Federal Court Decides Appeal of NSA Lawsuit that Addressed QPA Calculation

Back in August, you may have heard my colleague Cate Brantley review the latest in a string of lawsuits over the legitimacy of the No Surprises Act (NSA) and its implementing regulations.

The suits, four in total, were brought against the federal government by the Texas Medical Association (TMA) in a district court in Texas, and were all heard by the same presiding judge.

In general, the cases covered issues around the Qualifying Payment Amount (QPA) calculation method, the weight given to the QPA in arbitration decisions, guidance for grouping disputed services, and the fees associated with filing for arbitration.

You may also recall that the TMA “racked up a series of wins” in these cases, which has already prompted major changes in the law’s implementation, as the judge ruled in the association’s favor in each of them.

Subsequently, in two cases, the government appealed the rulings, one of which (the second lawsuit, or TMA II) they’ve already lost. That left one final appeal – on TMA III – to be decided before closing the loop.

Last Friday, an appeals court did just that, ruling on the government’s appeal of the TMA III lawsuit and handing the government its first (partial) victory in the four lawsuits.

Let’s take a quick look at what was at stake.

In the TMA III case, the providers argued against certain provisions in the NSA that addressed how health plans must calculate their QPAs, taking issue with certain factors being included in that calculation. They also suggested that additional information about QPAs should be provided by health plans.

Following the appeals court’s ruling, we now know once and for all that the QPA can be considered in the following ways:

1. Calculation can include contracted rates with providers that have not provided or may never provide items/services, aka “ghost rates;”
2. Calculation cannot include “special, case-specific agreements” with providers/facilities;
3. Calculation cannot include risk-sharing/bonus/penalty/or other incentive-based and retrospective payments or adjustments;
4. Calculation cannot use different provider specialties to determine a rate for a specific item/service; and
5. The court also ruled that health plans do not have to send more information about their QPA than is currently required by the NSA’s regulations.

Additionally, one related issue the court did not take up, as the government chose not to appeal it, was whether a third-party administrator (TPA) could calculate a QPA based on an aggregate of all of the plans it services. In the initial TMA III case, the judge ruled that a TPA cannot calculate its QPA based on all of its plans’ contracted rates, so that is now the law of the land as well.

In the immediate future, this technically doesn’t amount to much. The ruling means that for the government, its regulations are acceptable as written in each of the instances I just mentioned, so the NSA’s rules will not have to be re-drafted or altered.

But with the four main No Surprises Act lawsuits now final, we’ll likely see opponents turn to other methods of attacking the law.

There are several separate pieces of litigation moving through the courts as we speak that will determine whether the NSA affords providers the right to sue in court over arbitration awards handed down under the law’s dispute resolution process, and lawmakers in the U.S. House of Representatives just recently introduced legislation with bipartisan support that would increase penalties on health plans for late final payments following arbitration decisions.

So, much has already been decided, but there is still so much more yet to come. Providers and plans should stay tuned, as the sands continue to shift.