Section of No Surprises Act IDR Rule Vacated by Federal Court

On February 24, 2022, a federal judge in Texas granted summary judgment to the Texas Medical Association in its challenge to the No Surprises Act Interim Final Rules.

This decision vacates the sections of the rule and is not an injunction. Pending an appeal of the court’s decision to the 5th Circuit Court and possibly to the Supreme Court, this decision kills those provisions altogether, not just blocking them.

The court’s opinion impacts only the Independent Dispute Resolution (IDR) provisions of the rule. At root, the court had a problem with the section of the rule that supposedly makes the “qualified payment amount” the presumptively valid amount that the IDR entity needs to consider unless there is clear evidence that this amount is materially different from the appropriate out-of-network amount.

As a result, the court has only vacated the following portions of the rule:

(1) The definition of “material difference.”

(2) The second sentence of the first subparagraph of the “Payment Determination and Notification” section, which had previously allowed the IDR entity to examine whether the qualifying payment amount is “materially different” from the appropriate out-of-network rate (hence the vacatur of the material difference definition; if the IDR does not have to investigate whether the QPA is materially different from the appropriate out-of-network rate, there is no need for a definition of material difference).

(3) The last sentence of the third subparagraph of the “Considerations for Determination” section, which previously required additional information submitted to the IDR entity to “clearly demonstrate that the qualifying payment amount is materially different from the appropriate out-of-network” amount.

(4) All examples detailed in this section that discuss the interplay of the qualified payment amount and the “appropriate out-of-network” amount.

(5) Section B of the “Written Decision” section, which previously required the IDR entity to provide descriptions of whether the qualifying payment amount was materially different from the appropriate out-of-network payment amount.

Of note, the court also indicated that the rule violated the Administrative Procedures Act, which opens a doorway for a challenge to the rule as a whole for how it was implemented.