Summary: A recent district court decision, Texas Medical Association v. HHS, Dkt No. 6:21-CV-425 (E.D. Tex. Feb. 23, 2022), accessible on WESTLAW at Medicare & Medicaid Guide ¶307259 (C.C.H.), 2022 WL 597141, has troubling implications both for agencies’ traditional authority to create rebuttable presumptions and for the scope of Administrative Procedure Act section 553’s “good cause” exception permitting agencies to bypass notice and comment rulemaking. The decision invalidated a key provision of a regulation implementing a significant federal statute, the No Surprises Act, by reading the Act in a narrow textualist manner without acknowledging the contextual considerations set forth by regulators.  District Courts in at least four other Circuits are considering challenges raising the same issues. This is the first in a series of two blogposts exploring the Texas Medical Association decision.  This post describes the statute, the interim final regulations, and the district court decision; the next post will offer a critique of the district court’s decision.

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On December 27, 2020, Congress enacted The No Surprises Act to address “surprise medical bills.” The Act was part of the massive Consolidated Appropriations Act of 2021, Pub. L. No. 116-260, div. BB, tit. I, 134 Stat. 1182, 2758–2890 (2020).  A surprise medical bill is an unexpected bill from a health care provider or facility that occurs when an insured individual receives medical services from an out-of-network (i.e., “non-participating”) provider/facility.  Generally, the insured is not even aware that the provider or facility is out of network.  Surprise bills usually occur when a patient is unable to choose a health care provider or emergency facility, and thus cannot take steps to ensure that the services are provided in-network.  Requirements Related to Surprise Billing: Part II, 86 Fed. Reg. 55980,56055 (Oct. 7, 2021).[1]

The legislation’s major goal was to protect patients from bills from out-of-network providers or facilities that became the patient’s responsibility because they were only partially satisfied by the patient’s insurer, i.e., back billing.  Once patients are protected from back billing, insurers’ reimbursement for in-network providers and facilities can be left to negotiations between the parties, the insurers on the one hand and their in-network patients and facilities on the other.  But, for out-of-network emergency services, where providers and facilities must treat any patient regardless of ability to pay, providers and facilities lack leverage in their negotiations with insurers.  Thus the No Surprises Act created an arbitration process to resolve such disputes, the independent dispute resolution process.  Loren Adler, et al., Understanding the No Surprises Act (USC-Brookings Schaeffer Initiative for Health Policy Feb. 4, 2021.

The No Surprises Act and Its Implementing Regulations

The No Surprises Act

To say the least, the No Surprises Act is quite complex.  The Act alone filled over 32 pages of the U.S. Statutes at Large.  It amended statutes administered by three different agencies in three separate Departments of the federal government: the Public Health Service Act (“PHSA”) (administered by the Department of Health and Human Services), the Employee Retirement Income Security Act (“ERISA”) (administered by the Department of Labor), and the Internal Revenue Code (administered by the Department of the Treasury).  Texas Medical Association v. HHS, Dkt No. 6:21-CV-425, at 2, n.1 (E.D. Tex. Feb. 23, 2022).  Among other things, the Act limits the amounts insured patients must pay out-of-network providers for emergency services as well as for non-emergency services performed at an in-network hospital.  Id. at 2.

The Act requires insurers to reimburse out-of-network providers at a statutorily prescribed “out of network rate.”  In states with an all-payer model agreement or specified state law, the out-of-network rate is the rate provided by the model agreement or state law. 42 U.S.C. §300gg-111(a)(3)(K).  Otherwise, if the insurer and the out-of-network provider cannot agree on a reimbursement amount, the amount is determined through an independent dispute resolution process (“IDR”).  See Texas Medical Assn v. HHS, supra, at 2.  Because the federal IDR process is a last resort, the IDR process may be unnecessary in some states, at least with regard to billing for some services.[2]

The federal IDR process is set forth in 42 U.S.C. §300gg-111.  The IDR is structured like baseball salary arbitrations. The provider or facility and the insurer each submit their proposed reimbursement rate and the justification for that rate. The arbitrator must choose one of the two amounts.  In making such a choice the arbitrator must consider factors set forth in 42 U.S.C. §300gg-111(c)(5)(C).  In particular, the arbitrator must consider: (I) the qualifying payment amount (“QPA”), and (II) “information on any circumstance described in clause (ii).” 

