption impermissibly places its thumb on the scale in favor of the QPA.  As a result, the court vacated the portion of the interim regulations that elevates the QPA over the other statutory considerations.  This ruling currently applies nationwide.

Effect on Plan Sponsors

The portions of the interim regulations elevating the QPA over the other factors to be considered by the arbitrator in determining the payment amount are no longer in effect.  But, the federal Departments charged with carrying out the Act quickly published a statement that this court decision affects no other aspect of the interim regulations or the Act.  The issue in dispute is the amount to be paid to out-of-network providers for disputed claim amounts only and does not impact the fact that the Act still requires group health plans to allow for payment of all agreed upon out-of-network claim amounts.  Plan sponsors, insurers, and other plan service providers should continue implementing the Act and its related guidance to ensure compliance by all required effective dates.

If you have any questions about compliance or litigation issues, the members of the Jackson Lewis Employee Benefits and ERISA Complex Litigation Practice groups are available to assist.  Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.