Case: 1:21-cv-06823 Document #: 1 Filed: 12/22/21 Page 1 of 29 PageID #:1
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`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`
`
`
`
`
`Case No. 1:21-cv-06823
`
`
`
`AMERICAN SOCIETY OF
`ANESTHESIOLOGISTS
`1061 American Lane,
`Schaumburg, IL 60173,
`
`
`and
`
`
`AMERICAN COLLEGE OF
`EMERGENCY PHYSICIANS
`4950 W. Royal Lane
`Irving, TX 75063,
`
`
`and
`
`
`AMERICAN COLLEGE OF
`RADIOLOGY
`1891 Preston White Dr.
`Reston, VA 20191,
`
`Plaintiffs,
`
`v.
`UNITED STATES DEPARTMENT OF
`HEALTH AND HUMAN SERVICES
`200 Independence Avenue, S.W.
`Washington, DC 20201,
`
`
`and
`
`XAVIER BECERRA, in his official
`capacity as Secretary of the United States
`Department of Health and Human Services
`200 Independence Avenue, S.W.
`Washington, DC 20201,
`
`
`and
`
`
`UNITED STATES DEPARTMENT OF
`LABOR
`200 Constitution Avenue, N.W.
`Washington, DC 20210,
`
`
`and
`
`
`
`

`

`Case: 1:21-cv-06823 Document #: 1 Filed: 12/22/21 Page 2 of 29 PageID #:2
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`MARTIN J. WALSH, in his official
`capacity as Secretary of the United States
`Department of Labor
`200 Constitution Avenue, N.W.
`Washington, DC 20210,
`
`
`and
`
`
`UNITED STATES DEPARTMENT OF
`THE TREASURY
`1500 Pennsylvania Avenue, N.W.
`Washington, DC 20220,
`
`
`and
`
`
`JANET YELLEN, in her official capacity
`as Secretary of the United States
`Department of the Treasury
`1500 Pennsylvania Avenue., N.W.
`Washington, DC 20220,
`
`
`and
`
`
`UNITED STATES OFFICE OF
`PERSONNEL MANAGEMENT
`1900 E Street, N.W.
`Washington, DC 20415,
`
`
`and
`
`
`KIRAN AHUJA, in her official capacity as
`Director of the United States Office of
`Personnel Management
`1900 E Street, N.W.
`Washington, DC 20415,
`Defendants.
`
`
`
`
`
`
`COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
`
`Plaintiffs, the American Society of Anesthesiologists (“ASA”), the American College of
`
`Emergency Physicians (“ACEP”), and the American College of Radiology (“ACR”), bring this
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`action against Defendants, the United States Department of Health and Human Services
`
`
`
`2
`
`

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`(“HHS”), the United States Department of Labor (“DOL”), the United States Department of the
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`Treasury (“DOT”), the United States Office of Personnel Management (“OPM”), and the current
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`heads of those agencies in their official capacities (collectively, the “Departments”), and state as
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`follows:
`
`INTRODUCTION
`
`1.
`
`This is a civil action brought to obtain declaratory and injunctive relief to halt the
`
`implementation of specific provisions of an interim final rule (“IFR”) jointly published by the
`
`Departments to implement the No Surprises Act, Pub. L. No. 116-260, 134 Stat. 1182 (2020).1
`
`Requirements Related to Surprise Billing; Part II, 86 Fed. Reg. 55,980 (Oct. 7, 2021) [hereinafter
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`“October IFR”]. The No Surprises Act addresses two interrelated problems with the private
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`health insurance market: 1) insurers demand unreasonably low reimbursement rates as a
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`condition of physicians participating in their networks, thus forcing many physicians to stay out
`
`of network to remain economically viable; and 2) patients who unknowingly receive certain care
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`from out-of-network providers are responsible for amounts not paid by their insurance
`
`companies, which is known as “surprise billing.” Plaintiffs support Congress’s reforms, which,
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`if properly implemented, will ensure fair reimbursement for physicians and reasonable cost
`
`sharing by patients. Unfortunately, the Departments have turned these reforms upside down and
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`transformed an act intended to protect patients and their doctors into a giveaway to private
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`insurers that will harm patients and providers. Certain provisions of the Departments’ October
`
`IFR must be reversed because they are contrary to the No Surprises Act and violate rulemaking
`
`
`
` 1
`
` The No Surprises Act amended provisions of the Public Health Service Act, the Employee
`Retirement Income Security Act, the Internal Revenue Code, and the Federal Employees Health
`Benefits Act. The Federal Employees Health Benefits Act, as amended by the No Surprises Act,
`cross references the requirements described in 42 U.S.C. § 300gg-111, 29 U.S.C. § 1185e, and
`26 U.S.C. § 9816 (as applicable). 5 U.S.C. § 8902(p).