Clause (ii), entitled “additional circumstances” lists five factors:

(I) the level of training, experience, and quality and outcomes measurements of the provider or facility;

(II) the market share held by the nonparticipating provider or facility or that of the plan or issuer in the geographic region in which the item or service was provided;

(III) the acuity of the individual receiving such item or service or the complexity of furnishing such item or service to such individual;

(IV) the teaching status, case mix, and scope of services of the nonparticipating facility;

(V) demonstrations of good faith efforts (or lack of good faith efforts) made by the nonparticipating provider or nonparticipating facility or the plan or issuer to enter into network agreements.

The Act also specifies certain matters than shall not be considered by the certified IDR entity, such as the reimbursement rate for the service payable under government programs for medical assistance, like Medicare. 42 U.S.C. §300gg-111(c)(5)(D).[3]  Like arbitrations generally, the decisions of certified IDR entities is subject to judicial review only on the very limited grounds set forth in the Federal Arbitration Act, 42 U.S.C. §300gg-111(c)(5)(E) (barring judicial review except on the grounds set forth in 9 U.S.C. §10(e)(1)-(4)), thus precluding judicial control over such entities application of  the standards set forth in 300gg-111(c)(5)(C).

There was considerable attention paid to crafting section 300gg-111(c)(5)(C) during consideration of the bill.  For a description of the negotiations and additional references, see Understanding the No Surprise Billing Act, supra.[4]  The House Ways and Means Committee December 11, 2020 press release announcing the compromise between House and Senate negotiators over the No Surprises Act, and a summary of the compromise, can be found here and here.

The Act gave the Secretary of Health and Human Services a little over 6 months, until July 1, 2022, to establish by regulation the appropriate methodology for determining the QPA and relevant geographic regions on which to base the QPA (as the QPA is tied to the relevant geographic region), inter alia. 42 U.S.C. § 300gg-111(a)(2)(B). The Act required the Secretaries of Health and Human Services, Labor, and the Treasury, to “establish by regulation one independent dispute resolution process.” 42 U.S.C. §300gg-111(c)(2)(A). The deadline for the IDR process regulation was December 27, 2022, one year after the No Surprises Act’s enactment.

The No Surprises Act Interim Regulations

On September 30, 2021, the Departments issued an interim final rule implementing the IDR process provisions of the No Surprises Act.  Requirements Related to Surprise Billing: Part II, 86 Fed. Reg. 55980 (Oct. 7, 2021).  The issuance of those rules was a part of a series of notices of interim rules and notices of proposed rules issued to implement the No Surprises Act and related laws.  The Departments had issued Part I of their requirements related to surprise billing as interim rules on July 13, 2021, which included rules prohibiting back billing of surprise bills to patients and specifying the methodology for calculating the QPA.  Requirements Related to Surprise Billing: Part I, 86 Fed. Reg. 36872 (July 13, 2021).  On September 16, 2021, the Departments and the Office of Personnel Management (“OPM”) published a notice of proposed rulemaking entitled Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement. After the Departments issued their September 30 interim rules, they planned to undertake rulemaking to implement reporting requirements related to pharmacy benefits and prescription drug costs.  See Surprise Billing Requirements Part II, supra, 86 Fed. Reg. at 55981-82; accord, Surprise Billing Requirements Part I, supra, 86 Fed. Reg. at 36875-76.  The Departments appear to have seen greater urgency in implementing the protection shielding consumers from liability and meeting the statutory deadline for specifying the methodology for calculating the QPA than in implementing provisions for deciding reimbursement rates between insurers and providers/facilities.

