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No Surprises Act Lawsuit Filed by AMA and AHA

Adding to the chaos underlying the implementation of the No Surprises Act (the “NSA”), on Thursday, December 9, 2021, the American Medical Association and the American Hospital Association, among others, filed suit in the U.S. District Court for the District of Columbia against the U.S. Depts. of Health and Human Services, of Labor, and of the Treasury, as well as the Office of  Personnel Management (collectively, the “Departments”), requesting that the Court issue an injunction against certain aspects of the Interim Final Rule issued on September 30, 2021 (the “IFR”).  See Case No. 1:21-cv-03231.

This suit centers around the Departments’ interpretation of Congress’ intention concerning the IDR process, namely that the Qualifying Payment Amount (“QPA”) (i.e., the median in-network rate), was to be presumed by the arbitrator/IDR entity as the appropriate payment amount according to the IFR.  As argued in this case, as well as in a bipartisan letter from 152 Congressional representatives dated November 5, 2021, this interpretation of the IDR process (and how disputes are to be determined) is not in line with Congressional intent.  Essentially, in enacting the NSA, Congress intended that the IDR process equally consider six factors (only one of which is the QPA), to allow for a more balanced approach in determining appropriate payment rates.  The IFR, on the other hand, “places a heavy thumb on the scale in favor of just one of the factors [(the QPA)].”  Put simply, the current iteration of the IFR undoubtedly favors the insurers/payors/carriers.

Accordingly, in commencing this lawsuit, the AMA and AHA are seeking an injunction from the Court, staying the implementation of this aspect of the IFR, arguing that the implementation of the IFR as presently drafted will result in the routine under-compensation of hospitals, physicians, and like providers, aside from its clear conflict with Congressional intent.  This multi-faceted argument states, in part, that the current IFR actually incentivizes insurers/payors/carriers to reduce the payment rates for its in-network providers to further depress the rates paid to out-of-network providers through the IDR process (based on the QPA).

By demanding in-network providers accept reduced rates, more in-network providers will either relinquish their in-network status, or have their in-network status terminated, for refusing to agree to the unreasonably low in-network rates.  Per the litigation-commencing documents filed with the Court, this process is already happening, with Blue Cross Blue Shield of North Carolina allegedly having sent a letter to this effect to various in-network providers.  As a result, patients will be harmed by having less choice of providers.

In general, this lawsuit is just another wrinkle in a rocky and uncertain implementation process.  We, at Patriot, will continue to track this case and provide updates since the outcome of this case can significantly affect providers of all participation statuses and how their practices should be managed going forward.

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