At the end of August, the fourth in a series of Texas Medical Association (TMA) lawsuits regarding No Surprises Act regulations concluded.
These lawsuits have been ongoing for some time. Back in March of last year, we detailed some of the issues that inspired the lawsuits, and now that the fourth lawsuit has ended, we’ve decided to go over the various lawsuits and what they mean for both healthcare markets and the rollout of the No Surprises Act. We will start by examining these lawsuits in chronological order as to when they were concluded.
First, on February 6th, a Texas judge struck down the altered independent dispute resolution procedure implemented by the federal government. This pertained to the assessment of payments for out-of-network services under the No Surprises Act, which United States District Court Judge Jeremy Kernodle ruled unfairly biased outcomes in favor of commercial insurers. According to the judge, this was a breach of the middle-ground agreement that Congress had established within the Act — and thus, Judge Kernodle decided the case in favor of the TMA. This ruling paused the Independent Dispute Resolution (IDR) process until March 17th.
The courts came to a similar conclusion just a few weeks later on February 23rd, determining that arbitrators may not consider the QPA more heavily than other factors when determining the fair payment amount for a service.
There were months in between these and the next two rulings, but once they came, they arrived in quick succession. August began with a summary judgment that HHS had to amend provisions surrounding a fee increase that was laid out in their final rule. In short, physicians were required to pay an administrative fee in order to participate in arbitration. While the fee was previously listed at $50, a change made the price rocket up to $350 — making the arbitration process inaccessible for many. The courts found this increase unacceptable and required that HHS change provisions regarding this fee.
Additionally, the judgment required that CMS update its rules regarding how claims may be batched together for consideration in arbitration. In short, CMS had demanded that joint consideration of multiple disputed items and services be billed under the same or comparable codes. This ruling stated that HHS must update these rules to better reflect the experiences of physicians and healthcare workers, as many in the industry feared that this regulation could waste time, cause difficulties, and require a significant amount of money during the IDR process.
These aspects of the ruling caused CMS to temporarily pause the IDR process as of August 7th of this year.
Near the end of August, a fourth ruling was passed down, this time concerning QPAs. Effectively, the TMA argued that the arbitration process laid out in the No Surprises Act allowed payors to “artificially depress” the QPA amounts.
For context, insurers were previously allowed to include “ghost rates” in their QPA calculations. This refers to payment rates offered by in-market providers who do not, and have no intention to, offer the service in question. As the service is not actually being offered, these providers have little incentive to negotiate a proper price for them. Thus, calculations including these prices are not representative of the reality of the service, which can in turn depress QPA amounts.
“Calculating QPAs the way the agencies required meant physicians had the scales tipped against them from the outset of negotiations,” Rick Snyder, M.D., president of the TMA, said in a statement at the time. “Permitting the inclusion of ‘ghost rates’ in QPA calculations and rates of physicians who do not practice in the specialty in question — as well as the other provisions in the rules — imbalanced arbitration discussions in health plans’ favor, against physicians.”
The resultant judgment found that regulations HHS’ rules around how to calculate the QPA were unlawful.
Once these four rulings were handed down, the federal IDR process was suspended, including the ability to initiate new disputes. Now, the IDR process is slowly beginning again, with CMS directing IDREs to begin processing IDR submissions from prior to August 3rd; however, they are still not accepting new submissions, and there’s a strong chance that the situation will continue to change as CMS integrates the outcomes of these rulings into their implementation of the No Surprises Act. As always, when further changes are made, we will update you.