The Surprise Billing Requirements Part II rule included a provision that required the certified IDR entity to select the offer closest to the [QPA] unless it determines that credible information submitted by either party . . . clearly demonstrates that the [QPA] is “materially different”[5] from the appropriate out-of-network rate.[6] In such cases, “the certified IDR entity must select the offer [that] best represents the value of the qualified IDR item or services.”

In other words the regulation establishes a rebuttable presumption that the arbitrator should select the rate most closely approximating the QPA, unless either party shows that the QPA materially differs from the rate appropriate when all the statutorily-listed factors are taken into account.[7]

The Departments explained their reasoning for establishing such a presumption, and offered instructions for considering each of the five additional potentially relevant factors.  86 Fed. Reg. at 55996-98. In their view, the best interpretation of various statutory provisions, read in tandem, “is that when selecting an offer, a certified IDR entity must look first to the QPA, as it represents a reasonable market-based payment for relevant items and services, and then to other considerations.”  Id. at 55996.  Moreover, as a policy matter,“[a]nchoring the determination of the out-of-network rate to the QPA will increase the predictability of IDR outcomes, which may encourage parties to reach an agreement outside of the Federal IDR process to avoid the administrative costs.” Id.

The Departments also noted that providing a clear standard regarding the manner in which certified IDR entities were to consider the other factors in deciding whether the QPA presumption was rebutted and how to subsequently weight those factors “is necessary to help ensure consistency in how different certified IDR entities evaluate offers.” Id.  That in turn would “help ensure” that the IDR process “yields predictable outcomes and reduces administrative costs.”  Id. In short,“[e]nsuring that all certified IDR entities apply the same standards will help ensure” that the IDR process is “appropriately predictable, fair, and equitable.” Id. at 55997.

The September 30 notice indicated that the Office of Management and Budget (“OMB”) had declared the rule and ‘‘economically significant’’ as measured by the $100 million threshold, Executive Order 12866, §3(f)(1) (regulatory actions that have an annual effect on the economy of $100 million or more).  Id. at 56055.  Accordingly, the Departments prepared a joint 45-page Regulatory Impact Analysis. Id. at 56055-56090.

The Departments and the Director of OMB announced their joint finding that “it would be impracticable and contrary to the public interest to delay putting the provisions in these interim final rules in place until a full public notice and comment process has been completed.”  Id. at 56043.  Much of the basis for the finding was the imminence of the effective date of many of the No Surprises Act provisions relating to the IDR process.  Id. at 56043-44.  The complex provisions regarding certification of IDR entities were to take effect on October 7, a mere week after the notice was issued (and the very day on which it was published in the Federal Register).  The IDR, internal claims appeals. and external review provisions generally apply for policy years beginning on or after January 1, 2022.  Id.

The Departments noted that although the January 1 effective date may have allowed time for notice and comment (a concession that would ultimately be found significant on judicial review), such a timeframe “would not provide sufficient time for the regulated entities to implement the requirements.” Id.

The Departments explained that issuing the rules as interim final rules, rather than as proposed rules released for notice and comment, would “allow plans and issuers to account for the regulations as they finalize rates and plan offerings and [would] allow IDR entities to seek certification and be available to take part in the Federal IDR process when these interim final rules go into effect.” Id. at 56044.

In the Departments’ view, both sets of participants, health plans and issuers, on the one hand, and providers and facilities, on the other, needed the proposed rules “to be in place” in order “to determine the out-of-network rates for emergency services [and] services by out-of-network providers at in-network facilities.” Otherwise, providers and facilities would lack any IDR process in which to challenge insurer’s out-of-network reimbursement rates. Because providers and facilities would no longer be able to bill any unreimbursed balance to patients, those providers and facilities might well be undercompensated for their services. The Departments feared that such under-compensation could have three serious consequences.  First, it “could threaten the viability of these providers, [and] facilities.” Second, as a result, under-compensation might lead to additional industry consolidation, potentially driving health costs higher.  Third, the prospect of under-compensation could lead providers and facilities to deny insureds needed medical care, which itself would “undermin[e] the goals of the No Surprises Act.” Id.

