TX Doctors Sue Feds Over Surprise Billing IDR Process, Again

September 27, 2022 - The Texas Medical Association (TMA) is once again suing the federal government over the surprise billing law enacted earlier this year.

TMA sued federal regulators and won last year. At the time, the state medical group challenged an interim final rule that aimed to implement the independent dispute resolution process part of the No Surprises Act. The group argued that the IDR process as described by the interim final rule favored health payers over providers. Federal regulators, including CMS, later changed the wording of IDR process rules and issued new final rules in August of this year.

However, TMA maintains that the IDR process still favors payers, leaving providers with lower reimbursement rates for out-of-network care. Ultimately, the group says in its legal complaint that the new final rules essentially “have the same effect.”

“These provisions of the Final Rule are manifestly unlawful and will unfairly skew IDR results in insurers’ favor, granting them a windfall they were unable to obtain in the legislative process,” the complaint states. “At the same time, they will undermine healthcare providers’ ability to obtain adequate reimbursement for their services, to the detriment of both providers and the patients they serve.”

The issue in question in both lawsuits is just how much independent arbitrators should weigh the qualifying payment amount (QPA), which the No Surprises Act generally defines as the payer’s median in-network rate for similar services in the geographic region as of 2019 and updated later by the Consumer Price Index for All Urban Consumers (CPI-U).

READ MORE: State Surprise Billing Laws Impact Out-of-Network Provider Charges

The No Surprises Act prohibits surprise billing in most healthcare situations. So, when an insured patient receives care from a clinician outside of their health plan’s network despite being at an in-network facility, payers must cover the out-of-network claims and providers cannot bill patients more than the in-network cost-sharing amount.

Providers can seek reimbursement for the out-of-network services through the “baseball style” IDR process if negotiations with payers fail. Both parties submit bids to the independent arbitrators appointed by the federal government and that entity must select the appropriate rate based on the QPA and several other factors, including provider training and experience, the provider’s market share, and how difficult it was to provide the service.

The interim final rule facing scrutiny in the initial lawsuit filed by TMA stated that arbitrators should consider the closest bid to the QPA as the appropriate out-of-network rate for the service or services undergoing the IDR process. The American Hospital Association (AHA) and American Medical Association (AMA) had also filed a similar lawsuit challenging the emphasis on the QPA in the interim final rule implementing the IDR process.

The new final rules rolled back the weight arbitrators should give the QPA, instead stating that they should consider the QPA “and then must consider all additional information submitted by a party to determine which offer best reflects the appropriate out-of-network rate.”

The final rules specify that arbitrators “should select the offer that best represents the value of the item or service under dispute after considering the QPA and all permissible information submitted by the parties.”

READ MORE: Federal Judge Rejects Surgeon’s Challenge of No Surprises Act

TMA, as well as AHA and AMA, had previously argued that the interim final rule placed more emphasis on the QPA than Congress had intended when passing the No Surprises Act. Now, TMA says that the updated rules for the IDR process will lead to the same result: reimbursement rates that favor payers.

The new final rules still require the arbitrators to consider the QPA first in all cases and do not require them to evaluate the credibility of the QPA, the group contends. Additionally, the rules do not give weight to information already accounted for by the QPA and concerning the law’s other factors, unless they relate to the party’s bid.

“The QPA is a figure that is unilaterally calculated by the insurer and about which the insurer must disclose only limited information,” the complaint states. “Without a complete picture of how the QPA was calculated, providers offering additional information that they believe demonstrates why their offer represents the appropriate payment amount cannot reasonably be expected to show that this information was not already accounted for in the QPA. Nor can arbitrators be expected to determine on their own whether the QPA accounts for a particular piece of information.”

TMA has asked the court to vacate the final rules since they “place a thumb on the scale” in the IDR process.

AHA and AMA have also backed TMA’s challenge of the final rules after dismissing their own lawsuit following the release of the new final rules in August.

“The Texas court previously held that the interim final rule impermissibly rewrote clear statutory terms by placing a thumb on the scale in favor of commercial insurers,” the groups said in a joint statement last week. “The final rule suffers from the same problems. As was the case with the previous suit, the AHA and AMA want to see the law’s core patient protections move forward and seek only to bring the regulations in line with the law. We look forward to supporting the Texas Medical Association’s efforts to restore the balanced, patient-friendly approach that Congress passed and the AHA and AMA supported.”