Texas Court Boosts Out-of-Network Providers with QPA Ruling

Recent developments have once again shed light on the ongoing litigation around the No Surprises Act. On August 24, 2023, the United States District Court for the Eastern District of Texas handed a significant ruling in favor of the Texas Medical Association, along with other plaintiffs which include air ambulance providers. This pivotal judgment vacated certain rules and associated guidance about how the "Qualified Payment Amount" (QPA) is calculated under the Act.

Background

To better grasp this update, it's essential to understand the QPA. This factor, as described by the Act, designates the rates for out-of-network emergency and non-emergency services provided at in-network facilities. The QPA, used in the Federal IDR, typically represents the median contracted rate an insurer would have otherwise paid if the service was rendered by an in-network provider or facility.

Recent Developments

Following the recent Texas District Court decision, guidance issued by the Departments of Labor, Treasury, and Health and Human Services concerning the batching of claims for IDR and the IDR administrative fee saw a revocation. This action led the Centers for Medicare and Medicaid Services to temporarily suspend the Federal IDR process since August 3, 2023. As of August 25, 2023, IDR entities received directives to halt all IDR-related functions.

Specific Contentions on QPA Calculation

In this new lawsuit, the bone of contention was the July 2021 IFR and associated guidance by the Departments on how QPA is determined. Plaintiffs raised objections against:

• The “ghost rates” which include contracted rates for items/services not rendered by the provider or supplier.
• “Out of specialty rates” or contracted rates from differing specialties.
• Exclusion of incentive-based payments from the QPA calculation.
• Inclusion of rates from other plan sponsors overseen by third-party administrators.

The Court recognized the inconsistencies between these stipulations and the Act and consequently vacated the mentioned provisions.

Out-of-Network Air Ambulance Services

Additionally, challenges were posed against the July 2021 IFR and August 2022 guidance on the initiation timeline of the IDR process for air ambulance services. Issues such as requiring separate IDR processes for various air ambulance service codes and the exclusion of case-specific agreements for QPA calculation for these services were also brought to the fore. In line with the verdict, these parts of the July 2021 IFR and associated guidance were vacated.

Some Provisions Remain

However, the entire July 2021 IFR wasn't discarded. The Court maintained parts of it, notably those that grant the Departments substantial freedom in dictating what details about the QPA insurers/plans must reveal to providers. This also includes how they should conduct audits for compliance.

In the context of air ambulance services, the Court sustained the rule allowing insurers to determine QPAs based on rates from varying geographic areas. Given the unique nature of air ambulance services, the Court concurred with the Departments that this approach was reasonable.

Conclusion

This recent verdict underscores the ever-evolving landscape of healthcare regulations and their legal implications. As the No Surprises Act continues to shape healthcare provision and billing, stakeholders must remain informed and agile to navigate these changes effectively.