A federal district court judge vacated parts of an interim final rule on surprise billing that has prompted multiple lawsuits. The ruling (PDF) affects the rollout of the No Surprises Act.
The judge ruled in favor of the Texas Medical Association in a lawsuit challenging the dispute-resolution process established by the Biden administration to implement the surprise billing law and how the administration communicated details of the process.
With the ruling, those parts of the rule that were challenged were invalidated.
As part of the No Surprises Act, which passed in December 2020, Congress created an independent dispute resolution process that is required when providers and insurers are unable to reach agreement on payment for out-of-network services.
Under the statute, health plans have 30 days to make an initial payment after receiving a claim. If the provider is unhappy with the initial payment amount, the provider has 30 days to initiate an open negotiation period, which is itself 30 days long.
However, in issuing an interim final rule in September as part of the implementation of the No Surprises Act, federal regulators directed arbiters to presume that the qualifying payment amount — or median in-network rate — was the appropriate out-of-network rate and limited when and how other factors come into play.
Health care and physician groups, including the Academy, have expressed concern that the rule would unfairly benefit insurers by relying too heavily on a qualifying payment amount that insurers set. As the Academy explained last fall, the interim final rule violated congressional intent.
In a memo released Monday, the Biden administration said it will withdraw any guidance that is based on or refers to the portions of its rule on surprise billing that were vacated by the court’s decision. The memo underscores that the decision does not eliminate the consumer protections that were put in place by the administration’s other rulemaking for the No Surprises Act.
Additionally, the patient-provider dispute resolution process for uninsured and self-pay consumers to challenge bills that exceed a provider’s good faith estimate by $400 or more is still available. Review the Academy’s web page on AAO.org for more information about these consumers protections.
Although the rule went into effect Jan. 1, arbitrations to resolve disputes have not yet started. In its Feb. 28 memo, the administration also announced that it will be opening the independent dispute resolution process for submissions. It will grant parties whose open negotiation time has already expired another 15 days to start the dispute resolution process once the portal opens.
The American Medical Association has a separate lawsuit over the same interim final rule released in September 2021 that is focused on how providers and insurers resolve disputes over surprise medical bills.