No Surprises Act Implementation The Rage Reaches a One-Year High

It’s already September! And while many people are thinking about how quickly the summer flew by, those following the No Surprises Act implementation process may also be wondering how it’s possible that a full year has passed since the process hit a particularly difficult patch from which it has yet to emerge. While some might argue that the entire No Surprises Act implementation process has been rocky, the period of instability I’m specifically referring to began last August with a series of lawsuits that led to:

Temporarily suspending the federal independent dispute resolution (IDR) process; and
Repeal of several regulations which have not been reissued.

The U.S. Departments of Health and Human Services, Labor, and the Treasury (the Departments)—responsible for implementation—have taken initial steps to stabilize the process where they can, issuing explanatory documents last fall and a proposed regulation in October 2023 that would make a number of operational improvements to the federal IDR process. However, the proposed regulation will not be finalized for at least several months, and the final rules for the regulation will not take effect until 2025. Some stakeholders have argued that a final regulation is necessary to help stabilize the process and that the current instability potentially threatens the No Surprises Act’s core promises to protect patients from unexpected medical bills and keep them out of billing disputes.

So how did we get here? In August 2023, the United States District Court for the Eastern District of Texas issued two rulings Texas Medical Association (TMA) matters, TMA IV (released on August 3, 2023) and TMA III (August 24, 2023). TMA IV The decision invalidated the $350 administrative fee that was established for the federal IDR process, as well as certain provisions regarding grouping (grouping allows multiple claims to be included in the same IDR dispute). TMA III decision invalidated much of the methodology the Departments had established for calculating the Qualifying Payment Amount (QPA). More information about these decisions can be found in this Regs & Eggs post and this Special Report . Because both decisions invalidated some of the principles behind the IDR process, the Departments had to close the IDR portal several times in the fall of 2023 to update their systems and processes accordingly. The IDR portal did not fully reopen until December 2023.

During this period, the Departments also issued a series of guidance documents that attempted to clarify how key stakeholders in the IDR process (providers, insurers, and certified IDR entities) would proceed in the absence of the repealed regulations. However, one of the major issues—and one that continues to affect the process today—is the time it took the Departments to issue replacement regulations rather than just guidance. Generally speaking, regulations are more powerful than guidance. They carry more weight and are essential for actually interpreting the regulations and creating new requirements, rather than just providing clarification. However, issuing a regulation takes significantly longer than issuing guidance. While guidance can be issued fairly quickly, regulations must go through the formal rulemaking process (proposed regulation, 30-60 day comment period, and final regulation) before they can be finalized.

An example would be: On October 6, 2023, the Departments published guidance on how health plans should calculate QPA in light of TMA III ruling, as explained in this Regs & Eggs post. Because it was only guidance and not regulation, the Departments did not provide any new guidance on calculating QPA, but did clarify that insurers should calculate QPA using a fair, reasonable interpretation of the applicable statutes and regulations that remained in effect after TMA III decision. The departments said they would exercise executive discretion if health plans calculated QPAs based on the invalidated QPA methodology. Only a new regulation could interpret the statute and establish new rules for calculating QPAs. And because no regulation has been issued to date, that guidance for calculating QPAs remains in effect (and is approaching a year old). The departments appealed the original TMA III decision to the United States Court of Appeals for the Fifth Circuit, and oral arguments in the case took place earlier this week on September 3, 2024. Thus, it may be some time before the legal issues surrounding the QPA calculations are resolved and the Departments develop a replacement regulation.

Despite the failure to address QPA calculations through regulation, the Departments initiated some rulemaking last fall to address several other provisions that had been struck down by court decisions. The Departments completed the rulemaking process necessary to establish a new administrative fee for 2024, replacing the $350 fee that was struck down by TMA II decision with a new fee of $115. However, as previously mentioned, the Departments have not yet finalized a regulation that would establish new batch procedures and introduce other operational improvements to the IDR process.

The aforementioned draft regulation on “IDR operations” was issued on 27 October 2023 and published in Federal Register November 3, 2023 (Click here for our summary of the proposed regulation). The public consultation period initially ended on January 2, 2024, but the Departments decided to reopen it from January 22, 2024, to February 5, 2024, to solicit additional comments. Some of the rules in the proposed regulation had proposed effective dates beginning on or after August 15, 2024, or 90 days after the effective date of the final regulation. Other rules were to become effective on January 1, 2025. Given these proposed effective dates, there was a strong expectation among stakeholders that the final regulation would be issued in early or mid-summer 2024. However, in the Consolidated Spring 2024 Agenda, the date for the final regulation was listed as November 2024 (Which is only an estimate and is subject to change.) Based on the proposed timeline for the regulation to take effect, a November 2024 issuance date could result in most policies not taking effect until mid-calendar year 2025 or later.

On August 8, 2024, the American College of Emergency Physicians (ACEP), the American College of Radiology (ACR), and the American Society of Anesthesiologists (ASA) sent a letter to the departments expressing concern about the delayed issuance of the regulation. They strongly urged the departments to issue a final regulation as soon as possible (but no later than September 1, 2024), and for all rules to become effective no later than 30 to 60 days after the date of publication in Federal Register.

The organizations expressed confidence that, once finalized, many of the rules in the regulation would resolve some of the significant concerns their members continue to experience with the federal IDR process, including:

Whether consumer protections against balance billing and out-of-network co-payments under the No Surprises Act apply to a particular service or does state law apply;
How co-pays and out-of-network rates are determined;
How and with whom to start open negotiations to improve negotiations during this period; and
Services that qualify for federal IDR may be consolidated into one dispute.

The organizations argued that the federal IDR process is currently in an extremely unstable period that “threatens” their “collective ability to fulfill the No Surprises Act’s primary purpose: protecting patients and keeping them out of billing disputes.” While the legislation does not address all the issues affecting the federal IDR process, they said it is “a good start.”

Although the departments did not issue a final rule by September 1, as organizations requested, the departments are actively working to review the comments received and issue a final rule as soon as possible. Informally, they noted that it took some time to review all the comments and create a final rule that reflects the feedback received. Simply put, regulations generally take a long time to complete the rulemaking process from start to finish—and some regulations, such as the IDR Operations Regulation, can take even longer than others.

It’s hard to say for sure whether the IDR regulation, once finalized, will provide all the transparency that ACEP, ASA, and ACR are seeking, or whether increased transparency will result in fewer No Surprises Act complaints. The Centers for Medicare & Medicaid Services’ (CMS) most recent complaint report found that the agency has received more than 12,000 complaints against both providers and some payers through June 30, 2024, not including complaints handled by other agencies. (Although CMS is the primary federal agency implementing the law, other entities, such as the U.S. Department of Labor and state insurance departments, are responsible for oversight in some cases. These entities may have received complaints that were not included in this report.) Some of these complaints may involve situations in which patients may still be receiving “surprise” bills and paying more than they should have.

Again, we do not know whether the finalized IDR Operational Regulation will add transparency to the IDR process, reduce the number of complaints, and better protect patients, but some stakeholders believe that it represents one of the best opportunities available to end a period of instability that has been ongoing for about a year. Based on our current estimates of when the regulation will be issued and when its rules will become effective, we will not begin to see whether the regulation actually helps stabilize the IDR process until mid- to late 2025. By then, the current period of instability may have reached its second anniversary. We can only hope that it will not!

See you next week, Jeffrey says, enjoy reading the egg recipes.

(See source.)