Listen to this post

On August 3, 2023, the United States District Court for the Eastern District of Texas once again ruled in favor of the Texas Medical Association[1] and vacated portions of the guidance related to (i) the administrative fee for the Independent Dispute Resolution (“IDR”) process created by the No Surprises Act (the “Act”) and (ii) the “batching” of claims for the IDR.[2] The Department of Health and Human Services promptly announced that the IDR process is temporarily suspended and will not be available for out-of-network disputes until further notice.

IDR Administrative Fees

The Departments of Labor, Treasury and Health and Human Services (the “Departments”) adopted an interim final rule in September 2021 (the “September 2021 Final Rule”), requiring that they annually establish the IDR administrative fee. For 2022, the Departments contemporaneously published guidance announcing that the IDR fee would be set at $50. Similar guidance was issued in October 2022 and again set the administrative fee at $50. However, in December 2022, the Departments dramatically increased the IDR fee for 2023 to $350, due to the volume of IDR disputes and costs associated with determining dispute eligibility for the IDR process.

Plaintiffs filed this case challenging the December 2022 IDR fee increase, alleging that the Departments improperly increased the administrative fee without going through the required regulatory public notice and comment period. The district court agreed with the Plaintiffs, finding that the Departments were not exempt from the public notice and comment requirements for the fee increase, and that the Departments failed to demonstrate that any exception to the notice and comment requirements was present. The court found that failure to afford stakeholders the opportunity to comment on the increase may have prejudiced healthcare providers by not affording them an opportunity to demonstrate that the fee increase could be cost prohibitive, among other things. 

The court vacated the Departments’ December 2022 guidance increasing the fee to $350.

September 2021 Final Rule Provisions Regarding Batching

The Act permits the “batching” of multiple qualified IDR items or services to be considered jointly, if they meet certain criteria, including that the items or services are related to the treatment of a similar condition. In the September 2021 Final Rule, the Departments explained their view that items or services are considered to be the same or similar items or services if each is billed under the same Current Procedure Terminology (“CPT”) code (including any applicable modifier), Healthcare Common Procedure Coding System (“HCPCS”) code with modifier, or Diagnosis-Related Group (“DRG”) codes with applicable modifiers. 

Plaintiffs challenged these provisions, including on the ground that the required notice and public comment period were not provided. The district court found that the September 2021 Final Rule provisions requiring the same CPT (or HCPCS or DRG) code limits the types of claims that providers and insurers may batch, which would require separate IDR submissions, adjudication and payment of administrative fees for each. Such rulemaking required public notice and comment, and the court again found that the Departments did not demonstrate an exception to public notice and comment requirements. Accordingly, the court vacated the provisions from the September 2021 Final Rule requiring that batched claims include the same CPT, HCPCS or DRG codes.

IDR Process Temporarily Suspended Until Further Notice

Shortly after the district court’s ruling, the Department of Health and Human Service announced that the Federal IDR process has been temporarily suspended including acceptance of newly initiated disputes until the Departments can provide additional instructions.[3] The Patient-Provider Dispute Resolution process (which is used for the resolution of disputes related to self-pay and/or uninsured patients) has also been temporarily suspended.

If you have questions about the Federal IDR process, or about other No Surprises Act requirements, the attorneys of Sheppard Mullin Healthcare Team are available to assist you.

For up-to-date information on the No Surprises Act, please consider registering and attending our upcoming webinar series.

[1]The Texas Medical Association was joined in this litigation by health care providers, including Dr. Adam Corley, Tyler Regional Hospital, LLC, and two trade associations for Texas radiologists.

[2] Tex. Med. Ass’n, et al v. U.S. Dep’t of Health and Hum. Servs., 2023 WL 4977746 (E.D. Texas 2023).