The Departments considered whether they could exercise “enforcement discretion” while the IDR process rules were released for notice and comment and then finalized. They concluded that the No Surprises Act precluded such an approach.  The Act “requires that the government set up and administer a Federal IDR process to determine out-of-network rates.” Id. That left the Departments no choice but to establish set interim final rules for the IDR process, including for the certification of certified IDR entities, so that certified IDR entities, rather than the Departments, determined out-of-network rates.

Moreover, further delay would frustrate providers’ and facilities’ efforts to provide the statutorily-mandated “good faith” estimates of costs to out-of-network patients.  Id.  Indeed, the Departments announced that they would suspend enforcement of the “good faith” estimate requirement until the rulemaking was fully implemented. Id. at 56044, n.99. [8]

However, the notice did solicit comments, due in 60 days, on December 6, 2021 (less than 30 days before 2022 health care plans would typically go into effect, on January 1, 2022).  Id. at 55980.

Texas Medical Association v. HHS:  The Challenge to the QPA Presumption

An association of medical providers, the Texas Medical Association, challenged the QPA presumption rule in federal court.  The lawsuit is one of several challenging the QPA presumption.[9]  The Court found that the QPA presumption conflicted with the text of the No Surprises Act and, in addition, had been unlawfully promulgated without notice and comment, in violation of the Administrative Procedure Act.  As to the latter the Court rejected the Department’s findings of “good cause” to by-pass the notice and comment process before making the rule effective.

The Legality of Instituting a Presumption

The district court concluded that the No Surprises Act unambiguously establishes the framework for certified IDR entities deciding payment disputes that precludes the Departments making the QPA the presumptive rate of reimbursement.  Texas Medical Assn v. HHS, supra, at 15-17.  The Court rejected the Departments’ plea for deference; in its view the Departments’ interpretation could not satisfy Step I of the Chevron analysis. 

In particular, the Act provides that arbitrators deciding which offer to select “shall consider . . . the qualifying payment amounts . . . and . . . information on any circumstance described in clause (ii).”  Id. at 15.  The Court explained that “the word ‘shall’ usually connotes a requirement,” and thus by using such a mandatory term, “the Act plainly requires arbitrators to consider all the specified information in determining which offer to select.” Id. at 17 (citing Kingdomware Techs., Inc. v. United States, 579 U.S. 162, 171 (2016)).  Finding significance in statutory silence, the Court noted that“[n]othing in the Act,” (1) “instructs arbitrators to weigh any one factor or circumstance more heavily than the others,” (2) identifies “the QPA [as] the ‘primary’ or ‘most important’ factor,” or (3) imposes any rebuttable presumption.  Id.  Noting the meticulous detail in which Congress specified the arbitration procedures, the Court observed that had “Congress had wanted to restrict arbitrators’ discretion and limit how they could consider the other factors, it would have” done so explicitly.  Id. at 19.[10]

The QPA presumption rule conflicted with the statutory enumeration of considerations because the presumption “places its thumb on the scale for the QPA.”  Id. at 18.  It “required arbitrators to presume the correctness of the QPA”and imposed “a heightened burden the party seeking to rely on the remaining statutory factors to overcome that presumption.” Id.

