TMA Wins Appeal Upholding Its Challenge to Skewed Federal Surprise Billing Rule
By Amy Lynn Sorrel

A federal appeals court handed a victory to medicine affirming the district court’s decision to strike down federal provisions that run counter to Congress' intent for implementing a key piece of the No Surprises Act: to operate an arbitration process that does not skew dispute resolutions in surprise billing cases. 

The ruling invalidates portions of the final rules TMA argued conflict with the law and unfairly advantage health plans by directing arbitrators to give outsized weight to an opaque, insurer-calculated amount called the qualifying payment amount (QPA) when choosing between an insurer’s offer and a physician’s offer. The QPA is supposed to be the median in-network rate under the law but is deflated based upon the federal agencies’ rulemaking methodology.

“TMA strongly believed that tilting the scales in this manner was unfair to physicians, providers, and the patients we care for," TMA President G. Ray Callas, MD, said in a statement. "We hope this resolves the issue once and for all: Congress intended the No Surprises Act to be a fair means of protecting patients from surprise bills. The federal agency rules must adhere to the law and cannot privilege the qualifying payment amount.” 

Since 2021, TMA has successfully sued federal regulators four times over the implementation of the law’s provisions related to the independent dispute resolution (IDR) process between physicians and payers. TMA directed its lawsuits at ensuring a fair IDR and rulemaking process in line with the law’s plain language. 

After a win in TMA's first lawsuit, federal regulators rewrote the related QPA rule provisions, which TMA again found to conflict with the law and sued successfully a second time (with the appeals court now affirming the district court’s favorable decision). TMA argued the rewritten rules improperly weighted the QPA over other statutory factors relevant to the value of physicians’ services, putting physician practices at a disadvantage and threatening their sustainability and ultimately patients’ choices of affordable in-network care. According to the law, those other factors include contracted rates between the insurer and the physician during the previous four plan years; the physician’s training and experience; and patient acuity and case complexity, among others, TMA argued in court documents. 

The 5th Circuit agreed with TMA that the rewritten final rule "exceeds the Departments' authority" in telling arbitrators how to weigh certain factors during surprise billing arbitration. 

"Nothing in the [No Surprises] Act instructs arbitrators to weigh any one factor or circumstance more heavily than the others, nor does the Act authorize the Departments to superimpose regulatory rules on the clear statutory mandate," Judge Edith Jones wrote. 

Specifically, the court called out three “extrastatutory” requirements federal regulators imposed, namely that arbitrators:

• Must consider the QPA first and then the other factors;
• Must not consider information that is not “credible” or “related to” the issue, or that is already accounted for in the QPA; and
• Must explain their reasons if they depart from the QPA.

"By telling the arbitrators that they must consider the QPA before all other factors, the Departments place a thumb on the scale in favor of the insurer-determined QPA in derogation of the other congressionally mandated factors," judges said.

As of this writing, only one of TMA’s lawsuits (TMA III) remains in appeal. TMA III successfully challenged certain portions of the July 2021 interim final rules proposed by the U.S. departments of Health and Human Services, Labor, and the Treasury, along with the Office of Personnel Management, implementing the federal NSA that artificially deflate the QPA. The federal agencies appealed TMA III, which is currently pending at the U.S. Court of Appeals for the Fifth Circuit.

For more information on state and federal surprise billing laws, visit TMA’s resource center, and check out this past issue of Texas Medicine.