Fifth Circuit Reversed lower court’s Ruling on Key Provisions of The Federal No Surprises Act, including the QPA Formula
The Federal No Surprises Act (NSA) protects patients from out-of-network medical expenses for certain emergency and non-emergency services and care received from out-of-network providers at in-network facilities. As a result, medical providers and health insurers must resolve most out-of-network disputes through the arbitration process established by this law.
Citing to the United States Supreme Court’s decision in Loper Bright Enterprises v. Raimondo,[1] the Fifth Circuit Court of Appeals in Texas Medical Association et al. v. U.S. Department of Health and Human Services, affirmed key provisions of the NSA, including the Departments’[2] approach to calculating the qualifying payment amount (QPA) under the Federal No Surprises Act. The Court reversed a previous ruling that claimed the Departments’ methodology for determining a key benchmark under the No Surprises Act of 2020 was beyond the law’s scope. The Court emphasized that these provisions are consistent with the law and not arbitrary. The Court also affirmed the district court’s decision that insurers must send initial payment or denial notices to providers within 30 days of receiving a “clean claim.” Additionally, the Court upheld the type of information insurers must disclose regarding the QPA, rejecting the Plaintiff’s claim that fewer disclosure requirements made the NSA arbitration harder.
The QPA is central to the NSA arbitration process. The Fifth Circuit’s decision essentially allows the Departments to include “ghost rates”—rates for services that were not actually provided—in the QPA calculation, thereby skewing the median rate downward and resulting in lower payments. This decision further permits provider bonuses and single-case agreements to be excluded from QPA rates.
This ruling in favor of the Departments, as it relates to the QPA, contrasts with several recent decisions from the Fifth Circuit that have hindered the administration’s ability to implement its rulemaking efforts.
In August, the Fifth Circuit rejected a critical aspect of a rule that required Independent Dispute Resolution Entities to prioritize the QPA in their decisions. Before that, the Departments had modified this rule after Judge Kernodle struck it down in February 2022. Judge Kernodle’s decision also struck down an increase in administrative fees and introduced new guidelines for submitting batched claims. At this juncture, filing a petition to the Supreme Court is possible; however, given the absence of a circuit split, the Supreme Court is unlikely to take it on.
[1] The United States Supreme Court overturned the Chevron deference standard, known as Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc. This standard was a long-standing administrative law principle that allowed federal agencies to use their technical expertise to interpret laws and create necessary regulations.
[2] The “Departments” include the U.S. Department of Health and Human Services, the Office of Personnel Management, the U.S. Department of Labor, and the U.S. Department of the Treasury.