`
`
`
`3
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`

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`requirements of the Administrative Procedure Act (“APA”), 5 U.S.C. § 553(b)-(d).
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`2.
`
`These provisions of the October IFR are unlawful because they tie the hands of a
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`statutorily mandated independent arbitrator—referred to as an independent dispute resolution
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`(“IDR”) entity—that determines the appropriate reimbursement amount for certain health care
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`items and services furnished by a provider or facility that is not within the network of the insurer.
`
`October IFR, 86 Fed. Reg. at 56,104, 56,116, 56,128. The October IFR’s provisions dictating
`
`the IDR entity’s determination of the appropriate out-of-network rate for such items and services
`
`are invalid because they eliminate the IDR entity’s statutory authority to weigh multiple factors
`
`impacting the rate of payment and instead require the IDR entity to give “presumptive weight” to
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`only one factor, the qualifying payment amount (“QPA”), which is skewed in favor of insurers.
`
`3.
`
`The No Surprises Act establishes protections for participants, beneficiaries, and
`
`enrollees (collectively, “patients”) in group health plans and group and individual health
`
`insurance coverage (collectively, “insurers”) from surprise billing when patients receive (1)
`
`emergency services provided by an out-of-network provider or out-of-network emergency
`
`facility, or (2) non-emergency services from an out-of-network provider with respect to a visit at
`
`an in-network health care facility. The No Surprises Act addresses surprise billing that occurs
`
`when a patient unknowingly receives items or services from an out-of-network provider at an in-
`
`network healthcare facility or emergency care provided out-of-network, and the patient is billed
`
`for amounts not covered by the patient’s insurance.
`
`4.
`
`The No Surprises Act creates a framework for determining fair payment for the
`
`provision of certain out-of-network items and services. 42 U.S.C. § 300gg-111(c); 29 U.S.C. §
`
`1185e(c); 26 U.S.C. § 9816(c). Congress established an IDR process requiring the IDR entity to
`
`take a balanced approach to setting the amount of payment for the applicable out-of-network
`
`
`
`4
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`

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`items or services. 42 U.S.C. § 300gg-111(c)(5); 29 U.S.C. § 1185e(c)(5); 26 U.S.C. §
`
`9816(c)(5). Congress unambiguously delineated a list of factors that the IDR entity “shall
`
`consider” when identifying the appropriate reimbursement amount. 42 U.S.C. § 300gg-
`
`111(c)(5)(C); 29 U.S.C. § 1185e(c)(5)(C); 26 U.S.C. § 9816(c)(5)(C). To ensure a balanced and
`
`independent process, Congress did not give any one specific factor presumptive weight. Nor did
`
`Congress authorize the Departments to determine how the IDR entity should weigh each factor.
`
`5.
`
`Despite this clear directive, the Departments promulgated the October IFR, which
`
`unlawfully abrogates the discretion granted by Congress to IDR entities by dictating how the
`
`IDR entity should balance the statutory factors. Instead of requiring the consideration of all
`
`information that Congress deemed relevant to payment, the Departments improperly gave
`
`presumptive weight to one factor—the QPA—over all other factors unless the party can satisfy
`
`additional requirements that are not stated in the No Surprises Act. October IFR, 86 Fed. Reg. at
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`56,104, 56,116, 56,128.
`
`6.
`
`The October IFR requires IDR entities to “presume that the QPA is an appropriate
`
`payment amount” unless a party provides “credible information” concerning the factors
`
`enumerated in the statute “clearly demonstrating” that the QPA is “materially different from the
`
`appropriate out-of-network rate,” or unless the payment offers submitted by the provider/facility
`
`and the insurer are equally distant from the QPA but in opposing directions. Id. at 55,995.
