By Mattie Smith, JD, Law Clerk.
CMS appears to be calculating their next move after suffering another loss in a series of cases disputing their administration of the Independent Dispute Resolution (IDR) process which was created to facilitate provisions of the No Surprises Act of 2022. In response to the most recent holding in Texas Medical Association v. United States Department of Health and Human Services (TMA IV), CMS has suspended the Federal IDR process, including the ability to initiate new disputes.
The No Surprises Act was enacted by Congress in 2022 to address the problem of surprise medical billing and advocate for a higher level of transparency in medical transactions. The Act has the primary effect of limiting insured patients’ payments to out-of-network providers for emergency services and requires insurers to pay out-of-network providers at a statutorily calculated rate. A minority of states have state specified laws or All-Payer Model Agreements which determine the out-of-network rate to be paid, and these states are not subject to the Federal IDR process. Under an All-Payer Model Agreement, medical services or treatments cost the same for every patient (or “all payers”) under the same provider, regardless of the type of insurance coverage the patient holds. In states like South Carolina that do not have state specified laws or an All-Payer Model Agreement, the amount to be paid is determined through a negotiation between the out-of-network provider and the insurer, or, if no agreement can be made through initial negotiations, through the Federal IDR process which the Act requires the Secretaries of Health and Human Services, Labor, and the Treasury (the “Departments”) to establish.
The IDR process removes patients from disputes between the out-of-network provider and the insurer over the price to be paid for services and treatments. Instead, a third-party “baseball-style” arbitration process determines the payment amount.
In the most recently decided case regarding the administration of the Federal IDR process, TMA IV, plaintiffs challenged the 600% increase of the administrative fee that was announced in December 2023. The fee, which was originally $50, was increased to $350 by the Departments with no notice to interested parties nor any opportunity for those parties to comment on the fee increase. Plaintiffs in TMA IV also challenged a new rule that heavily restricts the “batching” of claims in a single payment dispute. The judge vacated both the fee increase and the restriction on batching as violations of the provisions of the Administrative Procedure Act (APA) which require that agencies give interested parties an opportunity for notice and comment before issuing a rule that has a binding legal effect.
With a history of backlogs, this most recent suspension of the Federal IDR process has the potential to cause major disruption for providers who wish to submit disputes. In a letter urging CMS to reopen the portal, Dr. Andrea Brault of the Emergency Department Practice Management Association (EDPMA), argues that the backlog benefits insurers and harms providers “by extending the length of time for which a service is underpaid, which creates significant cash-flow challenges.”
According to their most recent guidance, the Departments intend to reopen the portal “soon” and “will notify interested parties at that time.”