We previously noted that the No Surprises Act (NSA) regulation’s establishment of the presumption that the qualifying payment amount (QPA)—generally, the median payment by the plan to providers in the region—is the appropriate payment amount in arbitrations between plans and providers under the NSA did not appear to comport with the NSA.

In a recent case brought by the Texas Medical Association challenging the established presumption, the United States District Court for the Eastern District of Texas (“Court”) has held that the regulation “conflicts with the Act” and that the regulatory agencies failed to engage in necessary notice and comment rulemaking.  See Texas Medical Association & Adam Corley v. United States Department of Health and Human Services, et al., No. 6:21-cv-425-JDK, 2022 WL 542879, at *1 (E.D. Tex., Feb. 23, 2022). Based on such violations, the Court vacated the requirement that the QPA serve as the presumptive payment amount in such disputes.

The Court noted that “the Rule conflicts with the unambiguous terms of the Act in several key respects” and that “there is nothing the Departments can do … to rehabilitate or justify the challenged portions of the Rule.”  Id. at *32.  As the Court noted, “[i]f Congress had wanted to restrict arbitrators’ discretion and limit how they could consider the other [non QPA statutory] factors, it would have done so—especially here, where Congress described the arbitration process in meticulous detail.”  Id. at *19.

While the decision will likely be appealed, the strength of the decision reflects growing judicial intolerance with regulators making law, and it is not likely to be reversed.  If the administration wants to make the QPA the presumptive payment amount in disputes between providers and plans, it will likely need legislation.

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Photo of Edward S. Kornreich Edward S. Kornreich

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied…

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied providers (both for-profit and not-for-profit), vendors, GPOs, distributors and entrepreneurs. His approach combines sensitivity to meeting regulatory business goals with a comprehensive and realistic assessment of the health care environment, and he is particularly experienced in dealing with the complex issues related to integrated health care systems.

After working for the Legal Aid Society, Ed entered private practice, where he helped represent a major public hospital corporation in a series of reimbursement disputes with the state and federal governments, and counseled New York area hospitals and nursing homes on reimbursement and operational issues. Thereafter, Ed served as General Counsel of St. Luke’s-Roosevelt Hospital Center, one of the largest teaching hospitals in New York. After leaving St. Luke’s-Roosevelt Hospital Center, Ed joined Proskauer as a Partner in 1990.

Ed frequently writes and lectures on Medicare and Medicaid reimbursement, health care integration, not-for-profit law and corporate governance issues, and the application of federal and state anti-kickback and “Stark” laws to health care transactions.