Federal District Court to Hear TMA “No Surprises Act” Rules Lawsuit Tuesday

On Tuesday, Dec. 20, the U.S. District Court for the Eastern District of Texas will hear arguments in the Texas Medical Association’s (TMA’s) second lawsuit challenging certain portions of the Aug. 26, 2022, final rules implementing the federal No Surprises Act (NSA). District Judge Jeremy D. Kernodle will preside. This hearing addresses the second of three TMA lawsuits against federal agencies related to rulemaking under the surprise-billing arbitration law.

At issue are the rules affecting how payment disputes are resolved in certain situations in which a patient receives care from a physician or provider who is out of the patient’s insurance plan’s network. The payment disputes occur between health insurers and physicians or providers; patients are not affected or included. TMA is arguing that the challenged provisions of the final rule deprive physicians and providers of the arbitration process the law intended.

“We are, once again, asking for the law to be followed as Congress intended, and for the challenged provisions to be invalidated. There should be a level playing field for physicians and health care providers in payment disputes after they’ve cared for patients,” said TMA President Gary W. Floyd, MD.

TMA’s concern is over a final rule published by the U.S. departments of Health and Human Services, Labor, and the Treasury. In both its Oct. 28, 2021, lawsuit and the lawsuit being heard Tuesday, TMA alleges that the agencies – when implementing the federal surprise billing independent dispute resolution processes – adopted rules that conflict with the law and skew results in favor of insurers. TMA believes these rules are skewed to the detriment of both physicians and the patients they serve. TMA seeks to promote patient access to quality care and guard against health insurer business practices that give patients fewer choices of affordable in-network physicians and threaten the sustainability of physician practices.

“The final rules unfairly advantage insurers by requiring arbitrators to give outsized weight or consideration to an opaque, insurer-calculated amount – called the qualifying payment amount – when choosing between an insurer’s offer and a physician’s offer in a payment dispute,” Dr. Floyd said. “This is unfair to physicians, providers, and the patients we care for, so we had to seek fairness.” The qualifying payment amount (QPA) is an amount that is supposed to be the median in-network rate under the law but is deflated based upon the federal agencies’ methodology.

TMA’s first lawsuit – which the association won at the district court level – alleged that in the rules governing federal arbitrations between insurers and physicians, the federal agencies unlawfully required arbitrators to “rebuttably presume” the bid closest to the QPA was the appropriate out-of-network rate. TMA argued requiring arbitrators to heavily weight figures created by insurance plans provided them an unfair advantage.

Despite the district court’s initial ruling, TMA is arguing the agencies now have doubled down by issuing a new final rule that replaces the earlier presumption with a new set of requirements that give health insurers the same advantage.

Each of the challenged requirements in the federal agencies’ final rule unlawfully tie arbitrators’ hands and place an unmistakable “thumb on the scale for the [health plans’ QPA],” the complaint states, even though the law does not call the QPA the “primary” or “most important” factor, nor does it diminish the importance of any other factors in the law. The final rules, for example, require arbitrators to “first consider” the QPA.

TMA filed its third NSA-related lawsuit in November, challenging certain portions of the law’s July 2021 interim final rules. That TMA lawsuit focuses on four ways in which the rule unfairly deflates QPAs. TMA contends portions of the rule skew negotiations in favor of health insurers so strongly that health insurers will force physicians out of insurance networks and physicians will face significant practice viability challenges, struggling to keep their doors open in the wake of the pandemic.

As for Tuesday’s federal hearing, “TMA was hopeful the federal agencies would write final rules fair to everyone, especially after the federal district court ruled the agencies’ previously challenged rules were not lawful,” Dr. Floyd said. “Unfortunately, the federal agencies returned with a plan tipping scales in health plans’ favor.”

(Dial-in information to listen to the Dec. 20 court hearing: (571) 353-2301; meeting ID: 158301863#.)

TMA is the largest state medical society in the nation, representing more than 56,000 physician and medical student members. It is located in Austin and has 110 component county medical societies around the state. TMA’s key objective since 1853 is to improve the health of all Texans.

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