`
`Under the No Surprises Act, the QPA is the insurer’s median in-network rate within a particular
`
`geographic area. 42 U.S.C. § 300gg-111(a)(3)(E)(i); 29 U.S.C. § 1185e(a)(3)(E)(i); 26 U.S.C. §
`
`9816(a)(3)(E)(i). Thus, the October IFR effectively imposes the insurer’s in-network rate—the
`
`QPA—on out-of-network providers/facilities.
`
`7.
`
`Except in the rare circumstance that the offers are equally distant from the QPA
`
`
`
`5
`
`

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`but in opposing directions, the IDR entity is not required to consider any of the other statutory
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`factors unless “credible information submitted by the parties clearly demonstrates that the QPA
`
`is materially different from the appropriate out-of-network rate.” Id. at 55,995. Therefore, the
`
`October IFR’s “rebuttable presumption” in favor of the QPA significantly deviates from the
`
`statute’s text, upending the careful balance Congress created in establishing the IDR process.
`
`8.
`
`Moreover, this flawed policy was promulgated in excess of the authority granted
`
`to the Departments pursuant to the No Surprises Act. Congress did not specifically delegate
`
`authority to the Departments to promulgate rules imposing additional requirements on how IDR
`
`entities must weigh the statutory factors when determining the appropriate payment amount.
`
`9.
`
`The October IFR’s rebuttable presumption in favor of the QPA will harm
`
`providers/facilities and patients. The QPA is not reflective of the fair market value of items and
`
`services furnished by out-of-network providers/facilities in the marketplace. By significantly
`
`restricting the IDR entity’s consideration of all statutory factors, the October IFR will result in a
`
`disproportionately high number of IDR decisions that are closer to the QPA. As a result, the
`
`October IFR’s rebuttable presumption will undermine providers’ and facilities’ ability to be
`
`fairly reimbursed for their out-of-network services, which will, in turn, threaten their ability to
`
`operate in the marketplace. Accordingly, the October IFR’s rebuttable presumption will hinder
`
`patients’ access to care.
`
`10.
`
`Because the QPA is tied to the insurer’s median in-network rates and the October
`
`IFR’s rebuttable presumption will skew IDR decisions in favor of the QPA, the Departments
`
`have created a perverse incentive for insurers to significantly reduce their in-network rates or to
`
`refuse to enter into network agreements with providers/facilities.. Consequently, this rebuttable
`
`presumption has adversely impacted providers/facilities’ negotiating position with insurers. If
`
`
`
`6
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`

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`more providers/facilities are forced out-of-network due to this rebuttable presumption, patients
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`will lose access to in-network care.
`
`11. Moreover, the Departments’ flawed rebuttable presumption in favor of the QPA is
`
`procedurally invalid under the APA. Prior to the publication of the October IFR, the
`
`Departments failed to provide notice of proposed rulemaking or an opportunity for the public to
`
`engage in the rulemaking process by submitting written comments. Because the Departments
`
`did not demonstrate good cause for circumventing the APA’s rulemaking procedures, the
`
`October IFR’s rebuttable presumption must be vacated.
`
`12.
`
`Therefore, this Court must set aside the October IFR’s rebuttable presumption in
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`favor of the QPA as “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
`
`with law” and “in excess of statutory jurisdiction, authority, or limitations.” 5 U.S.C. §
`
`706(2)(A), (2)(B).
`
`JURISDICTION AND VENUE
`
`13.
`
`Plaintiffs bring this action under the APA, 5 U.S.C. § 551 et seq., and the
`
`Declaratory Judgment Act, 28 U.S.C. § 2201.
`
`14.
`
`This Court has jurisdiction under 28 U.S.C. § 1331 because all causes of action
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`arise under the laws of the United States.
`
`15.
`
`Venue in this Court is proper under 28 U.S.C. § 1391(c)(2) because Plaintiff ASA
`
`maintains its headquarters and principal place of business in the Northern District of Illinois.
`
`PARTIES
`
`16.
`
`Plaintiff ASA is a voluntary professional association comprised of approximately
`
`54,000 physician anesthesiologists and others involved in the medical specialty of
`
`anesthesiology, critical care, and pain medicine. ASA is headquartered in Schaumburg, Illinois.
