The federal government is giving payers an extended grace period as they come to terms with court-ordered changes to how a key value in out-of-network payment disputes is calculated.
A new enforcement guidance FAQ (PDF) jointly issued Tuesday by the departments of Health and Human Services, Labor and the Treasury addresses one of four legal challenges brought against the government’s interpretation of the No Surprises Act by the Texas Medical Association (TMA III).
In short, it extends an ongoing period of “enforcement discretion” until Aug.1, meaning that regulators will largely stay hands-off so long as health plans calculate the qualifying payment amount (QPA) using a “good faith, reasonable interpretation of the applicable statutes and regulations that remain in effect” following recent court orders.
“Stakeholders had been waiting for the Departments to issue the enforcement guidance and the Departments did so today,” Jeffrey Davis, a health policy director at McDermott+, said in an email discussing the update.
Davis also noted that the final call on how plans calculate the QPA—which is used to render an arbitration decision and is meant to represent the median amount an insurer would pay for a service in that region—will fall to the Trump administration.
TMA III received an initial ruling from a federal court in August 2023 vacating several provisions of the government’s rulemaking—a victory for providers—though some components of the decision were appealed by the administration and partially overturned in late October.
At issue in the district court’s decision and the appeal is the QPA. TMA III and other cases filed by the Texas Medical Association have taken issue with the administration’s guidance on how the QPA should be calculated and considered during arbitration, which the provider group argued unlawfully favored payers.
Specifically in TMA III, the district court ruled that QPA calculations must only include rates of physicians in the same or similar specialty and that plan sponsors cannot use their own rates during calculations. However, the appellate court ruled that QPA calculations can include contract rates available for a service regardless of whether it had been performed and that non-fee-for-service adjustments may be included or excluded at federal regulators’ discretion.
In practice, Davis said these and other changes to the guidance on payment disputes have left parties on both sides in a “grey area” as federal departments rewrite their enforcement guidance, a process the departments said could take a substantial amount of time.
“This effectively maintains the status quo, as this enforcement discretion has already been in place since the fall of 2023,” he noted.
Providers will also be spared some scrutiny. In Tuesday’s FAQ, the departments said they will exercise similar enforcement discretion for any provider that bills its patients for cost-sharing amounts that were based on the now-invalidated QPA methodologies for services furnished prior to the Aug. 1 cutoff.
The Texas Medical Association has filed a petition for the full bench to rehear TMA III.
Largely successful challenges from the provider group have thrown the Biden administration’s rollout of the No Surprises Act into disarray, sometimes forcing the government to place a pause on arbitration altogether as it sought to hash out court orders. Lawmakers have repeatedly laid into the administration for its “flawed implementation” of the consumer protection law.