Physicians Challenge NSA Implementation

Brenna Jenny and Jaime Jones discuss how recent challenges to the NSA by healthcare providers have shown their willingness to litigate against regulators over measures that drastically cut reimbursement, and how their successes may encourage similar administrative challenges in 2023.

The No Surprises Act (NSA) imposes significant financial demands on hospitals and providers, particularly those commonly required to provide emergency services. Challenges to this law have, to date, focused on the law’s arbitration process. In 2022, healthcare providers also won an important case concerning the federal government’s implementation of the NSA. In 2023, we anticipate that implementation will be an active subject of litigation and agency engagement.  

The NSA bars healthcare providers from balance billing patients for certain out-of-network services. However, it offers healthcare providers and insurers an opportunity to use an independent dispute resolution (IDR) process to select a reimbursement rate. In July and September 2021, the departments of Health and Human Services (HHS), Labor, and the Treasury (the Departments) issued interim final rules (IFRs) implementing most provisions of the NSA. These rules included the methodology for calculating the qualifying payment amount (QPA) and also rules governing the IDR process.

In October 2021, the Texas Medical Association (TMA) filed the first NSA-related lawsuit against the Departments. The claim alleged that the September IFR unlawfully required arbitrators to presume that the bid closest to the QPA was the correct reimbursement rate, rather than allowing arbitrators to exercise discretion in determining the appropriate weight to give to relevant factors. After this case, organizations representing a range of providers, including the American Medical Association, filed seven other lawsuits across the U.S. These lawsuits primarily challenged the so-called QPA rebuttable presumption and certain aspects of the methodology that insurers use to calculate QPAs.

In February 2022, a federal district court sided with the TMA and concluded that the Departments “impermissibly altered the [NSA’s] requirements’, by issuing a rule that ‘places its thumb on the scale for the QPA.’” As a result, the judge vacated across the country the provision of the NSA that had been challenged.  

In August 2022, the Departments issued a final regulation that eliminated the QPA rebuttable presumption but adopted other rules that, in the view of many providers, continued to unlawfully bias choice toward the QPA in the IDR process. The TMA and other organizations filed renewed legal challenges in September 2022. Then, in November, the TMA filed a third legal challenge attacking aspects of the QPA methodology. As of this writing, these claims remain pending before the same judge who had initially ruled in the TMA’s favor.

These lawsuits have demonstrated healthcare providers’ willingness to litigate and assertively engage with regulators over measures that drastically cut reimbursement and imperil their continued survival. The litigation successes that providers have experienced in claims concerning the NSA may encourage similar administrative challenges to other laws and regulations that have a significant effect on providers’ financial viability.

Tips for healthcare providers affected by the NSA

  • IDR participants should update their submissions to appropriately address the ongoing litigation.
  • IDR participants should systematically take advantage of their right to obtain copies of the opposing side’s bid submission. 
  • On November 17, 2022, the Departments put an end to the ability to show discretion when making enforcement decisions that relate to the intermingling of healthcare provider specialties in QPA calculations. Healthcare providers should track and understand the extent to which QPAs changed after that date.
The views expressed in these articles are exclusively those of the authors and do not necessarily reflect those of Sidley Austin LLP and its partners. This article has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers.
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