The Court interpreted the two-part provision, identifying the QPA as a factor, and then separately listing 5 “additional” factors, as merely an undifferentiated listing of six factors. The Court thus disregarded the statutory structure, which mandated consideration of the QPA in its own provision, section (i), and then mandated consideration of the other factors in a separate section.  Id. at 19.[11]  Having disregarded that structure, and the heading of the provision setting forth the non-QPA factors, the Court observed that listing a factor first did not connote its importance.  Id.[12]

And it made no difference that the regulation merely required arbitrators to consider the QPA first, without precluding arbitrators from considering the remaining factors.  Id. at 20.  The Court explained: “But the Rule treats the QPA—an insurer-determined number—as the default payment amount and imposes on any provider attempting to show otherwise a heightened burden of proof that appears nowhere in the statute.”  Id.  The Court had earlier indicated its apparent distaste for the QPA, which it shared with the Texas Medical Association.  It explained that “the QPA is typically the median rate the insurer would have paid for the service if provided by an in-network provider or facility.” Because insurers have the ultimate say on what in-network rates, insurers “hold ultimate power—and are charged by regulation—to calculate the QPA.”[13]

The Failure to Engage in Notice and Comment

The Court also faulted the Departments for releasing interim final rules, rather than issuing a notice of proposed rulemaking and awaiting the completion of the notice and comment process to issue the final rule. The Court found that the error was not harmless, and that vacatur (rather than remand without vacatur) was appropriate.

Absence of Good Cause

The Court began by observing that section 553’s the good cause exception to the notice and comment requirement “should be read narrowly,” and applied “only in situations where ‘delay would do real harm.’” Id. at 24 (citing United States v. Johnson, 632 F.3d 912, 928 (2011), and U.S. Steel Corp. v. EPA, 595 F.2d 207, 214 (5th Cir. 1979)).[14]  It noted that “the mere existence of deadlines for agency action, whether set by statute or court order, does not in itself constitute good cause for a § 553(b)(B) exception.” Id. at 25 (citing U.S. Steel Corp., supra, 595 F.2d at 213, and City of Waco v. EPA, 620 F.2d 84, 86 (5th Cir. 1980)). In its view, the Department, had not adequately justified their failure to pursue the notice and comment in the full year they had to promulgate the regulation.   Id. at 25.

The Court acknowledged the Departments’ assertions that the QPA Presumption Rule “work[s] in concert with” the rules the Department released for comment in July defining the QPA, and that the QPA needed to be defined before they could issue the QPA Presumption Rule.  Id. However, the Court responded, “the Departments nowhere explain why they could not have worked on both rules in tandem.” Id. Nor, the Court observed, “do the[] [Departments] explain why they could not have issued the substance of the Rule as a proposed rule instead of an interim final rule, provided notice and comment, and integrated feedback into the eventual final rule.” Id.

Moreover, citing Johnson, the Court noted that “Congress could have expressly waived the APA procedural requirements . . . if it feared those requirements would produce significant harm or excessive delay.” Id. at 26 (citing Johnson, 632 F.3d at 928 (finding no good cause despite agency claims of public endangerment from delaying a sex offender registration regulation).[15]

The Departments cited Methodist Hospital v. Shalala, 38 F.3d 1225, 1237 (D.C. Cir. 1994), and Petry v. Block, 737 F.2d 1193, 1200–02 (D.C. Cir. 1984), finding good cause where the agency faced 135-day and 60-day deadlines respectively. The Court found neither apposite given that the Departments had an entire year before the Act became effective.  Texas Medical Assn v. HHS, supra, slip op. at 26.

The Court also rejected the Departments’ claim that insurers, providers, and arbitrators needed sufficient “lead time” to avoid “uncertainty” and to adapt to the Rule’s guidance. Id. at 27. Again citing Johnson, it noted that the “desire to provide immediate guidance, without more, does not suffice for good cause.” Id.; Johnson, supra, 632 F.3d at 929.[16]  And, as in Johnson, “the goal of reducing uncertainty is undercut by the request for post-promulgation comments, which could have resulted in a [final] rule change.” Id. (paraphrasing Johnson).

