The U.S. Court of Appeals for the Fifth Circuit affirmed a lower court decision that vacated critical portions of the surprise billing independent dispute resolution (IDR) provisions of the Consolidated Appropriations Act, 2021 (CAA, 2021). The case is Texas Med. Ass’n v. HHS, 2024 WL 3633795 (5th Cir. 2024).

Relying on the recent U.S. Supreme Court’s decision in Loper Bright, the Fifth Circuit held that the CAA, 2021, did not give the U.S. Department of Labor (DOL), U.S. Department of Health and Human Services (HHS), and the Internal Revenue Service (IRS) the authority to issue regulations setting substantive standards for arbitrators. As a result, the court ruled that the federal agencies exceeded their authority by imposing three requirements on arbitrators not listed in the statute, i.e.:

  • The arbitrators must consider the qualifying payment amount (QPA) before other factors;
  • The arbitrators must not consider information that is not credible or unrelated to the issue, or already accounted for in the QPA; and
  • The arbitrators must explain their reasons if they deviate from the QPA.

The CAA, 2021, increased patient protections against surprise medical bills resulting from out-of-network emergency and non-emergency services. The DOL, HHS, and IRS issued joint interim regulations addressing various issues. More specifically, the regulations addressed participant cost-sharing for services, primarily using the QPA based on the plan’s median in-network rate and procedural aspects of the IDR process in terms of plan payments to out-of-network providers.

A court previously invalidated certain interim regulations provisions, prioritizing the QPA over other factors when determining the out-of-network payment rate. In response, the agencies removed the disputed provisions and finalized the IDR portions of the regulations.

Nonetheless, the Texas Medical Association then challenged the final regulations as continuing to improperly emphasize the QPA. The trial court agreed, finding that the agencies had imposed restrictions that appeared nowhere in the CAA, 2021, as previously noted, and returning the provisions to the agencies for further consideration. The agencies appealed, which led to the Fifth Circuit’s decision.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and H.R./employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.