Texas Medical Association succeeds in new legal challenge to No Surprises Act

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The Texas Medical Association has once again prevailed in a legal challenge to President Biden's No Surprises Act, with a Texas judge ruling to vacate several regulations involving payment dispute resolutions between some out-of-network providers, group health plans and payers.

It's the fourth successful legal challenge TMA has made against the NSA, which bans surprise out-of-network bills and details payment dispute processes between payers and providers.

In the decision, U.S. District Judge Jeremy Kernodle sided with the TMA in its criticism of portions of the law's implementation, particularly the claim that the calculation of qualifying payment amounts (QPAs) used in dispute arbitration "unfairly" disadvantages physicians in payment disputes with insurers.

The QPA is the median rate insurers would pay for certain services at in-network facilities.

WHAT'S THE IMPACT

Along with other plaintiffs, including those representing air ambulance providers, the TMA said in the lawsuit that federal regulations allowed insurers to artificially depress the QPA, thereby translating into lower payments to providers. 

The ruling vacates provisions allowing rates for items or services that providers have no intention of delivering – dubbed "ghost rates" – in calculating the QPA. These rates were included in the QPA as contracted rates for clinicians' services, but plaintiffs alleged the rates were below fair market value.

TMA also objected to the Department of Health and Human Services' disclosure requirements. 

Kernodle said that all but one regulation related to QPA calculations violate the letter of the NSA, adding that the regulations "extending the deadline for making an initial payment determination and requiring two proceedings for one air transport conflict with the Act and are unlawful." As such, he ruled against requiring two separate independent dispute resolution processes for a single medical air transport.

When the ruling was handed down, the Centers for Medicare and Medicaid Services responded by saying it would pause all independent dispute resolution processes "until the Departments can provide additional instructions" – a move the agency made earlier this month when Texas courts struck down additional NSA provisions in a separate ruling.

HHS did successfully defend two regulations that were challenged – one involving disclosure requirements, and the other linked to the calculation of air ambulance services' QPA.

"While the court disagreed with TMA regarding disclosure requirements in the rules, we remain pleased with the overall outcome," said TMA President Dr. Rick W. Snyder II in a statement. "TMA appreciates that the court concurs that the challenged provisions conflict with the law. These provisions unfairly disadvantaged physicians in payment disputes with health insurers, ultimately robbing our patients of access to physicians' care. Calculating QPAs the way the agencies required meant physicians had the scales tipped against them from the outset of negotiations."

THE LARGER TREND

This lawsuit is among numerous cases brought by the Texas Medical Association against implementation of the No Surprises Act.

TMA argued this case in December, addressing the second of four TMA lawsuits against federal agencies related to rulemaking.

In prior cases, the court reviewed an interim final rule and held that the NSA unambiguously requires arbitrators to consider several factors when selecting the proper payment amount – and does not instruct arbitrators to weigh any one factor or circumstance more heavily than the others.

TMA also challenged a 600% hike in administrative fees for seeking federal dispute resolution in No Surprises Act situations.

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com