`
`One of ASA’s purposes is to advocate for the interests of its members and their patients,
`
`
`
`7
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`

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`including on matters concerning adequate and fair reimbursement for anesthesia services. ASA
`
`brings this action on behalf of its members who will be adversely impacted by the October IFR’s
`
`rebuttable presumption that the QPA is the appropriate payment amount for out-of-network
`
`services.
`
`17.
`
`Plaintiff ACEP is a voluntary professional association comprised of more than
`
`40,000 emergency physicians, residents, and medical students. ACEP is headquartered in Irving,
`
`Texas. One of ACEP’s core purposes is to advocate for the interests of emergency physicians
`
`and their patients. Among its many purposes, ACEP seeks to ensure that insurers provide
`
`patients and their emergency physicians with adequate and fair reimbursement for emergency
`
`services. ACEP brings this action on behalf of its members who will be adversely impacted by
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`the October IFR’s rebuttable presumption that the QPA is the appropriate payment amount for
`
`out-of-network services.
`
`18.
`
`Plaintiff ACR is a voluntary professional association comprised of approximately
`
`40,000 diagnostic radiologists, radiation oncologists, interventional radiologists, nuclear
`
`medicine physicians, and medical physicists. ACR is headquartered in Reston, Virginia. ACR’s
`
`core functional areas—advocacy, economics, education, quality and safety, research, and
`
`membership value—seek to improve, promote, and protect the practice of radiology. One of
`
`ACR’s purposes is to advocate for the interests of its members and their patients. This includes
`
`advocating for adequate and fair reimbursement for radiology services provided to patients.
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`ACR brings this action on behalf of its members who will be adversely impacted by the October
`
`IFR’s rebuttable presumption that the QPA is the appropriate payment amount for out-of-
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`network services.
`
`19. Members of ASA, ACEP, and ACR have standing to challenge the Departments’
`
`
`
`8
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`

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`October IFR because they are the objects of the October IFR. Owner-Operator Indep. Drivers
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`Ass’n, Inc. v. Fed. Motor Carrier Safety Admin., 656 F.3d 580, 585 (7th Cir. 2011) (citing Lujan
`
`v. Defenders of Wildlife, 504 U.S. 555, 562-63 (1992)). This action does not require the
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`participation of individual members of ASA, ACEP, or ACR because this action “raises a pure
`
`question of law.” Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am. v.
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`Brock, 477 U.S. 274, 287 (1986). Additionally, in this action, “neither the claim asserted nor the
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`relief requested requires the participation of individual members in the lawsuit.” Retired
`
`Chicago Police Ass’n v. City of Chicago, 7 F.3d 588, 603-04 (7th Cir. 1993) (quoting Hunt v.
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`Washington State Apple Advert. Comm’n, 432 U.S. 333, 343 (1977)).
`
`20.
`
`In support for this action, Plaintiffs hereby offer the declarations of Christopher
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`Young, MD, a current member of ASA; Jennifer Raley, MD, a current member of ACEP; and
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`Lauren Golding, MD, a current member of ACR.
`
`21.
`
`Defendant HHS is a department of the federal executive branch and is
`
`headquartered in Washington, DC.
`
`22.
`
`Defendant Xavier Becerra is the Secretary of HHS and is the federal officer
`
`responsible for administering the Public Health Service Act, as amended by the No Surprises
`
`Act. Defendant Xavier Becerra is sued in his official capacity.
`
`23.
`
`Defendant DOL is a department of the federal executive branch and is
`
`headquartered in Washington, DC.
`
`24.
`
`Defendant Martin J. Walsh is the Secretary of DOL and is the federal officer
`
`responsible for administering the Employee Retirement Income Security Act, as amended by the
`
`No Surprises Act. Defendant Martin J. Walsh is sued in his official capacity.
`
`25.
`
`Defendant DOT is a department of the federal executive branch and is
`
`
`
`9
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`

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`headquartered in Washington, DC.
`
`26.
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`Defendant Janet Yellen is the Secretary of DOT and is the federal officer
`
`responsible for administering the Internal Revenue Code, as amended by the No Surprises Act.
