Directly on the heels of the Texas Medical Association’s (TMA’s) third lawsuit (TMA 3) challenging portions of the No Surprises Act (NSA), LifeNet, a company that provides ground and air ambulance services, has also filed their own third lawsuit (LifeNet 3). While LifeNet 3 makes many of the same arguments presented in TMA 3, it also makes additional challenges to portions of the July Interim Final Rule.
A Brief History of LifeNet’s Lawsuits
LifeNet’s first suit (LifeNet 1) challenged the designation of the qualifying payment amount (QPA) as a rebuttable presumption with respect to air ambulance claims services in the scope of NSA protections. In their second suit, LifeNet challenged the instructions in the August Final Rule over when and how to evaluate the QPA in contrast to additional factors (LifeNet 2). In both instances, LifeNet’s arguments were similar to TMA’s; LifeNet 2 was consolidated into TMA 2.
LifeNet 3 Challenges to the July IFR
Like TMA 3, LifeNet 3 challenges how the QPA is calculated, as well as a few other portions of the July IFR. LifeNet 3 challenges both the substance and process of the July IFR. LifeNet makes technical arguments about the lack of notice and comment related to the interim final rule process, as well as the following substantive arguments that were not made in the TMA 3 suit:
- The July IFR improperly permitted the 30-calendar-day period for plans to pay or deny a claim to begin when the plan “receives the information necessary to decide a claim” and not upon receipt of the claim itself, which LifeNet claims contradicts the NSA and is being misused by plans to delay payment.
- The July IFR rules on how to calculate QPA do not meet the NSA requirement of approximating “market rates under typical contract negotiations” for the following reasons:
- The July IFR permits QPAs to be calculated based on rates applicable to very large and diverse geographical regions, because if plans have insufficient rates they can “greatly broaden” the geographic scope, including up to census divisions.
- The July IFR excludes case-specific rates — contracted rates agreed to by out-of-network providers — from the calculation of QPA, even though case-specific agreements are “extremely common” in the air ambulance industry and would better reflect typical market rates.
- The IDR process does not permit IDR Entities or providers to check the accuracy or reliability of plans’ QPA calculations, even though the July IFR requires plans to make many “interpretive decisions” on how to calculate QPA, about which reasonable people may disagree, and the regulations should require specific, detailed disclosures.*
- As of August 2022, the departments have begun to require two separate IDR processes per air ambulance transport: one for the base rate and one for the per-mile fees. This interpretation of batching claims together is contrary to the NSA permitting items/services to be considered jointly when they are related services.
A Thought Based on Our Analysis
It’s interesting to note that LifeNet argues against calculating QPA at the Census division level because it’s too broad and diverse. Claritev agrees that transport costs would be better represented within a more narrow market. However, our internal analysis shows that only about 38% of MSAs have sufficient air ambulance contracted claim data to determine a median.
Next Steps
The administration will have an opportunity to respond to the LifeNet suit, and then the court will determine whether some or all of the challenged portions of the July IFR are contrary to the NSA requirements and should therefore be vacated. Considering the overlap between the TMA 3 and LifeNet 3 arguments, there is some possibility that these cases may be consolidated and considered together.
Why LifeNet’s Lawsuit Is Important
Like TMA 3, LifeNet 3 challenges the QPA and how it is calculated. Among other things, this suit demonstrates the controversy surrounding QPA and illustrates that one year after its implementation, the NSA, or portions of it, continue to be hotly debated and how the law should be applied is far from settled. Claritev will continue to monitor these developments so that we can help our customers to quickly adjust their NSA strategies to address any resulting changes in market dynamics.
*Also included in TMA 3, but more details are provided here.
The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes. If you have questions about how the No Surprises Act applies to your organization, please consult your legal counsel.
