The ERISA Edit: More Guidance and FAQs Implementing the No Surprises Act
Employee Benefits Alert
Chaotic Re-Opening for No Surprises Act IDR Process
On October 6, 2023, the U.S. Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) announced the immediate reopening of the No Surprises Act (NSA) Independent Dispute Resolution (IDR) portal for the initiation of certain new single and bundled payment disputes. The Departments also issued Frequently Asked Questions (FAQs) and other guidance for the IDR process going forward. See FAQs About Consolidated Appropriations Act, 2021 Implementation Part 62 (FAQs Part 62) and Federal Independent Dispute Resolution (IDR) Process Partial Reopening of Dispute Initiation Guidance (October 2023 Guidance). The fluctuating rules, timelines, and workarounds aimed at keeping the IDR process moving forward in light of recent court decisions has resulted in a chaotic process for all involved.
The IDR portal had been closed since August 3, 2023, for revisions needed to align with the court decisions in Texas Medical Association v. U.S. Department of Health and Human Services, No. 6:22-cv-450-JDK (Aug. 24, 2023 E.D. Tex.) (TMA III) and Texas Medical Association v. U.S. Department of Health and Human Services, No. 6:23-cv-59-JDK (Aug. 3, 2023 E.D. Tex.) (TMA IV), where provider-plaintiffs challenged, inter alia, the IDR fee structure and methodology contained in federal regulations for determining the "qualified payment amount" (QPA) used in provider rate determinations.
As of October 6, 2023, the IDR portal is open for the initiation of new single disputes, including single disputes involving bundled payment arrangements. The portal remains temporarily unavailable to initiate new disputes involving air ambulance services as well as batched disputes for air ambulance and non-air ambulance items and services. IDR portal functionalities related to previously initiated batched disputes are also unavailable. The Departments recommend that disputing parties continue open negotiations in accordance with required timeframes. Those impacted by the temporary suspension of the IDR program will get more time to submit and respond to new disputes, as detailed in our October 6, 2023, EB Flash and as discussed in detail in the October 2023 Guidance.
In FAQs Part 62, the Departments address how plans and issuers should calculate QPAs following the TMA III decision that vacated a number QPA provisions in the July 2021 interim final rules. The FAQs state that "plans and issuers are expected to calculate QPAs using a good faith, reasonable interpretation of the applicable statutes and regulations that remain in effect after the TMA III decision." However, given the heavy administrative burden and other challenges on plans and issuers associated with recalculation of large numbers of QPAs, the Departments state they "will exercise their enforcement discretion" for plans and issuers that continue to rely on QPAs calculated in accordance with the July 2021 interim final rules for items and services furnished before May 24, 2024. The Departments indicate they will reevaluate in the future whether to extend the temporary enforcement policy beyond the May 24, 2024, date and will engage in compliance assistance with regulated entities who work diligently and in good faith to comply with the laws still in place following TMA III. For plans and issuers that continue to rely on QPAs determined in accordance with the methodology in the now-vacated July 2021 interim final rules, they must indicate their use of that methodology in their QPA disclosures to providers in response to provider inquires. The Departments encourage states to adopt a similar approach to enforcement.
FAQs Part 62 also state that, following TMA III, IDR entities "can consider" the QPA among any allowable factors or information submitted by or requested from the parties when making a payment determination.
TMA III also vacated the part of the July 2021 interim final rules that governed initial payments and disclosure by plans and issuers to non-participating air ambulance providers. The now-vacated rules triggered payment and disclosure timelines off a "clean claim." According to FAQs Part 62, following TMA III, the initial payments and disclosures must be made within 30 calendar days after receipt of the non-participating air ambulance provider's bill, even when a plan or issuer lacks sufficient information to determine coverage under the plan or policy. The Departments direct that before denying a claim under the ERISA claims regulation, plans and issuers should seek any additional information needed to determine coverage within the 30-calendar-day timeframe and, if the claim is covered under the plan or policy and under the NSA, send an initial payment or a notice of denial within that timeframe. The Departments direct that if a plan or issuer cannot determine coverage in that timeframe, "the plan or issuer should issue a notice of benefit denial due to an adverse benefit determination, as defined in 29 CFR 2560.503-1, and should communicate the basis for the denial in a manner that does not incorrectly suggest that the furnished service has been determined not to be a covered service."
The Departments warn non-participating air ambulance providers not to balance bill patients who otherwise have coverage but who receive benefit denial notices from plans or issuers due to insufficient information from which to assess coverage.
The October 2023 Guidance explains that the processing and initiation of batched disputes and initiation of air ambulance disputes remain temporarily suspended pending additional guidance and system updates necessary to ensure compliance with TMA III and TMA IV. The Departments state they have identified multiple guidance documents that contain information that is now inconsistent with the regulations as vacated by the court orders and are working on updated guidance.
The Departments have expressed their intent to appeal TMA III and briefing continues before the U.S. Court of Appeals for the Fifth Circuit in the government's appeal in Texas Medical Association v. U.S. Department of Health and Human Services, No. 23-40217 (5th Cir.) (TMA II), where the district court vacated regulations setting forth a process for IDR entities to follow when deciding NSA out-of-network payment rates that the court found was inconsistent with the NSA. In addition, on September 20, 2023, the Departments issued proposed regulations setting new IDR entity and administrative fees in response to TMA IV, which vacated the Departments' fee schedule set in late December 2022. Plans, issuers, and providers can expect more changes to the IDR process as the appeals work their way through the courts and the Departments issue more regulations, guidance, and interim fixes.
Supreme Court Declines Review of Tenth Circuit's ERISA Arbitration Clause Decision
On October 10, 2023, the U.S. Supreme Court denied a petition for a writ of certiorari filed by Argent Trust Company and the Board of Directors of Envision Management Holding, Inc. in response to the Tenth Circuit's holding earlier this year that the individual arbitration clause in the Envision Management Holding, Inc.'s employee stock ownership plan was unenforceable in a case bringing ERISA fiduciary breach claims. Agent Trust Co. v. Harrison, No. 23-30 (U.S. Oct. 10, 2023). The Ninth Circuit has enforced arbitration of ERISA claims based on individual arbitration clauses in plans, while the Third, Seventh, and Tenth Circuits reached the opposite conclusion. See Dorman v. Charles Schwab Corp., 780 F. App'x 510, 514 (9th Cir. 2019); Henry v. Wilmington Trust, N.A., 72 F.4th 499 (3d Cir. 2023); and Smith v. Board of Directors of Triad Manufacturing, Inc., 13 F.4th 613 (7th Cir. 2021). For now, absent the Supreme Court weighing in, the courts' differing treatment of the enforceability of individual arbitration clauses in plan documents and employment agreements will continue to have an impact on where ERISA class action litigation alleging fiduciary breach claims, such as retirement and health plan excessive fee litigation, is filed.
Upcoming Speaking Engagements and Events
On October 17, Joanne Roskey will present, "Headaches, Heartburn, and Anxiety - Mental Health Parity Policy Implications," to members of the ERISA Industry Committee.
On October 18, Joanne Roskey will speak about No Surprises Act litigation and guidance on the "Employee Benefits Welfare Plans" panel at the ABA Section of Taxation Virtual 2023 Fall Tax Meeting.
On October 31, Joanne Roskey and Dawn Murphy-Johnson will present, "State Legislative Activities Impacting Employee Benefits," an American Staffing Association webinar.
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