`
`Defendant Janet Yellen is sued in her official capacity.
`
`27.
`
`Defendant OPM is an independent federal agency of the United States and is
`
`headquartered in Washington, DC.
`
`28.
`
`Defendant Kiran Ahuja is the Director of OPM and is the federal officer
`
`responsible for administering the Federal Employees Health Benefits Act, as amended by the No
`
`Surprises Act. Defendant Kiran Ahuja is sued in her official capacity.
`
`BACKGROUND
`
`I.
`
`REIMBURSEMENT FOR CERTAIN OUT-OF-NETWORK SERVICES
`
`29. Many insurers create networks of health care providers in which the insurer
`
`negotiates rates with providers for particular services as a condition of including the providers in
`
`the insurer’s network. If a patient receives health care items or services from a provider in the
`
`network, the insurer will reimburse the provider the contracted, in-network rate for the covered
`
`items and services. The patient will be responsible for a cost-sharing amount, which may
`
`include a deductible and/or a copayment. The patient’s out-of-pocket obligation will be less for
`
`in-network services than if the patient received care from a provider outside the insurer’s
`
`network. See, e.g., Blue Cross Blue Shield Blue Care Network of Mich., What’s the Difference
`
`Between In-Network and Out-of-Network Benefits? (last visited Dec. 22, 2021).2 If the provider
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`has signed a network agreement with the insurer, the provider will not charge the patient the
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`difference between the provider’s charges and the negotiated, in-network rate.
`
`
` 2
`
` http://www.bcbsm.com/index/health-insurance-help/faqs/topics/how-health-insurance-
`works/difference-between-in-network-out-of-network-benefits.html.
`
`
`
`10
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`

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`30.
`
`If the patient receives care from a provider that is not in the patient’s insurance
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`network, the provider will be reimbursed by the patient’s insurer at the insurer’s out-of-network
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`rate. The out-of-network rate, as the name implies, is not negotiated in advance by the provider
`
`and the insurer. Unless prohibited under state law, any difference between the provider’s charge
`
`and the insurer’s out-of-network payment may be billed by the provider to the patient. The
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`practice of billing the patient for the part of the bill not paid by insurance is known as “balance
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`billing.” Generally, in states that prohibit balance billing, the provider accepts the insurer’s
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`payment for out-of-network services as payment in full, even if the payment falls well below the
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`provider’s charge.
`
`31.
`
`“Surprise billing” occurs when the patient unknowingly receives items or services
`
`from an out-of-network provider at an in-network healthcare facility or emergency care provided
`
`out-of-network, and the patient is billed for cost sharing amounts that are not paid by the insurer
`
`and are higher than if the patient received care at an in-network provider.
`
`32.
`
`Over the years, “surprise billing” has become more common due to insurers
`
`offering inadequate in-network rates to emergency and other ancillary service providers,
`
`including anesthesiologists and radiologists, forcing these providers to stay out-of-network.
`
`II.
`
`THE NO SURPRISES ACT
`
`33.
`
`On December 27, 2020, the President signed into law the No Surprises Act as part
`
`of the Consolidated Appropriations Act, 2021, which established, among other things, a
`
`framework to protect patients from balance and surprise billing under certain circumstances and
`
`to determine fair payment to providers for applicable out-of-network items and services. No
`
`Surprises Act, Pub. L. No. 116-260, 134 Stat. 2757 (2020).
`
`A.
`
`34.
`
`Reforms to Patient Cost Sharing
`
`The No Surprises Act applies to non-emergency items or services provided by an
`
`
`
`11
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`

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`out-of-network provider at an in-network health care facility, or emergency services provided by
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`an out-of-network provider or an out-of-network emergency facility.3 42 U.S.C. § 300gg-111;
`
`29 U.S.C. § 1185e; 26 U.S.C. § 9816. An out-of-network emergency facility is statutorily
`
`defined as “an emergency department of a hospital, or an independent freestanding emergency
`
`department, that does not have a contractual relationship” with the insurer for providing such
`
`item or service under the plan or coverage. 42 U.S.C. § 300gg-111(a)(3)(F)(i); 29 U.S.C. §
`
`1185e(a)(3)(F)(i); 26 U.S.C. § 9816(a)(3)(F)(i). The No Surprises Act defines a “health care
`
`facility” as (1) a hospital, (2) a hospital outpatient department, (3) a critical access hospital, (4)
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`an ambulatory surgical center, and (5) any other facility specified by the Departments. 42 U.S.C.
