CMS puts No Surprises Act arbitration on hold after Texas Medical Association legal win

Update: On Feb. 24, 2023, the Centers for Medicare & Medicaid Services (CMS) instructed IDR entities to resume processing payment determinations for disputes involving items or services furnished before Oct. 25, 2022. The notice tells IDR entities to refer to instructions laid out in CMS’ October 2021 final rules for those disputes. Certified IDR entities will continue to hold payment determinations for items or services furnished on or after Oct. 25, 2022, until the agency issues further guidance. 

The Centers for Medicare and Medicaid Services (CMS) has put its surprise billing arbitration process on hold after the Texas Medical Association prevailed in a lawsuit that alleged the process favored insurance companies. 

As a result of the federal court decision, CMS instructed arbiters, or Independent Dispute Resolution (IDR) entities, to hold all payment determinations effective Feb. 10, until further guidance. CMS also instructed them to recall any determinations issued after Feb. 6, the day the ruling came down.

The Texas Medical Association filed the lawsuit last year challenging the No Surprises Act rule that describes the arbitration process. Specifically, the association challenged the requirement that IDR entities select the out-of-network rate closest to the qualifying payment amount (QPA) for final payment determinations.

Physician groups and hospitals have argued the QPA, which is generally the median contracted rate for the same or similar item or service in 2019, gives payers an advantage because they set the rates. Ruling in favor of the Texas Medical Association, the court concluded that the challenged portions of the rule were unlawful and must be set aside. Arbiters will now consider all of the factors mentioned in the legislation instead of giving undue preference to the QPA.

CMS is currently reviewing the court’s decision and evaluating its IDR processes, guidance, templates, and systems to determine what updates will be necessary to comply with the court’s order. CMS has instructed IDR entities to continue working through other parts of the IDR process, including eligibility determinations, as they wait for additional direction.

— Brennan Cantrell, AAFP Commercial Health Insurance Strategist

Posted on Feb. 16, 2023