In a February 23 order, the U.S. District Court for the Eastern District of Texas vacated a controversial rule issued in September that implemented the independent dispute resolution (IDR) procedure under the federal No Surprises Act (NSA). The lawsuit[1] was brought by the Texas Medical Association. Numerous industry participants had complained that the rule conflicted with the clear language of the NSA and violated the notice-and-comment requirements of the Administrative Procedure Act.

The NSA, which took effect on January 1, was recently discussed here. The NSA provides that payment disputes be resolved in a “baseball-style” process, in which the insurer and an out-of-network provider each propose a payment amount and an arbitrator selects one figure or the other. The now-vacated rule established a rebuttable presumption that the insurer’s median in-network rate for a geographic area, or “qualifying payment amount” (QPA), was also the appropriate out-of-network rate for that area; however, the NSA provides for the IDR arbiter to consider all relevant factors equally.

District Judge Jeremy D. Kernodle agreed that the rule, as issued, improperly favored the proposal closest to the QPA and thereby “rewrites clear statutory terms.” The opinion stated, “The Rule thus places its thumb on the scale for the QPA, requiring arbitrators to presume the correctness of the QPA and then imposing a heightened burden on the remaining statutory factors to overcome that presumption.” Eliminating the presumption will likely result in higher reimbursement payments, on average, from health insurers to out-of-network providers.

[1] Texas Med. Ass’n v. United States Dep’t of Health and Human Servs., No. No. 6:21-cv-425-JDK (E.D. Tex. Feb. 23, 2022).