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`§ 300gg-111(b)(2)(A)(ii); 29 U.S.C. § 1185e(b)(2)(A)(ii); 26 U.S.C. § 9816(b)(2)(A)(ii).
`
`35.
`
`Under the No Surprises Act, insurers are prohibited from imposing a cost-sharing
`
`requirement for such items or services that is greater than the amount that would apply if these
`
`items or services were provided in-network.4 42 U.S.C. § 300gg-111(a)(1)(C)(iii), (b)(1)(A); 29
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`U.S.C. § 1185e(a)(1)(C)(iii), (b)(1)(A); 26 U.S.C. § 9816(a)(1)(C)(iii), (b)(1)(A).
`
`36.
`
`The No Surprises Act requires insurers to calculate the cost-sharing requirement
`
`using the “recognized amount.” 42 U.S.C. § 300gg-111(a)(1)(C)(ii), (b)(1)(B); 29 U.S.C. §
`
`1185e(a)(1)(C)(ii), (b)(1)(B); 26 U.S.C. § 9816(a)(1)(C)(ii), (b)(1)(B). The “recognized amount”
`
`is statutorily defined as follows: (1) the amount that the state approves under the applicable All-
`
`Payer Model Agreement under section 1115A of the Social Security Act; (2) the amount
`
`determined in accordance with the “specified state law” (as defined in 42 U.S.C. § 300gg-
`
`
`
` 3
`
` Additionally, the No Surprises Act contains special provisions concerning providers of air
`ambulance services. These statutory provisions are not at issue in this action.
`4 The No Surprises Act provides an exception to this prohibition for non-emergency items and
`services if certain notice and consent criteria are satisfied. 42 U.S.C. § 300gg-111(b)(1)(A); 42
`U.S.C. § 300gg-132(d); 29 U.S.C. § 1185e(b)(1)(A); 26 U.S.C. § 9816(b)(1)(A).
`
`
`
`12
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`Case: 1:21-cv-06823 Document #: 1 Filed: 12/22/21 Page 13 of 29 PageID #:13
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`111(a)(3)(I), 29 U.S.C. § 1185e(a)(3)(I), and 26 U.S.C. § 9816(a)(3)(I)) if there is no applicable
`
`All-Payer Model Agreement under section 1115A of the Social Security Act; or (3) the amount
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`that is the QPA for the item or service if there is no “specified state law” or applicable All-Payer
`
`Model Agreement under section 1115A of the Social Security Act. 42 U.S.C. § 300gg-
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`111(a)(3)(H); 29 U.S.C. § 1185e(a)(3)(H); 26 U.S.C. § 9816(a)(3)(H).
`
`37.
`
`The QPA is generally defined in statute as the “median of the contracted rates
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`recognized by the [insurer] … for the same or a similar item or service that is provided by a
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`provider in the same or similar specialty and … geographic region … increased by the
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`percentage increase in the consumer price index for all urban consumers.” 42 U.S.C. § 300gg-
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`111(a)(3)(E)(i); 29 U.S.C. § 1185e(a)(3)(E)(i); 26 U.S.C. § 9816(a)(3)(E)(i).
`
`B.
`
`38.
`
`Reforms to Out-of-Network Reimbursement
`
`The No Surprises Act requires insurers to reimburse the out-of-network
`
`provider/facility an “out-of-network rate,” less the cost-sharing requirement of the patient. 42
`
`U.S.C. § 300gg-111(a)(1)(C)(iv)(II), (b)(1)(D); 29 U.S.C. § 1185e(a)(1)(C)(iv)(II), (b)(1)(D); 26
`
`U.S.C. § 9816(a)(1)(C)(iv)(II), (b)(1)(D). Similar to the provisions governing the cost-sharing
`
`requirement, the “out-of-network rate” is determined by the applicable All-Payer Model
`
`Agreement under section 1115A of the Social Security Act, or if no such agreement exists, the
`
`“specified state law.” 42 U.S.C. § 300gg-111(a)(3)(K)(iii); 29 U.S.C. § 1185e(a)(3)(K)(iii); 26
`
`U.S.C. § 9816(a)(3)(K)(iii).
