Kaitlin Howard

By Kaitlin Howard

Kaitlin Howard is a researcher and writer producing insightful content across the healthcare revenue cycle. She has written and produced content for Zelis, Waystar, and Recondo Technology, as well as agencies. With a B.A. in English and Writing from University of Denver, Kaitlin stays current on market updates on claims management and healthcare payments, publishing a regular educational blog series on industry trends and Zelis offerings.

On Wednesday, February 23, 2022, a federal court struck down a controversial part of the Biden administration’s regulations that implement the No Surprises Act. Zelis Chief Legislative Affairs Officer Matthew Albright recently shared his thoughts via a short four-minute video.

We’ll discuss the highlights below, but you can find the full video here.

Let’s get into it.

Healthcare providers have filed several lawsuits challenging the Department of Health and Human Services’ (HHS) mediation process for providers and payers to settle disputes over certain out-of-network bills. On February 23, a federal court struck down the HHS’s controversial interpretation of a part of the federal law banning surprise medical bills.

In a recent summary judgment, the US District Court for the Eastern District of Texas sided with the Texas Medical Association, a trade association representing over 55,000 physicians. The court felt that HHS was mistaken in its decision to instruct mediators to give rates that insurers and providers contracted with in the past extra weight compared to other factors. As such, the court ruled that the sections of the No Surprises Act (NSA) Part Two Regulation that established certain considerations for the Independent Dispute Resolution (IDR) process must be repealed.

But what does that mean, exactly?

Under the court’s ruling, the arbiter now has to consider five different factors (instead of one primary factor) when deciding what proper reimbursement looks like. In short, the court’s decision hands healthcare providers a “win” when it comes to the arbitration process, as they will now have a better chance of receiving reimbursement higher than the in-network rate.

The downside? The ruling will make the arbitration process both more complex and subjective.

The Ruling: A Breakdown

The bottom line: Patients are still protected, but there’s a lot more ambiguity about how much payers should reimburse hospitals and other providers for out-of-network claims. Consumer protections against balance billing in emergency and non-voluntary situations still stand.

Five different paragraphs and sentences in the NSA regulation were removed. These removed provisions required arbitrators to consider the median in-network rate, or Qualifying Payment Amount (QPA), as the de facto appropriate reimbursement rate. Now that those provisions are removed, regulations can now be read to say that the arbitrator must include four more factors, as well as the QPA, when deciding the appropriate payment.

The new factors are as follows:

  • Acuity of patient
  • Experience and quality of provider
  • Market share of provider and payer
  • Past network contract negotiation

Possible Industry Consequences

The ruling leaves in place certain patient protections to combat surprise billing, but it strikes down part of the regulation that governs how much insurers will pay doctors once the patient is taken out of the middle.

This means more providers may dispute the initial reimbursement, bringing their disputes to the Independent Dispute Resolution (IDR) arbitration level. As such, plans will need to do more than just calculate a QPA when considering provider reimbursement (e.g., how to defend their QPA). And the final decision on the amount of said reimbursement will now be much more subjective, relying on the arbiter’s value judgment rather than a mathematical calculus.

The Wrap Up

HHS may appeal the decision and, while there are other lawsuits of the same nature percolating, it’s unclear how those will land. What we do know, however, is this: the court’s decision is the law of the land right now, and we must all do the best we can to develop strategies that actually work.

If you’re interested in finding out how Zelis infrastructure can help your organization navigate this change, contact us here.

And, once again, if you’re interested in a recap and implications of the court’s decision, here’s the link to the video.