When the Texas Medical Association scored a win over federal regulators in a Feb. 23 U.S. district court decision, it wasn’t just a victory for physicians. It was a victory for patients, too, cheers Houston emergency physician and TMA Immediate Past President Diana Fite, MD.
The court sided with TMA in its attempt to stop a piece of rulemaking tied to the federal No Surprises Act, the 2020 law that takes patients out of the middle of out-of-network billing disputes between physicians and insurers. The No Surprises law set up an independent dispute resolution (IDR) process whereby an arbiter looks at several factors in those disputes and chooses as an appropriate payment amount either the physician’s proposed figure or the health plan’s.
But when regulators issued rules to accompany the law in October 2021, they essentially tried to boil the arbitrator’s decision down to one factor – an insurer-determined factor that TMA believed would stack the deck in health plans’ favor.
After hearing both sides in court on Feb. 4, the U.S. District Court for the Eastern District of Texas agreed with TMA. And Dr. Fite, a well-versed navigator of payment disputes over out-of-network care, says that win for fairness spread well beyond physicians’ bottom line.
“A fair process makes it winnable for the patient, because they have better access to care,” she said. “Whereas if there’s not a fair process, their access to care will be in jeopardy.
“In many physician practices, especially small practices like one or two physicians, they are very tight in being able to pay overhead and all their employees, and [for] various items to stay in practice. If they don’t get a fair amount, then they may have to close their practice,” Dr. Fite added. “Then, the patients with that insurance lose the access to the doctors that they want to see, or the doctors that they have used for years and years.”
TMA filed the lawsuit last year shortly after the federal rules were issued, alleging they allow the arbiter to default to the “qualifying payment amount” (QPA) – a metric only health insurers calculate – as the only benchmark for determining the right out-of-network payment rate, unless “credible information” demonstrates it shouldn’t be.
That’s not what the law intended, TMA argued in its suit, and what’s more, it’s not fair. The No Surprises Act intended for the arbiter to consider a handful of factors when determining fair payment, including prior contracted rates for the same medical service, the physician’s training and experience, and case complexity.
Nowhere does the law even allow regulators to “instruct IDR entities how to decide cases,” TMA said in its suit. The “unlawful” pieces of the rule “will unfairly skew IDR results in [payers’] favor, granting them a windfall they were unable to obtain in the legislative process.”
The court agreed with TMA, finding the rule “conflicts with the unambiguous terms” that Congress passed in the No Surprises Act. District Judge Jeremy D. Kernodle wrote that nothing in the No Surprises Act “instructs arbitrators to weigh any one factor or circumstance more heavily than the others. … [H]ere, the Act nowhere states that the QPA is the ‘primary’ or ‘most important’ factor.”
“The Act instructs arbitrators to ‘consider’ the QPA and the five other factors in deciding which offer to accept. That’s it,” Judge Kernodle wrote.
He also agreed with TMA that regulators had issued their rule without a notice and comment period required by law, saying the regulation “must be set aside for this additional reason.”
With her focus on the implications for access to care, Dr. Fite hopes Judge Kernodle’s decision ends up reflecting the case’s final resolution, whenever that may occur. For now, the judge’s ruling on TMA’s motion for summary judgment vacates that disputed piece of the federal rule.
At press time, the federal agencies in the suit – the U.S. Department of Health and Human Services (HHS) and several others – had not appealed. Also, separate and similar lawsuits filed by the American Medical Association and other entities remain pending, although AMA has asked the federal court in the District of Columbia to rule quickly in its case in light of the Texas ruling.
On Feb. 28, HHS, through the Centers for Medicare & Medicaid Services, released a memo announcing that federal authorities are "reviewing the court's decision and considering next steps." But the memo said the federal departments involved would take several steps to conform to the court order, including "withdraw[ing] guidance documents that are based on, or that refer to, the portions of the rule that the court invalidated" and updating documents that reflect the court order. HHS said it also would provide training on the revised guidance for both arbiters and "disputing parties."