Texas Medical Association notches another surprise billing win

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The Texas Medical Association notched another win in its legal challenges to the No Surprises Act, further complicating the law’s implementation. 

Judge Jeremy D. Kernodle of the U.S. District Court for the Eastern District of Texas last Friday issued a ruling largely in favor of the association, which argued that flawed methodology compromised the calculated median rate insurers pay for a service in a particular market, also known as the qualified payment amount. 

Kernodle vacated parts of the final rule implementing provisions of the law, including the qualified payment amount’s inclusion of “ghost rates,” or contracted rates for specialized services that providers rarely or never provide, and sent them back to the Health and Human Services, Labor and Treasury departments.

The ruling marks the fourth win for the Texas Medical Association in its legal fight targeting the No Surprises Act, which prevents providers from billing privately insured patients more than median in-network, out-of-pocket costs for most emergency services, excluding ground ambulance transportation. 

Kernodle sided with the federal government regarding the calculation of air ambulance services’ qualifed payment amount and insurers’ disclosure requirements involving the qualified payment amount, writing in his decision that the law gives insurers “wide latitude in issuing a disclosure rule.”

The Texas Medical Association said in a statement that it is “pleased a federal court has once again agreed with medicine in nearly all our complaints against the federal agencies’ unfair July 2021 rules pertaining to implementation” of the No Surprises Act. The association declined to comment on potential future lawsuits. 

In response to the ruling, the Centers for Medicare and Medicaid Services published a notice that it has “temporarily suspended all federal independent dispute resolution process operations in order to make changes necessary to comply with the court’s opinion and order.”

Providers and insurers are awaiting further guidance from the federal government regarding how to properly process disputes amid the legal turmoil.

CMS and HHS had already paused most of the disputed claims processing on Aug. 7 as the agencies adapt to another court ruling in favor of the Texas Medical Association that invalidated the government’s batching requirements and fee increases for filing disputes. Previously, the association successfully litigated that the qualified payment amount and the arbitration process unduly favored insurers. 

The latest decision “could embolden [the Texas Medical Association] to challenge even more regulations or guidance,” said Zachary Baron, an associate director of the Health Policy and the Law Initiative at Georgetown University’s O’Neill Institute.

CMS said in an April report that more than 330,000 disputes were filed from mid-April 2022 through March 2023, nearly 14 times more than expected.

The growing backlog of disputes and the intermittent pausing of the arbitration process may explain why disputes can take months to settle. Even after arbitration, some doctors are raising concerns about late payments. Americans for Fair Health Care, which represents physicians and advocacy groups, this spring polled more than 48,000 physicians who said that more than half of all arbitration-determined payment amounts were not paid at all.

The legal challenges continue to bog down the system and can potentially “flip the No Surprises Act on its head,” consumer advocacy groups warn. A group of patient and consumer advocacy organizations, including the National Patient Advocate Foundation, filed an amicus brief on behalf of the defendants in the qualified payment amount calculation case in March, warning that higher qualified payment amounts reached during arbitration would likely increase patient cost-sharing.

“If, for example, the QPA factored in bonuses and incentive payments (which bear no relation to the cost of individual services or patients’ cost-sharing), as plaintiffs would prefer, the higher resulting QPAs would increase patients’ cost-sharing burdens,” the brief states.

Other related cases and potential appeals may continue to affect the No Surprises Act’s rollout. Several lawsuits are pending from air ambulance providers that challenged individual arbitration decisions. And a pending appeal from Dr. Daniel Haller, a general surgeon in Rockville Centre, New York, challenges the constitutionality of the No Surprises Act.

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