Further, assuming arguendo that the Departments had good cause to promulgate the rules regarding certification of IDR entities “to allow time for arbitrators to ‘acquire the necessary expertise and evidence of qualification to apply for certification,’” the urgency regarding such rules, issued in the same rulemaking document, did not provide good cause to promulgate the QPA provision without notice and comment. The Court would not allow “a regulation otherwise subject to section 553 procedures to piggyback” on properly-issued regulations.”  Id. 27-28 (quoting United States v. Garner, 767 F.2d 104, 120 (5th Cir. 1985)).

Harmless Error Analysis

The Court then rejected the Departments’ argument that the failure to seek notice and comment was harmless.

Had the Departments provided notice and comment, it explained, “Plaintiffs could have submitted the specific reasons and authorities for why they believed the Rule is inconsistent with the Act, how the Rule would impact them as providers, and how the Rule could be drafted to track the statutory text more closely.” Id. at 29.  The Departments had simply not demonstrated that they had considered and fully addressed such issues. Id.

The Departments argued that their “conclusions would have been materially different had they first engaged in notice and comment.” Id.  The Court responded by explaining that agencies cannot justify foregoing notice and comment by claiming, after the fact, that they would not have changed anything.  Id.

In its harmless error analysis, the Court also discussed the nature of the IDR process rules.  The rules governing the IDR process do not involve “a simple binary decision,” but rather establish “an exhaustive and complex arbitration process that would have almost certainly changed—even if in small part—had the Departments properly considered Plaintiffs’ objections.” Id. at 30; see, Johnson, supra, 623 F.3d at 933 (holding that “harmless error is more fitting” for failure to provide notice and comment regarding a “binary decision” than for “nuanced and detailed regulations”).

Vacatur or Remand Without Vacatur?

Finally, the Court found vacatur the appropriate remedy. 

In its view, the seriousness of the Departments’ APA violation weighed heavily in favor of vacatur.  Texas Medical Assn v. HHS, supra, slip op. at 32.  Indeed, because the challenged QPA presumption conflicted with the Act’s unambiguous terms in several key respects, the Departments could neither rehabilitate nor justify the QPA presumption on remand.  Id.

Nor would vacating the QPA presumption upend the insurers’ plans. The Court observed that the remaining provisions of the rule and the Act itself provide[d] a sufficient framework for providers and insurers to resolve payment disputes, including the matters an arbitrator “shall” and “shall not” consider.  Id.  (citing 42 U.S.C. § 300gg-111(c)(5)(C), (D)). Thus, “the only consequence of vacatur will be that [arbitrators] will decide cases under the statute as written without having their hands tied by the Departments’ QPA presumption.” Id. at 33 (quoting plaintiffs).

The Government Response: Acquiescence?

The Department of Labor issued a memorandum announcing that it was reviewing the decision and considering next steps.  Employee Benefits Security Administration, Department of Labor, Memorandum Regarding Continuing Surprise Billing Protections for Consumers (February 28, 2022).  In the meantime, it is “withdraw[ing] guidance documents that are based on, or that refer to, the portions of the Rule that the court invalidated.”  Once it had updated its guidance documents “to conform with the court’s order,” the Department would repost the updated documents.

It seems likely that at least one or more of the courts hearing challenges to the No Surprise Act regulations will disagree with the Court’s conclusions in Texas Medical Assn. v. HHS.  There is a significant possibility that one or more of the rulings will be appealed to courts of appeals covering different circuits.  And because all of the certified IDR entities cover all of the more than 30 U.S. jurisdictions that rely on the federal IDR process, see, Centers for Medicare & Medicaid Services, List of Certified Independent Dispute Resolution Entities, it is likely that any Circuit split among the five circuits in which the litigation regarding the validity of the QPA presumption is pending will need to be resolved.

