Battle Over No Surprises Act Rages on and Expands to New Fronts

Footnotes for this article are available at the end of this page.

Texas Medical Association (“TMA”) and LifeNet Inc. are expanding their fight over the regulations implementing the No Surprises Act (“NSA”). The NSA protects patients from surprise medical bills when they receive unanticipated out-of-network care. It also establishes an independent dispute resolution (“IDR”) process that allows arbitrator review of reimbursement disputes between payors and out-of-network providers. In the IDR process, the payor and provider submit their recommended reimbursement amount for the item or service, along with information on factors that the NSA statute directs the arbitrator to consider, including the training and experience of the provider, the payor’s and provider’s respective market shares, historical contracted rates between them, the acuity of the patient, and the qualifying payment amount (“QPA”) — i.e., a payor’s median in-network provider contracted rate for the same or similar item or service. Armed with this information, the IDR entity selects the offer that it believes to be the appropriate payment amount.

Earlier this year in a Texas federal court, TMA and LifeNet prevailed on suits challenging an NSA Interim Final Rule to the extent that it created a rebuttable presumption that the QPA was the appropriate out-of-network payment amount and directed arbitrators to select the offer closer to the QPA (“TMA I”).¹ Subsequently, the departments that administer the NSA issued a Final Rule that TMA and LifeNet allege still creates a de facto presumption in favor of the QPA.² In this second round of litigation (“TMA II”), plaintiffs have returned to the same federal court judge to argue that the Final Rule still skews the IDR process by requiring arbitrators to:

1. consider the QPA first in all cases;
2. evaluate the credibility of any information presented to them except for the QPA;
3. treat the QPA as credible despite flawed calculation methodology;
4. give no weight to information already accounted for by the QPA; and
5. give no weight to information concerning the additional factors required to be considered by law unless they relate to the party’s offer.³

In opposition, the departments attacked the plaintiffs’ “standing” — that is, their right to bring this case before the court — and further argued that the departments used their authority to issue rules establishing procedures for IDR proceedings to craft a Final Rule that reasonably instructs arbitrators to apply consistent methodology in selecting the offer that best represents the qualified IDR item or service’s value.⁴ The defendants also noted that the plaintiffs had not directly challenged the methodology behind establishing the QPA.⁵

Both sides have garnered heavy support from industry groups. In support of the plaintiffs, the Physicians Advocacy Institute and over two dozen other state medical associations and medical specialty societies focused on the Final Rule’s subtle reliance on “anchoring bias” to favor the QPA, which they say elevates it in a more pernicious way than the rebuttable presumption previously rejected by the court.⁶ The American Medical Association described the harm that the Final Rule will cause, including the systemic depression of compensation for both in- and out-of-network providers, consequently imperiling patient care by leading some physician groups to close, sell, or relocate their practices.⁷ The American College of Emergency Physicians informed the court that insurance companies have already begun setting artificially low payment rates, citing Blue Cross Blue Shield of North Carolina’s using the departments’ IDR rules to coerce providers to accept significant reductions in contracted rates.⁸  Finally, the Emergency Department Practice Management Association detailed the serious adverse consequences that the Final Rule will have on the nation’s healthcare, leading to the contraction of provider networks and the narrowing of healthcare choices for patients.⁹

Interest groups aligned with the departments’ position have pushed back. The American Benefits Counsel (“ABC”) and other trade, employer, and industry groups contended that the Final Rule is fully consistent with the text and structure of the NSA.¹⁰ American Health Insurance Plans, Inc. (“AHIP”), a national trade association representing the health insurance community, focused on the propriety of the centrality of the QPA in the IDR process.¹¹ Both AHIP and ABC strongly supported the previously invalidated QPA presumption in the Interim Final Rule, but nonetheless endorsed the Final Rule’s more modest procedural guidelines, asserting that they have important practical consequences for predictability and accuracy of arbitration outcomes (albeit not to the same degree as the vacated interim rule).¹² AHIP posited that, given the statutory and regulatory constraints around the QPA, the Final Rule appropriately recognized that a rule-compliant QPA will meet the credibility requirement to be given weight, and requiring other information submitted by either party to meet the same credibility standard that the QPA already meets through other mechanisms ensures a credibility floor for all information considered in the IDR process.¹³ AHIP continued by contesting the plaintiffs’ amici’s prediction that QPA-centered IDR decisions will lead health insurance providers to cut physicians from their networks and refuse to contract for above-QPA rates, and denied that there had been any move to cut rates and narrow networks.¹⁴ Finally, the Public Interest Research Group and eight other patient and consumer advocacy groups authors focused on the impact of surprise billing on patients, and rejected the assertion made by the plaintiffs and their amici — who are all medical providers or provider trade organizations — that patients and consumers will be harmed by the Final Rule’s IDR process.¹⁵

