CMS Resumes IDR Payment Determinations Under No Surprises Act

IDR Entities to Resume Some Payment Determinations

2/28/2023 After a short pause, certified independent dispute resolution (IDR) entities are resuming payment determinations for disputes involving items or services furnished before Oct. 25, 2022, according to a notice from CMS.

The federal agency paused the IDR payment determination processing earlier this month after the US District Court for the Eastern District of Texas issued a judgment and order on Feb. 6, 2023, vacating certain parts of federal regulations implementing the IDR process under the No Surprises Act (NSA).

CMS said previously that the Departments of Health and Human Services, Labor, and the Treasury (the Departments) were reviewing the court’s decision and evaluating IDR processes, guidance, templates, and systems in light of the ruling.

In the latest notice, CMS said IDR entities can process payment determinations for disputes from before Oct. 25, 2022, using the standards provided in the October 2021 interim final rules. However, IDR entities should hold on processing payment determinations for any disputes initiated after that date because they are impacted by the court decision.

Key parts of the October 2021 interim final rules described what factors IDR entities should consider when making a payment determination. The rules heavily emphasized the use of the qualifying payment amount (QPA), which is generally the median contracted rate for the same or similar services in the same geographic region, increased for inflation.

The Texas Medical Association (TMA) challenged the interim final rules, arguing in part that the emphasis on the QPA unfairly tips the scales in favor of payers. The Departments revised the interim final rules in August 2022 following the court’s ruling in favor of TMA.

TMA sued the Departments again in September 2022, again challenging the payment determination process. The latest court decision addressed the weight of the QPA in the revised rules.

“Certified IDR entities will continue to hold issuance of payment determinations that involve items or services furnished on or after October 25, 2022 until the Departments issue further guidance,” the notice stated. “The Departments are working diligently to complete necessary guidance and system updates in order to allow certified IDR entities to resume processing payment determinations for these disputes.”

All other IDR process timelines still apply, CMS added.

CMS Instructs IDR Entities to Hold Payment Determinations

2/28/2023 CMS recently instructed certified independent dispute resolution (IDR) entities to hold all payment determinations until the Departments of Health and Human Services, Labor, and the Treasury issue further guidance.

The federal agency announced the hold in a Feb. 10 email to subscribers. The email also said that certified IDR entities must recall any payment determinations issued after Feb. 6, 2023.

The US District Court for the Eastern District of Texas issued a judgment and order on Feb. 6, vacating certain parts of federal regulations implementing the IDR process under the No Surprises Act (NSA). This is the second court ruling regarding the implementation of the IDR process.

“The Departments are currently reviewing the court’s decision and evaluating current IDR processes, guidance, templates, and systems for updates that will be necessary to comply with the court’s order,” CMS said in the email. “The Departments will provide specific directions to certified IDR entities for resuming the issuance of payment determinations that are consistent with the court’s judgment and order. Certified IDR entities should continue working through other parts of the IDR process, including eligibility determinations, as they wait for additional direction from the Departments.”

Judge Jeremy D. Kernodle of the US District Court for the Eastern District of Texas ruled earlier this month that certain parts of the revised IDR process following an August 2022 rule from the Departments were inconsistent with the NSA.

In a previous case from nearly a year ago, Judge Kernodle held that an interim final rule from the Departments also contradicted the NSA by imposing “rebuttable presumption” that the offer closest to the qualifying payment (QPA) amount should be chosen. The Departments then replaced the interim final rule with rulemaking in August 2022.

However, the Texas Medical Association, which filed the original lawsuit, also sought to vacate the new final rule. They argued that, just like the interim final rule, the new rule put more emphasis on the QPA relative to other factors, such as patient acuity, clinician characteristics, and market share. Judge Kerndole agreed with the Texas Medical Association and other plaintiffs.

The payment determination pause issued by CMS earlier this month will delay the IDR process, according to Max Czernin, partner at Squire Patton Boggs, writing in The National Law Review. It is also likely to lead to further backlogs as new claim disputes are submitted, Czernin wrote.

A report from the Departments describes a significantly higher volume of claims than the Departments initially estimated. Payers and providers submitted over 90,000 disputes from April 15 through September 30, 2022, the report stated. The Departments had estimated in the 2021 interim final rule that 17,333 claims would be submitted as part of the federal IDR process each year.

Payers and providers can submit a dispute to the IDR process if both parties fail to arrive at an agreed-upon payment amount during a 30-day open negotiation payment for items and services covered by NSA, which include surprise bills for emergency services, non-emergency items and services furnished by out-of-network providers at in-network facilities, and services provided by out-of-network air ambulance providers. The IDR process is a “baseball-style” arbitration process in which both parties submit payment amounts and explanations to a certified IDR entity, which then selects one of the proposed amounts based on certain factors, including the QPA.

The IDR process launched on April 15, 2022.

The original version of this article was published on February 16, 2023.