Court Delivers TMA Win Against Fee Hike, Batching in Surprise Billing Arbitration

Medicine is another step closer to a surprise billing dispute resolution process consistent with congressional intent after the Texas Medical Association scored yet another victory against federal regulators in an Aug. 3 federal court ruling.

The U.S. District Court for the Eastern District of Texas struck down, based upon a lack of notice and comment, a 600% hike in the administrative fee to access the arbitration process, as well as certain rules that limited batching to the same service code (e.g., CPT code). The decision is one of several victories TMA has won against federal regulators tasked with implementing the 2020 federal No Surprises Act.

TMA President Rick Snyder, MD, said the 600% increase has had a chilling effect, “dramatically curtail[ing] many physicians’ ability to seek arbitration when a health plan offers insufficient payment for out-of-network care.” The decision “will aid in reducing barriers to physician access to the law’s arbitration process, which is vital to both patient access to care and practice viability,” he said in an Aug. 4 statement.

TMA has sued federal regulators four times over rulemaking for the federal No Surprises Act, which took effect Jan. 1, 2022. The association says regulators have failed to follow clear direction from Congress on how to implement the law’s independent dispute resolution (IDR) process, among other components.

In this case, the fourth, TMA challenged a steep jump in the administrative fee physicians must pay to participate in the arbitration process – from $50 to $350. TMA also took issue with regulators’ narrowing of the law’s “batching” provisions, which Congress authorized to encourage efficiency and minimize costs in the IDR process.

Together, the changes make the IDR process cost prohibitive for physicians, especially those with smaller claims, TMA argued.

District Judge Jeremy Kernodle agreed with TMA regarding the rule’s unlawful bypassing of the notice-and-comment requirements in a 35-page ruling that nullified both the fee hike and the batching rule.  

Not only did federal regulators have plenty of time to follow notice-and-comment procedures, the errors were “not harmless,” Judge Kernodle wrote.

“The batching rule and administrative fee at issue here influence how, and at what cost, parties may present their claims to the arbitrator in the first place,” he said.

In addition to "dramatically” increasing the administrative fee, for instance, federal regulators unilaterally “elected to include, for the first time, costs of pre-eligibility review in their projected IDR costs. Nothing in the [No Surprises] Act requires that the total cost of ‘carrying out the IDR process’ include the cost in determining whether a dispute is ‘eligible for the process’ in the first place,” the court explained.

As for the batching rule, according to court documents referenced in Judge Kernodle’s decision, “one provider testified, for example, that ‘under the Departments’ current batching rules, 100% of claims submitted to IDR for services I furnished were not allowed to be batched by the Departments.”

The court’s decision to vacate the two rules took effect immediately.

Although TMA also had requested additional relief, including certain IDR deadline extensions, Dr. Snyder says the overall outcome is a positive – and impactful – one.

Immediately following the ruling, the Centers for Medicare & Medicaid Services (CMS) suspended the federal IDR process, citing Judge Kernodle’s ruling. CMS said it is “reviewing the court’s decision and evaluating current IDR processes, templates, and system updates that will be necessary to comply with the court’s order.”

TMA’s other lawsuits related to the No Surprises Act include:

• One filed in 2021, which TMA later won at the federal district level, alleging that, in the interim final rules governing arbitrations between insurers and physicians, federal agencies unlawfully required arbitrators to “rebutably presume” the offer closest to the qualifying payment amount (QPA) was the appropriate out-of-network rate.
• A second filed in September 2022, which TMA also later won at the federal district level, alleging that the final rules unfairly advantaged health insurers by requiring arbitrators to give outsized weight or consideration to the QPA. The federal government is appealing the decision.
• A third filed in November 2022, which remains pending at the district court level, challenging certain portions of the interim final rules regarding how the QPA is calculated.

More recently, TMA has voiced its opposition to a federal bill that threatened to expand the use of the opaque and flawed QPA formula to limit payments for health care services furnished in physician offices.

For more information, check out TMA’s Surprise Medical Bills webpage.