Congressional leaders are also sharply divided on the issues presented in this litigation. In recent correspondence, bipartisan leaders of the House Ways and Means Committee sent a letter to the departments asking for changes in NSA enforcement.¹⁶ The administration’s Final Rule “follows neither the letter nor the intent of the law,” said the lawmakers, citing certain issues raised by TMA and LifeNet in TMA II.¹⁷ On the other side, the current chairs of the Senate Health, Education, Labor, and Pensions (“HELP”) Committee and the House Committee on Energy and Commerce wrote to the departments in support of the Final Rule, deeming the litigation around the QPA “frivolous.”¹⁸ Bill Cassidy (R-La.), one of two senators projected to assume leadership on the Senate HELP Committee next year, has expressed interest in conducting oversight on NSA implementation.¹⁹ Cassidy, a gastroenterologist, was instrumental in pushing a more doctor-friendly version of the legislation and believes the administration has not carried out the law as Congress intended.²⁰

As TMA II nears its conclusion in the trial court, the plaintiffs have started a fresh fight before the same judge. Perhaps in response to the departments’ arguments that the plaintiffs have attacked the role of the QPA in the IDR process but have not challenged regulations on setting it directly, the plaintiffs are now contesting the methodology behind establishing the QPA. TMA’s new suit focuses on four ways the departments’ regulations unfairly deflate the QPA:

1. inclusion of “ghost rates” in QPA calculations;
2. inclusion of rates of physicians not in the same or similar specialty as the physician involved in the dispute in QPA calculations;
3. use of amounts other than the total payment in QPA calculations when the contracted rate includes payment adjustments; and
4. permitting self-insured plans to opt into a lower QPA for payment disputes with physicians.²¹

The lawsuit also challenges the lack of transparency around QPA calculations.²² LifeNet’s new claims include that regulations that allow payors to indefinitely delay the IDR process, calculate the QPA incorrectly, and govern what information a payor must disclose about its QPA calculations are arbitrary and capricious.²³

The litigation surrounding the QPA and its role in arbitrations over appropriate payments to out-of-network providers carries serious implications for physicians and patients nationwide. That’s why this is such an important battle for TMA to fight, says TMA President Gary W. Floyd, MD.²⁴ Giving priority to a health plan-determined amount — without appropriately considering other factors relevant to the value of physicians’ services — puts practices at a disadvantage, threatening their sustainability and ultimately patients’ choices of affordable in-network care.²⁵ The court heard oral arguments on the parties’ briefing in TMA II on December 20, 2022. While there is no set timetable for the court to render its decision, it is notable that this court issued its opinion invalidating the QPA rebuttable presumption in the plaintiffs’ prior suit just 19 days after oral arguments in TMA I.

 

[1] Texas Med. Ass’n v. U.S. Dep’t of Health & Hum. Servs. (“TMA I”), 587 F. Supp. 3d 528 (E.D. Tex. 2022), appeal dismissed, No. 22-40264, 2022 WL 15174345 (5th Cir. Oct. 24, 2022) LifeNet, Inc. v. U.S. Dep’t of Health & Hum. Servs., No. 6:22-CV-162-JDK, 2022 WL 2959715 (E.D. Tex. July 26, 2022).

[2] Texas Med. Ass’n v. U.S. Dep’t of Health & Hum. Servs., (“TMA II”), No. 6:22-cv-00372-JDK, Doc. 1, (E.D. Tex Sept. 22, 2022).

[3] TMA II, Docs. 41-42.

[4] Id., Docs. 62-63.

[5] Id.

[6] Id. Doc. 51.

[7] Id. Doc. 54.

[8] Id. Doc. 53.

[9] Id. Doc. 56.

[10] Id. Doc. 74.

[11] Id. Doc. 76.

[12] Id. Docs. 74, 76.

[13] Id. Doc. 74.

[14] Id.

[15] Id. Doc. 78.

[16] https://www.aha.org/system/files/media/file/2022/11/key-house-committee-express-serious-concerns-regarding-latest-efforts-to-implement-the-bipartisan-no-surprises-act-letter-11-21-22.pdf.

[17] Id.

[18] https://energycommerce.house.gov/sites/democrats.energycommerce.house.gov/files/documents/HHS.DOT_.DOL_.2022.12.7.%20Letter%20re%20Support%20Related%20to%20Surprise%20Billing%20Requirements.%20HE.pdf.

[19] Meet the New Leaders of the Senate Health Panel: Bernie and Cassidy, The Washington Post, Nov. 18, 2022, available at https://www.washingtonpost.com/politics/2022/11/18/meet-new-leaders-senate-health-panel-bernie-cassidy/ (last visited Dec. 16, 2022).

[20] Id.

[21] Texas Med. Ass’n v. U.S. Dep’t of Health & Hum. Servs., No. 6:22-cv-00450-JDK (E.D. Tex. Nov. 30, 2022).

[22] Id.

[23] LifeNet, Inc. v. U.S. Dep’t of Health & Hum. Servs No. 6:22-cv-00453-JDK (E.D. Tex. Dec. 1, 2022).

[24] UPDATE: TMA Sues Feds – Again – Over Unfair Arbitration Process Under Federal Surprise Billing Rule, Sept. 22, 2022, available at https://www.texmed.org/TexasMedicineDetail.aspx?id=60459 (last visited Dec. 16, 2022).

[25] Id.