HHS Files Notice of Appeal to Oppose Texas District Court Ruling Striking Down Portions of the No Surprises Act Independent Dispute Resolution Process

On April 22, 2022, the Department of Health and Human Services (“HHS”), in conjunction with several other federal agencies, filed a notice of appeal in opposition to a Texas federal judge’s summary judgment ruling regarding the No Surprises Act (“NSA”). The underlying lawsuit was filed by the Texas Medical Association (“TMA”) and Adam Corley (a Texas-based physician), which resulted in portions of the regulations implementing the NSA being struck down.

By way of brief background, the NSA prohibits providers from sending patients a surprise medical bill for emergency services or certain services that were provided by an out-of-network provider at an in-network facility. The NSA establishes a process to determine the appropriate payment amount an out-of-network provider may receive for services (referred to as the “Out of Network Rate”). In states
with an All-Payer Model Agreement or specified state law, the out-of-network rate is
the rate provided by the Model Agreement or state law.  In states without a Model Agreement or specified state law, the out- of-network rate is either the amount agreed to by the insurer and the out-of-network provider or an amount determined through an independent dispute resolution (“IDR”) process – the Independent Dispute Resolution (“IDR”) process.

In October 2021, the TMA and Adam Corley filed their lawsuit against HHS and other federal agencies, claiming that the regulations implementing the NSA provided unfair weight to the “Qualifying Payment Amount,” (generally, the insurer’s median in-network rate) in determining the appropriate Out of Network Rate. In its February 2022 ruling, the U.S. Dist. Ct. for the Eastern District of Texas Tyler Division struck down the portions of the NSA regulations related to the IDR process that favored the offer closest to the Qualifying Payment Amount. The Court determined that the NSA process unfairly benefited insurers. For more information on the court’s ruling, see our previous blog discussing the matter.

Note that the District Court’s ruling and the subsequent notice of appeal do not affect NSA patient protections against out-of-network bills.

For more information on the issues relating to this article, please contact Jessica L. Gustafson, Esq. at jgustafson@thehlp.com, Abby Pendleton, Esq. at apendleton@thehlp.com, or the Health Law Partners at (248) 996-8510 or (212) 734-0128 or by email at partners@thehlp.com.