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September 5, 2024 – We are now in September! And while many folks are thinking about how summer has come and gone so quickly, those following the No Surprises Act implementation process may also be wondering how a whole year has passed since the process hit a particularly bumpy patch from which it has yet to recover. While some could argue that the entire No Surprises Act implementation process hasn’t been smooth, the period of instability that I’m specifically referencing began last August with a series of court cases that led to:
The US Departments of Health and Human Services, Labor, and Treasury (the Departments) – the ones responsible for implementation – have taken initial steps to stabilize the process where they could. They issued clarifying guidance documents last fall as well as a proposed regulation in October 2023 that would make a lot of operational improvements to the federal IDR process. However, that proposed reg won’t be finalized for at least a few more months, and the reg’s final policies won’t become effective until 2025. Some stakeholders have argued that the final reg is necessary to help stabilize the process and that the current instability potentially jeopardizes the fundamental promises of the No Surprises Act to protect patients from surprise medical bills and keep them out of the middle of billing disputes.
So, how did we get here? In August 2023, the US District Court for the Eastern District of Texas ruled in two Texas Medical Association (TMA) cases, TMA IV (issued August 3, 2023) and TMA III (August 24, 2023). The TMA IV decision invalidated the $350 administrative fee that had been established for the federal IDR process as well as some batching regulations (batching allows for multiple claims to be included in the same IDR dispute). The TMA III decision invalidated major portions of the methodology the Departments established for calculating the qualifying payment amount (QPA). More information about these decisions can be found in this Regs & Eggs post and this Special Report. Since both decisions invalidated some of the operating rules of the IDR process, the Departments had to close the IDR portal several times throughout fall 2023 to update its systems and processes accordingly. The IDR portal did not fully reopen until December 2023.
During that period, the Departments also issued a series of guidance documents that attempted to clarify how key stakeholders in the IDR process (providers, insurers, and certified IDR entities) were to go forward in the absence of the overturned regulations. However, one major issue – which continues to affect the process today – is the time it has taken for the Departments to issue replacement regs rather than just guidance. In general, regs are more powerful than guidance. They carry a heavier weight and are necessary to actually interpret laws and create new requirements, instead of just providing clarifications. However, it takes much longer to issue a reg than it takes to put out guidance. While guidance can be issued fairly quickly, regs have to go through the formal rulemaking process (a proposed reg, a 30- to 60-day comment period, and a final reg) before they are finalized.
Case in point: On October 6, 2023, the Departments released guidance about how health plans should calculate the QPA in light of the TMA III ruling, as explained in this Regs & Eggs post. Since it was just guidance and not a regulation, the Departments did not provide any new directions for calculating the QPA, but clarified that insurers should calculate QPAs using a good faith, reasonable interpretation of the applicable statutes and regulations that remained in effect after the TMA III decision. The Departments stated that they would exercise enforcement discretion if health plans calculated the QPA based on the invalidated QPA methodology. Only a new regulation can interpret the statute and establish new rules for calculating the QPA. And because no reg has been issued up to this point, this guidance around calculating the QPA is still in effect (and approaching the one-year mark). The Departments appealed the initial TMA III decision to the US Court of Appeals for the Fifth Circuit, and oral arguments for that case occurred earlier this week on September 3, 2024. Thus, it may be a while until the legal issues around QPA calculations are sorted out and the Departments draft a replacement reg.
Despite not addressing the QPA calculations through a reg, the Departments did initiate some rulemaking last fall to address several other regulations that were rescinded by the court decisions. The Departments completed the rulemaking process necessary to establish a new administrative fee for 2024, replacing the $350 fee that was invalidated by the TMA II decision with a new $115 fee. However, as previously mentioned, the Departments have yet to finalize a reg that would establish new batching procedures and make other operational improvements to the IDR process.
The aforementioned “IDR operations” proposed reg was released on October 27, 2023, and published in the Federal Register on November 3, 2023 (click here for our summary of the proposed reg). The public comment period initially closed on January 2, 2024, but the Departments decided to reopen it from January 22, 2024, to February 5, 2024, to get additional feedback. Some of the policies in the proposed reg had proposed effective dates beginning on or after the later of August 15, 2024, or 90 days after the effective date of the final reg. Other policies were supposed to become effective on January 1, 2025. Given these proposed effective dates, there was a strong expectation among stakeholders that the final reg would be released in early to mid-summer 2024. In the Spring 2024 Unified Agenda, however, the final reg’s release date was listed as November 2024 (which is only an estimate and could be modified). Based on the proposed reg’s timeline for when policies would become effective, a November 2024 release date could result in most policies not becoming effective until the middle of calendar year 2025 or even later.
On August 8, 2024, the American College of Emergency Physicians (ACEP), the American College of Radiology (ACR), and the American Society of Anesthesiologists (ASA) sent a letter to the Departments expressing their concern about the reg’s delayed release. They strongly urged the Departments to release the final reg as soon as possible (but no later than September 1, 2024), with all the policies becoming effective no later than 30 to 60 days from the date of publication in the Federal Register.
The organizations stated their belief that many of the reg’s policies, once finalized, would address some of the significant areas of confusion their members continue to experience related to the federal IDR process, including:
The organizations claimed that the federal IDR process is currently in an extremely unstable period that is “putting in jeopardy” their “collective ability to meet the core objective of the No Surprises Act: to protect patients and keep them out of the middle of billing disputes.” The regulation, while not resolving all the issues affecting the federal IDR process, represents a “good start” in their view.
While the Departments did not issue the final reg by September 1 as the organizations requested, the Departments are actively working to address the comments they received and issue the final reg as soon they can. They have informally noted that it has taken a while to adjudicate all the comments and create final policies that reflect the feedback received. Simply put, regs in general take a long time to complete the rulemaking process from start to finish – and some regs, such as the IDR operations reg, can take even longer than others.
It is hard to state definitively whether the IDR operations reg, once finalized, will provide all of the clarity sought by ACEP, ASA, and ACR, and whether more clarity will result in fewer overall complaints related to the No Surprises Act. The Centers for Medicare & Medicaid Services’ (CMS’s) most recent complaint report showed that the agency had received more than 12,000 complaints against both providers and certain payers as of June 30, 2024, not including complaints adjudicated by other agencies. (While CMS is the main federal agency implementing the law, other entities, such as the US Department of Labor and state departments of insurance, are responsible for oversight in certain cases. These entities may have received complaints that are not accounted for in this report.) Some of these complaints could involve situations where patients are perhaps still receiving “surprise” bills and paying more than they should owe.
Again, we don’t know whether a finalized IDR operations reg will add clarity to the IDR process, reduce complaints, and better protect patients, but some stakeholders believe that it represents one of the best opportunities available to end the period of instability that has already existed for about a year. Based on our current estimate of when the reg will be released and when its policies will go into effect, we won’t begin to find out whether the reg does help to stabilize the IDR process until sometime in mid- to late 2025. By that time, this current period of instability might have reached its two-year anniversary. We can only hope that it doesn’t!
Until next week, this is Jeffrey saying, enjoy reading regs with your eggs.
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