`
`39.
`
`However, unlike the No Surprises Act’s provisions governing cost-sharing
`
`requirements, Congress did not establish the QPA as the “out-of-network rate” when there is no
`
`“specified state law” or applicable All-Payer Model Agreement under section 1115A of the
`
`Social Security Act.
`
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`40.
`
`Instead, Congress authorized insurers to determine the initial out-of-network
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`reimbursement amount and to send the provider/facility the initial payment, or a notice of denial
`
`of payment, not later than 30 calendar days after the bill is transmitted by the provider/facility to
`
`the insurer. 42 U.S.C. § 300gg-111(a)(1)(C)(iv)(I), (b)(1)(C); 29 U.S.C. § 1185e(a)(1)(C)(iv)(I),
`
`(b)(1)(C); 26 U.S.C. § 9816(a)(1)(C)(iv)(I), (b)(1)(C). If the provider/facility disagrees with the
`
`payment determination, the provider/facility may initiate open negotiations with the insurer to
`
`determine the amount of payment for the out-of-network item or service. 42 U.S.C. § 300gg-
`
`111(a)(1)(C)(iv)(I), (a)(3)(K)(ii), (c)(1)(A); 29 U.S.C. § 1185e(a)(1)(C)(iv)(I), (a)(3)(K)(ii),
`
`(c)(1)(A); 26 U.S.C. § 9816(a)(1)(C)(iv)(I), (a)(3)(K)(ii), (c)(1)(A). The open negotiation period
`
`is a 30-day period beginning on the date of initiation of the negotiations. 42 U.S.C. § 300gg-
`
`111(c)(1)(A); 29 U.S.C. § 1185e(c)(1)(A); 26 U.S.C. § 9816(c)(1)(A). If open negotiations do
`
`not result in a determination of an amount of payment for the out-of-network item or service,
`
`either the provider/facility or the insurer may, within four days after the open negotiation period,
`
`initiate the IDR process. 42 U.S.C. § 300gg-111(c)(1)(B); 29 U.S.C. § 1185e(c)(1)(B); 26
`
`U.S.C. § 9816(c)(1)(B).
`
`41.
`
`The provider/facility and the insurer may, within three business days following
`
`the date of the initiation of the IDR process, jointly select an independent IDR entity. 42 U.S.C.
`
`§ 300gg-111(c)(4)(F)(i); 29 U.S.C. § 1185e(c)(4)(F)(i); 26 U.S.C. § 9816(c)(4)(F)(i). The
`
`applicable agency will select an independent IDR entity if the parties fail to make a selection. 42
`
`U.S.C. § 300gg-111(c)(4)(F)(i); 29 U.S.C. § 1185e(c)(4)(F)(i); 26 U.S.C. § 9816(c)(4)(F)(i).
`
`42. Within ten days of the selection of the IDR entity, the provider/facility and insurer
`
`must each submit to the IDR entity an offer for a payment amount and information requested by
`
`the IDR entity relating to the offer. 42 U.S.C.§ 300gg-111(c)(5)(B)(i); 29 U.S.C. §
`
`
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`1185e(c)(5)(B)(i); 26 U.S.C. § 9816(c)(5)(B)(i). Within the same timeframe, the
`
`provider/facility and insurer may each submit to the IDR entity any additional information
`
`relating to such offer submitted by either party. 42 U.S.C. § 300gg-111(c)(5)(B)(ii); 29 U.S.C. §
`
`1185e(c)(5)(B)(ii); 26 U.S.C. § 9816(c)(5)(B)(ii).
`
`43.
`
`The IDR entity, within thirty days of its selection, “shall … tak[e] into account the
`
`considerations specified in subparagraph (C)” (the “Subparagraph C Factors”) and “select one of
`
`the offers submitted” by the parties to be the amount of payment for such item or service
`
`furnished out-of-network. 42 U.S.C. § 300gg-111(c)(5)(A)(i); 29 U.S.C. § 1185e(c)(5)(A)(i); 26
`
`U.S.C. § 9816(c)(5)(A)(i).
