Providers hope to reverse a court’s No Surprises Act ruling that would affect independent dispute resolution

Hospital and physician advocates are urging an appeals court to reverse a district court’s decision that would render No Surprises Act (NSA) arbitration payments unenforceable.

In May, two air ambulance companies lost a case in a Northern District of Texas federal court in which they sought payment from Health Care Service Corporation (HCSC) for awards decided under the No Surprises Act’s independent dispute resolution (IDR) process.

Judge Jane J. Boyle ruled in favor of HCSC’s motion to dismiss the case, saying “the NSA does not contain any provisions expressly allowing plaintiffs to file a lawsuit in federal court seeking to enforce an IDR award.”

The plaintiffs, Guardian Flight LLC and Med-Trans Corporation, appealed the decision to the U.S. Court of Appeals for the Fifth Circuit. If the ruling stands, it would set a troubling precedent for providers, which have won a large majority of decisions since the IDR process was implemented to settle out-of-network payment disputes in 2022. The most recent report from CMS examined the second half of 2023 and found providers won 82% of the time.

In 2023, however, 35% of post-IDR payments were not made in the required 30 days, and 19% were for incorrect amounts, according to a recent survey report from the clinician advocacy group Americans for Fair Health Care.

“Hospitals and health systems report that payers consistently are not complying with IDR determinations,” the American Hospital Association (AHA) wrote in February comments to CMS, adding that the “delay or loss of millions of dollars in reimbursement only harms patients by starving providers of the resources they need to deliver care.”

The district court’s ruling in the Guardian Flight LLC v. Health Care Service Corporation case would be expected to exacerbate those trends.

Providers seek a reversal

Those stakes motivated the AHA, Federation of American Hospitals, American Medical Association and Texas Medical Association to file an amicus brief in support of the air ambulance companies’ appeal.

The legal argument put forth by the groups partially hinges on a “presumption against ineffectiveness” in statutes, i.e., “the idea that Congress presumably does not enact useless laws,” the brief states, quoting a 2014 Supreme Court decision.

“There is no need for an IDR process — or any of the NSA’s other payment mechanisms — if nothing requires insurers to render payment upon an IDR determination,” the groups wrote.

The amicus brief says insurers already were demanding substantial rate cuts in contract negotiations, based on perceived leverage they had when IDR decisions were supposed to be tied to the qualifying payment amount (QPA, i.e., the insurer’s median in-network, in-market rate for a service).

If insurers thought they had leverage with “only an overweighted QPA in their back pocket,” the provider groups wrote, “imagine what will happen when insurers realize they need not pay out-of-network providers anything at all. In-network providers will be forced to accept even greater take-it-or-leave-it rate cuts, knowing that their other choice is to be pushed out of network and potentially never paid (by anyone).”

Successful litigation by the Texas Medical Association, upheld by the same appeals court that is set to hear the air ambulance case, required CMS to put out guidance instructing arbitrators to give equal weight to prescribed factors other than the QPA.

Agencies and Congress back providers

It remains to be seen how willing the Fifth Circuit, known as arguably the most conservative appeals court, will be to overturn a ruling that stemmed from a strict reading of the statute. But providers’ arguments have drawn support from both the executive and legislative branches.

The Departments of Justice and Labor, which together with HHS enforce the No Surprises Act, likewise filed a brief in the case, stating that “the district court read the statute too narrowly and placed undue weight on the absence of a specific statutory provision authorizing a provider to seek federal judicial enforcement of a CIDRE’s [certified IDR entity’s] award.”

Furthermore, the departments wrote, “The IDR process would make little sense if the parties to a CIDRE’s payment determination lacked a means for judicial enforcement. The NSA’s text, structure, purpose and history support judicial enforcement of the payment determinations.”

Recently drafted legislation in the House aims to shore up various aspects of No Surprises Act enforcement, including by penalizing insurers that miss the deadline for making a payment after an IDR decision. The penalty would be triple the difference between the initial payment and the arbitrated rate.

Congress generally has supported providers in the dispute over how the IDR process is deployed, saying HHS disregarded statutory intent in its pre-litigation guidance linking decisions to the QPA. The thinking in Congress was that if providers had leverage in out-of-network payment settlements, insurers would be motivated to bring more providers in-network, to the benefit of patients.

Regulatory agencies have taken a different approach, initially seeking to tie IDR decisions much more closely to the QPA. Such an approach theoretically could help constrain healthcare spending, which analyses suggest will not happen with providers winning most cases.