No Surprises Act: Washington State Rethinks IDR Transition Amid Federal Court Showdown

Washington State's Office of the Insurance Commissioner (OIC) is delaying its transition to the federal No Surprises Act (NSA) Independent Dispute Resolution (IDR) process for at least six months. As a result of this decision, out-of-network providers in Washington State will be able to continue using the state-regulated process for resolving out-of-network billing disputes. The OIC's decision comes after a recent decision by the Centers for Medicare & Medicaid Services (CMS) to pause the general federal IDR process indefinitely, except for disputes about services provided prior to October 25, 2022.

At the end of February, the OIC announced that in light of recent litigation in federal court related to the NSA IDR process and comments the OIC received in response to a request for information (RFI), the OIC would delay adoption of the federal IDR process for at least six months. The OIC had issued the RFI on February 1 to solicit comments about whether Washington should transition to the federal NSA IDR process on July 1, 2023, or continue to use the state's Balance Billing Protection Act (BBPA) dispute resolution mechanism to resolve disputes between payers and out-of-network providers.

The BBPA is a Washington state law that predates the NSA and seeks to protect consumers from balance billing by out-of-network providers for emergency services, as well as by out-of-network providers of nonemergency services at in-network hospitals and ambulatory surgical facilities. For carriers and providers who cannot agree on a "commercially reasonable payment," the BBPA created a dispute resolution system administered by the OIC. The system has been in place in Washington since January 1, 2020. In 2022, the Washington State Legislature amended the BBPA to give the OIC discretion to migrate most disputes to the NSA IDR process as of July 1, 2023, or a later date.

The OIC's announcement of the decision to delay the tentative transition date comes only three weeks after a February 6 win by the Texas Medical Association (TMA) in an action challenging an NSA Final Rule that would have given preference to health plans' Qualifying Payment Amount (QPA) in the IDR process (Texas Medical Association et al. v. United States Department of Health and Human Services et al., case number 6:22-cv-00372 (U.S. District Court for the Eastern District of Texas, 2023)). After the February 6 ruling, CMS instructed IDR entities to hold all payment determinations in out-of-network disputes until CMS issues further guidance. CMS then further instructed IDR entities to recall any payment determinations issued between February 6, 2023, and February 10, 2023. However, CMS allowed that, starting February 27, IDR entities can resume making payment determinations for payment disputes concerning items or services provided before October 25, 2022, using the standards provided in the revised October 2021 interim final rules. Certified IDR entities will continue to hold payment determinations for disputes involving items or services furnished on or after October 25, 2022, until further guidance is in place.

*Wei Wei (University of Washington School of Law) is Davis Wright Tremaine's first 2L Diversity Healthcare Law Clerk. We are pleased to have Wei join our team for the spring term.