Conclusion

In short, the Court, based only upon the sparse text of section 300gg-111(c)(5)(C), concluded that the Departments charged with implementing the No Surprises Act lacked the authority to establish a rebuttable presumption that the QPA was the appropriate rate of reimbursement for out-of-network services, or even specify the relative weighting of the other factors that had to be considered in determining the appropriate rate of reimbursement.  The Court also concluded that a year was sufficiently long to complete the No Surprises Act rulemaking, without referencing any of the surrounding circumstances, or any of the potential harms both to patients and to providers and facilities that the Departments had identified were the regulations not to go into effect as interim final rules.

Surprise! Surprise! Surprise! [17]

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[1] In their Federal Register notice for their No Surprise Act Regulations, Part II, regulators noted that Vox, had identified accident victims who were billed received over $20,000 for care at out-of-network hospitals.  Id. at 56045.  The regulators observed that such surprise billing was a particularly acute challenge for members of minority and underserved groups. In that context, it observed, doctor-patient relationships will more likely reflect “poor communication, underlying mistrust of the medical system, and lower levels of patient engagement.”  Id. at 56045-46.  See generally, Requirements Related to Surprise Billing: Part I, 86 Fed. Reg. 36872, 36874-75 (July 13, 2021).

[2] The American College of Emergency Physicians has identified the jurisdictions (states and territories) in which the federal IDR is used, see here.    The federal IDR process applies in approximately 30 jurisdictions.  Ironically, given the Texas Medical Association litigation, Texas does not appear to be one of them.

[3] Section 300gg-111(c)(5)(D) reads, in relevant part:

“In determining which offer is the payment to be applied . . . , the certified IDR entity . . . shall not consider usual and customary charges, the amount that would have been billed by such provider or facility . . . had the provisions of section 300gg–131 or 300gg–132 of this title . . . not applied, or the payment or reimbursement rate for such items and services furnished by such provider or facility payable by a public payor, . . .

[4] As Loren Adler and his authors explain:

The final bill, which provides for “Setting these payments exclusively via arbitration is a departure from initial proposals advanced by the Senate Health, Education, Labor, and Pensions Committee and the House Energy and Commerce Committee in 2019, which would have instead directly specified a “benchmark” payment rate equal to the median in-network rate for similar services. Using arbitration was a key demand of provider groups, who likely hope that they will be able to extract higher prices via an arbitration process. The particular version of arbitration used in the final bill is also somewhat more provider-friendly than the version in an earlier bill approved by the House Ways and Means Committee, in that it expands eligibility for arbitration and requires arbitrators to consider certain provider-friendly factors drawn from a May 2019 arbitration proposal put forward by a bipartisan group of Senators. 

The May 19 proposal, introduced by Senators Bennet, Brown, Carper, Cassidy, Cramer, Grassley, Hassan, Murkowski, Sullivan, and Young, the STOP Surprise Medical Bills Act, is discussed in Leon Adler, et al. Breaking Down The Bipartisan Senate Group’s New Proposal To Address Surprise Billing, HEALTH AFFAIRS (May 21, 2019).  Even that proposal, however, stated only that the arbitrator may consider the additional factors, without compelling the arbitrator to do so.  STOP Surprise Medical Bills Act, S. 1531, §2729B(d)(3)(D)(unenacted). 

[5] The Rule defines “material difference” as “a substantial likelihood that a reasonable person with the training and qualifications of a certified IDR entity making a payment determination would consider the submitted information significant in determining the out-of-network rate and would view the information as showing that the [QPA] is not the appropriate out-of-network rate.” §149.510(a)(2)(viii).

[6] The certified IDR entity was also given discretion to choose between offers equally distant from the QPA in opposing directions.

[7] Presumption is a “slippery” word and can have a variety of meanings. 1 CHRISTOPHER B. MUELLER, LAIRD C. KIRKPATRICK, FEDERAL EVIDENCE §3:1 (4th ed.) (accessible on WESTLAW)(citing MCCORMICK ON EVIDENCE §342 (5th ed.)).  But it is reasonably clear that the QPA presumption is a mandatory, yet rebuttable, presumption.  For more on the different types of presumptions, see Edward W. Cleary, Presuming and Pleading: An Essay on Juristic Immaturity, 12 STAN. L. REV. 5 (1959).

