TMA Scores Another Victory in Court in NSA Lawsuits

There’s a good chance frequent Monitor Monday listeners have heard me discuss the four Texas Medical Association (TMA) lawsuits at least once over the last few years.

The lawsuits challenge various parts of the Centers for Medicare & Medicaid Services (CMS) final rules implementing the No Surprises Act (NSA). A district court in Texas ruled in favor of TMA and the provider plaintiffs in all four cases, and the Biden Administration has appealed two of those rulings.

Well, after over a year, the 5^th Circuit Court of Appeals in New Orleans ruled on the first of the two appeals, and handed yet another victory to TMA.

Now, it’s easy to get these lawsuits confused, so let me provide a small refresher of what was at stake here. The second TMA suit was initially filed in 2022, after CMS released final rules implementing the NSA independent dispute resolution (IDR) process. TMA argued that parts of the rules conflicted with the actual statute of the NSA by requiring arbitrators to weight the qualifying payment amount (QPA) more heavily than other factors in the IDR process, which “unfairly advantaged health insurers.”

The organization also alleged that the rules improperly created prerequisites that had to be met before non-QPA factors could even be considered. The district court agreed, and the Biden Administration appealed that decision. 

After hearing both sides’ oral arguments back in February, the 5th Circuit took six months to consider whether the Biden Administration overstepped its bounds in its final rules – and ultimately concluded that it did.

The court looked at several issues related to the appeal, a few of which I’ll touch on here.

First, it found that the Biden Administration has only narrow rulemaking authority in regards to the NSA, and went “a lily pad too far” by jumping from the administrative authority it was given by Congress in the NSA to filling in gaps in the arbitration process itself.

Second, it found that the Biden Administration exceeded its authority because the NSA does not have any language specifying the order factors that must be considered in the IDR process, or that other factors should be considered less than the QPA.

Third, the court found that the Administrative Procedure Act does indeed authorize courts to vacate agency actions, and that doing so in this case would not be overly disruptive. 

Interestingly, the Supreme Court’s recent overturning of the Chevron deference standard in Loper Bright was technically considered, as both sides filed documents related to the change in precedent. These documents argued why the case supported or didn’t change the validity of their argument. This is one of the first lawsuits regarding agency action to be ruled upon, post-Loper.

So, what does this mean going forward? Well, technically, not much, immediately. The provisions at issue here were vacated back with the initial ruling, so things have been operating more or less pursuant to this latest ruling for quite some time.

The U.S. Department of Health and Human Services (HHS) was contacted for comment after the decision came out, but thus far has declined.  Many have suggested that the agency might pause the IDR process to update the rules pursuant to this decision, but the Administration’s NSA website has not yet been updated in any way.

TMA has stated that with this fifth victory in court, they “hope this resolves the issue once and for all” on what Congress intended. While they do remain undefeated in court, the Biden Administration has one more chance when it argues its appeal of the third TMA suit before the court early next month.

All may be quiet for now, but it won’t stay that way for long.