Texas Court Strengthens Position of Out-of-Network Providers with QPA Ruling

Recent developments in the ongoing litigation surrounding the No Surprises Act have significantly impacted out-of-network (OON) providers. On August 24, 2023, the United States District Court for the Eastern District of Texas ruled in favor of the Texas Medical Association (TMA) and other plaintiffs, including air ambulance providers, vacating key provisions related to the calculation of the Qualified Payment Amount (QPA). This decision provides a major victory for out-of-network providers seeking fair reimbursement.

Background: Understanding the Qualified Payment Amount (QPA)

The Qualified Payment Amount (QPA) is a central component of the No Surprises Act, designed to determine the reimbursement rates for out-of-network emergency and non-emergency services rendered at in-network facilities. The QPA generally represents the median contracted rate an insurer would have paid had the services been provided by an in-network provider. This figure plays a crucial role in the Independent Dispute Resolution (IDR) process, where disputes over reimbursement amounts are resolved.

Recent Developments: Texas Court Ruling

Court Decision and Impact

On August 24, 2023, the Texas District Court ruled in favor of the TMA and other plaintiffs, vacating several provisions in the 2021 Interim Final Rule (IFR) that had defined how QPAs should be calculated. The court found that certain rules and guidance issued by the Departments of Labor, Treasury, and Health and Human Services were inconsistent with the intent of the No Surprises Act, leading to the revocation of:

• Guidance on batching claims for IDR.
• Administrative fee structures for the IDR process.

As a result, the Centers for Medicare and Medicaid Services (CMS) temporarily suspended the Federal IDR process as of August 3, 2023, with IDR entities halting all related functions by August 25, 2023.

Specific Contentions on QPA Calculation

In the litigation, key objections were raised regarding how the QPA was being determined under the July 2021 IFR. The plaintiffs contested the inclusion of provisions they believed undermined fair reimbursement, including:

1. Ghost Rates

The practice of including contracted rates for services that were never rendered by the provider or supplier was challenged. These "ghost rates" were seen as unfairly inflating the QPA, leading to lower reimbursement amounts for OON providers.

2. Out-of-Specialty Rates

Rates from different specialties were being included in the QPA calculation, even though the service in question may have been outside the scope of the specialty involved. This led to claims that the rates were not an accurate reflection of the market value for the specific services provided.

3. Exclusion of Incentive-Based Payments

The exclusion of incentive-based payments (e.g., bonuses or risk-sharing arrangements) from the QPA calculation was also contested. Providers argued that these payments reflect the full value of their services and should be considered in QPA determinations.

4. Inclusion of Rates from Third-Party Administrators

The inclusion of rates from third-party administrators overseeing various plan sponsors was also challenged. Plaintiffs argued that this practice resulted in inflated QPAs that did not accurately reflect the actual market value for services.

The court sided with the plaintiffs, vacating these provisions due to their inconsistency with the intent of the No Surprises Act.

Out-of-Network Air Ambulance Services

In addition to the above, there were also concerns raised regarding air ambulance services under the July 2021 IFR and August 2022 guidance. These included:

• Separate IDR processes for various air ambulance service codes.
• Exclusion of case-specific agreements in QPA calculations for air ambulance services.

The court also vacated these provisions, ensuring a more streamlined and fair process for air ambulance providers seeking reimbursement for their services.

Some Provisions Remain

Despite the ruling, not all provisions of the July 2021 IFR were vacated. The court upheld several key aspects of the rule, including:

1. Disclosure Requirements for Insurers

The court sustained the requirement that insurers disclose detailed information about how they calculate QPAs, ensuring greater transparency for providers.

2. Geographic Variability for Air Ambulance Services

For air ambulance services, the court agreed with the Departments that insurers should be allowed to determine QPAs based on rates from varying geographic areas, given the unique nature of these services. This provision remains in effect.

Moving Forward: Implications for Providers

This decision is a significant win for out-of-network providers, as it ensures more accurate and fair calculations of the QPA. However, ongoing litigation and changes to the IDR process may continue to create uncertainty.

At Ardú Medical Partners, we are committed to staying ahead of these developments and supporting healthcare providers in navigating the complexities of the No Surprises Act and the Independent Dispute Resolution (IDR) process. Our expertise and guidance help ensure that providers receive the fair reimbursement they deserve.

Contact Ardú Medical Partners Today

To learn more about how we can help you navigate the evolving landscape of reimbursement, contact Ardú Medical Partners for expert consultation and support. Let us guide you through the challenges of the No Surprises Act and ensure your financial health remains secure.