[8] As stated in the Federal Register notice:

Accordingly, until rulemaking to fully implement this requirement to provide such a good faith estimate to an individual’s plan or coverage is adopted and applicable, HHS will defer enforcement of the requirement that providers and facilities provide good faith estimate information for individuals enrolled in a health plan or coverage and seeking to submit a claim for scheduled items or services to their plan or coverage.

[9] Katie Keith, The Six Provider Lawsuits Over The No Surprises Act: Latest Developments, HEALTH AFFAIRS FOREFRONT (February 16, 2022). The litigations are in district courts in the D.C., Second, Seventh, and Eleventh Circuits, in addition to the Fifth Circuit.

[10] Of course, it is not clear that Congress would have considered presumptions or the weighting of factors “procedural.”  Indeed, presumptions could be characterized as either substantive or procedural. So Congress might well have been specifying the process by which disputes regarding reimbursement rates for out-of-network services should be resolved, without specifying the substantive law governing certified IDR agency resolution of such disputes (except to provide the factors without specifying their weighting or relative significance).  For a general discussion of the use of statutory silence, see Bernard W. Bell, Legislative History Without Legislative Intent: The Public Justification Approach to Statutory Interpretation, 60 OHIO ST. L.J. 1, 89–94 (1999); Anita S. Krishnakumar, The Sherlock Homes Canon, 84 GEO.W. L. REV. 1 (2016).

[11] As noted above, the Court disregarded the heading of the provision setting forth the five considerations other than the QPA.  Tellingly, the provision was entitled “additional factors.”  The Court asserted that “subchapter heading[s] cannot substitute for the operative text of the statute.” Id. at 19 (citing United States v. Lawrence, 727 F.3d 386, 393 (5th Cir. 2013)).  But Lawrence itself acknowledges that headings can be considered “where the statutory language is truly ambiguous.”  Lawrence, supra 727 F.3d at 393.  And in Lawrence, the Fifth Circuit panel had refused to consider the heading because, it its view, the heading conflicted with the statutory structure as well as the statutory text.  The heading “additional considerations” is entirely consonant with the structure of section 300gg-111(c)(5)(C), which suggests that the QPA is the primary factor for consideration.  At most, on the question of whether Congress really intended all the listed factors to be given the precisely equal weight in every circumstance, section 300gg-111(c)(5)(C) is entirely silent, and thus truly ambiguous.

[12] The Court observed “the Departments cite no authority holding that a statutory factor is entitled to more weight simply because it is the first in a list.”  Id. at 19.

[13] However, this may well not have been the congressional view; Congress appears to have viewed the in-network rate as a negotiated one, rather than one unilaterally set by insurers.

[14] The Court rejected the Departments’ argument that because each of their governing statutes “authorizes the Secretary of each of the Departments to ‘promulgate any interim final rules as the Secretary determines are appropriate to carry out this subchapter,’” they were expressly authorized to bypass notice and comment requirements.  Texas Medical Assn v. HHS, slip op. at 22-24.

[15] In Johnson, citing Asiana Airlines v. FAA, 134 F.3d 393, 398 (D.C. Cir. 1998), the Court had explained:

“Congress balanced the costs and benefits of an immediately effective rule against a more deliberate rulemaking process, and it favored the latter. Without good cause, we must enforce Congress’s choice in favor of the traditional, deliberative rulemaking process.” 

[16] As will be noted in the next post in this series, there was more.  The Department expressed concerns, which the Court did not address, that providers and facilities would be undercompensated for the services they provided, threatening their viability, and possibly resulting in either a deleterious further consolidation of providers and facilities or denial of needed medical services.

[17] This is a reference to the phrase often used by the fictional character Gomer Pyle.