Federal Court Sides With Payers on No Surprises Act IDRE Selection Process: What Providers Need to Know Now

In Neurological Surgery Practice of Long Island, PLLC v. US Department of Health and Human Services et al., the court dismissed a provider’s challenge to the federal agencies’ implementation of the independent dispute resolution entity (IDRE) selection procedures under the NSA. Providers should be aware of the court’s deference to agency discretion, the limitations on judicial remedies, and the ongoing regulatory developments that may impact future IDR proceedings.

In the case, a private neurosurgery practice in New York brought suit against the US Departments of Health and Human Services, Treasury, and Labor, alleging that the agencies’ procedures for selecting IDREs under the NSA were unlawful.

The court reviewed the statutory framework of the NSA, which requires that providers and payers jointly select an IDRE within a three-business-day window. If the parties cannot agree, the agencies’ regulations provide that the initiating party (typically the provider) proposes a preferred IDRE, and the non-initiating party (typically the payer) may object and propose an alternative. If the provider does not respond to the payer’s objection, the payer’s choice is automatically selected. The provider argued that this current process allows payers to strategically delay their selection of an alternative IDRE until the last possible moment, usually on the third day and after business hours so that the provider is unaware of the selection until the selection period has closed. The provider asserted that this effectively forces providers to accept the payer’s preferred arbitrator — often one perceived as favoring payers and taking longer to issue decisions. The provider claimed this practice resulted in a lower likelihood of favorable provider outcomes and delayed payments.

Despite acknowledging the provider’s frustration and the potential for strategic abuse, the court held that the agencies’ procedures comply with the statutory requirements of the NSA. The court held that it lacked authority under the Administrative Procedure Act (APA) to order the agencies to adopt specific procedures or to dictate the way the agencies implement the statute, so long as a method for joint selection exists. The court emphasized that the APA only allows courts to compel agencies to perform non-discretionary acts, not to direct how those acts are carried out. Because the agencies had established a method for joint selection, the court concluded that the provider’s claims failed as a matter of law and dismissed the case with prejudice.

The provider filed a notice of appeal, so there may be more to come on this issue.

Key Takeaways for Providers

Current IDRE Selection Process Remains in Effect

Providers must continue to follow the existing IDRE selection procedures under 45 C.F.R. § 149.510. The process allows the initiating party to select an IDRE, then the non-initiating party (often the payer) can propose an alternative IDRE. If the initiating party (often the provider) does not respond to the alternate proposal in time, the payer’s choice is deemed mutually agreed upon.

Judicial Relief Is Limited

The court made clear that it cannot compel agencies to adopt specific procedural safeguards or timelines beyond what the law requires.

Regulatory Changes May Be Forthcoming

Federal agencies have proposed amendments to the IDR selection process that could address some provider concerns. However, these changes are not yet in effect, and providers should monitor regulatory developments closely.

Importance of Timely Responses

Given the current rules, providers should implement robust internal processes to monitor IDR deadlines and respond as promptly as possible to payer proposals for alternative IDREs. Failure to respond within the three-business-day window may result in the automatic selection of the payer’s preferred IDRE.

Conclusion

This decision underscores the importance of vigilance and timely action in the IDR process under the NSA. While the court recognized the challenges providers face, it ultimately deferred to agency discretion and the existing regulatory framework. Moving forward, providers should monitor deadlines closely and stay informed about potential future regulatory changes. AFS will be following both this appeal and any future regulatory changes.