The No Surprises Act IDR Gap: Vacated Rules, Enforcement Discretion, and Unresolved Payment Disputes

Congress passed the No Surprises Act to protect patients from unexpected out-of-network bills. But the implementing regulations for its arbitration process — the independent dispute resolution (IDR) mechanism that determines what insurers actually pay providers — have been repeatedly challenged in federal court, with the QPA-weighting and presumption provisions of 45 CFR § 149.510 vacated. The statute still stands; so does most of the IDR regulatory framework. What the courts struck down are the specific provisions that put a thumb on the scale in favor of the insurer-calculated Qualifying Payment Amount (QPA). Agencies are operating on enforcement discretion while the Fifth Circuit reconsiders the case en banc.

This is a structural gap that sits in the space between binding statute and binding regulation. The No Surprises Act's prohibition on surprise billing is enforceable. The methodology for how payments are resolved when insurers and providers disagree — the IDR process — currently lacks fully enforceable regulatory guidance because the courts have struck down the specific rules agencies wrote to operationalize it. What remains is a combination of statutory text, interim agency FAQs, and non-binding enforcement discretion. None of that is a final, judicially reliable regulatory framework.

What the No Surprises Act Requires

The No Surprises Act was enacted as Division BB, Title I of the Consolidated Appropriations Act, 2021, Pub. L. 116-260 (Dec. 27, 2020). It created protections against surprise medical billing codified in part at 42 U.S.C. §§ 300gg-111 through 300gg-115 for group health plans and health insurance issuers. The core obligation is that covered plans and issuers must hold patients harmless from balance bills for out-of-network emergency services, non-emergency services at in-network facilities (with limited exceptions), and air ambulance services from nonparticipating providers.

What the Agencies Did — and What the Courts Said

Implementing regulations for the IDR process were issued jointly by HHS, DOL, and Treasury. The key HHS regulation is at 45 CFR § 149.510. The DOL regulation is at 29 CFR § 2590.716-8. The Treasury/IRS regulation is at 26 CFR § 54.9816-8. The agencies used the initial interim final rule and the subsequent final rule to establish how the QPA is calculated and how IDR entities should weigh it against other statutory factors.

The Texas Medical Association and other medical groups challenged those regulations, arguing that the agencies had structured the rules to give the QPA — which is essentially the insurer's own median in-network rate — a thumb on the scale, contrary to the statutory text requiring equal treatment of multiple factors. Federal courts agreed.

The practical consequence of the vacaturs is that the specific QPA-weighting provisions of 45 CFR § 149.510 — the rules that directed IDR entities to treat the QPA as a rebuttable presumption and default starting point — have been struck down. The statute's list of factors remains in force, and the broader IDR regulatory framework (including the process for initiating arbitration, selecting certified IDR entities, and submitting offers) continues to operate. What was eliminated are the provisions that required IDR entities to give the QPA special priority over other statutory factors.

What Fills the Gap: Enforcement Discretion and FAQs

After the vacaturs, HHS, DOL, and Treasury issued FAQ guidance (including FAQ Parts 62 and 69 under the ACA/CAA series) stating that plans and issuers could continue to use the pre-litigation QPA calculation methodology through specified dates — extended periodically, most recently through at least 2026. The agencies described this as "enforcement discretion": they would not pursue enforcement actions based on use of the earlier methodology.

What This Means in Practice

Providers, insurers, and IDR entities are operating in a regulatory environment where the specific rules that govern how payment disputes are resolved lack the stability of binding, judicially validated regulation. IDR entities must apply the statute — meaning they must genuinely weigh the QPA alongside training, experience, acuity, market share, and prior contracting history — without being able to rely on the regulatory structure that was intended to operationalize that multi-factor test.

For health system compliance teams, the gap means that payment amounts resolved in the IDR process during the current period are based on an agency-constructed interim framework that is itself legally contested. That does not mean IDR awards are void — the statute is valid, and IDR awards under the statute have independent legal force. But it does mean that the detailed procedural rules governing those awards are less stable than a finally adjudicated regulatory framework would provide.

For insurers and health plans, the gap has an analogous implication. The QPA calculation methodology that agencies are allowing under enforcement discretion reflects the agencies' best current interpretation of how the statute should work in the absence of enforceable regulations. Relying on that methodology in contract negotiations or payment offer calculations is reasonable — but the methodology is not immunized from future challenge if the en banc court or subsequent rulemaking changes the framework.

Law Gaps tracks gaps like this one — where the statute is clear, the legislative intent is documented, but the regulatory apparatus meant to make it work is legally fragile. The No Surprises Act IDR situation is a concrete example of a gap produced by the interaction between judicial review of agency rulemaking and the pace at which agencies can re-issue valid replacements.