`
`44.
`
`Subparagraph C sets forth the factors that the IDR entity “shall consider” when
`
`determining which offer to select:
`
`(I) the qualifying payment amounts … for the applicable year for items or
`services that are comparable to the qualified IDR item or service and that are
`furnished in the same geographic region (as defined by the Secretary for purposes
`of such subsection) as such qualified IDR item or service; and
`
`(II) … information on any circumstance described in clause (ii), such information
`as requested [by the IDR entity relating to the party’s offer], and any additional
`information [submitted by a party relating to such offer of either party].
`
`42 U.S.C. § 300gg-111(c)(5)(C)(i)(I)-(II), (c)(5)(B)(i)(II), (c)(5)(B)(ii); 29 U.S.C. §
`
`1185e(c)(5)(C)(i)(I)-(II), (c)(5)(B)(i)(II), (c)(5)(B)(ii); 26 U.S.C. § 9816(c)(5)(C)(i)(I)-(II),
`
`(c)(5)(B)(i)(II), (c)(5)(B)(ii). “Clause (ii),” referenced above, enumerates five additional factors
`
`that the IDR entity “shall” consider:
`
`(I) The level of training, experience, and quality and outcomes measurements of
`the provider or facility that furnished such item or service ….
`
`(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.
`
`
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`(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 that furnished such item or service.
`
`(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 and, if applicable, contracted rates between the
`provider or facility, as applicable, and the plan or issuer, as applicable, during the
`previous 4 plan years.
`
`42 U.S.C. § 300gg-111(c)(5)(C)(ii); 29 U.S.C. § 1185e(c)(5)(C)(ii); 26 U.S.C. §
`
`9816(c)(5)(C)(ii).
`
`45.
`
`Congress did not give any of the Subparagraph C factors presumptive weight.
`
`Nor did Congress authorize the Departments to determine how the IDR entity should weigh the
`
`factors.
`
`46.
`
`The No Surprises Act further provides that the IDR entity “shall not consider”
`
`usual and customary charges; the reimbursement rate for such items and services payable by a
`
`public payer (e.g., Medicare, Medicaid, the Children’s Health Insurance Program, TRICARE,
`
`United States Department of Veterans Affairs); or the amount that the out-of-network
`
`provider/facility would have billed for the item or service had the No Surprises Act not applied.
`
`42 U.S.C. § 300gg-111(c)(5)(D); 29 U.S.C. § 1185e(c)(5)(D); 26 U.S.C. § 9816(c)(5)(D).
`
`47.
`
`The No Surprises Act directs the Departments to establish a process to certify
`
`IDR entities to ensure that the entities have “sufficient medical, legal, and other expertise and
`
`sufficient staffing” to select an offer taking into account the factors that the IDR entity “shall”
`
`and “shall not” consider. 42 U.S.C. § 300gg-111(c)(4)(A); 29 U.S.C. § 1185e(c)(4)(A); 26
`
`U.S.C. § 9816(c)(4)(A).
`
`48.
`
`If the parties agree on a payment amount during the IDR process but before the
`
`
`
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`
`date on which the IDR entity makes a payment determination, that amount will constitute the
`
`out-of-network rate. 42 U.S.C. § 300gg-111(a)(3)(K)(ii), (c)(2)(B); 29 U.S.C. §
`
`1185e(a)(3)(K)(ii), (c)(2)(B); 26 U.S.C. § 9816(a)(3)(K)(ii), (c)(2)(B).
`
`49.
`
`The No Surprises Act directs the Departments to promulgate regulations
`
`implementing its statutory provisions by specified deadlines. Among other deadlines, Congress
`
`required the Departments to establish through rulemaking, by December 27, 2021, the IDR
`
`process “in accordance with the succeeding provisions of this subsection” (i.e., the statutory
`
`provisions governing how the IDR entity determines the appropriate payment amount). 42
`
`U.S.C. § 300gg-111(c)(2)(A); 29 U.S.C. § 1185e(c)(2)(A); 26 U.S.C. § 9816(c)(2)(A).
`
`III.
`
`INTERIM FINAL RULE PUBLISHED ON OCTOBER 7, 2021
`A.
`
`Promulgation