Texas doctors file lawsuit over No Surprises Act 600% fee hike

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The Texas Medical Association is challenging a 600% hike in administrative fees for seeking federal dispute resolution in No Surprises Act situations. TMA filed a lawsuit in the U.S. District Court for the Eastern District of Texas this week, the group's fourth challenging various aspects of the NSA.

The group claims this "steep administrative fee hike" will strip many physicians and healthcare providers of the arbitration process that Congress enacted. TMA calls the fees "arbitrary and capricious," contrary to the law and in violation of notice and comment requirements.

WHAT'S THE IMPACT?

The U.S. departments of Health and Human Services, Labor and the Treasury, as well as the U.S. Office of Personnel Management, collectively adopted interim final rules implementing the federal surprise billing law. The rules include establishing the nonrefundable administrative fee all parties must pay to enter the federal independent dispute resolution (IDR) process in the event of a payment disagreement between an out-of-network physician or provider and a health plan in circumstances covered by the law. 

The situations could occur when emergency services are provided by a doctor or healthcare provider outside of the patient's insurance network or when out-of-network services are provided at an in-network facility.

The federal agencies set the initial administrative fee at $50 and announced in October 2022 it would remain at $50 for 2023. Two months later, said TMA, the agencies announced a 600% hike in the fee to $350 beginning in January 2023, "due to supplemental data analysis and increasing expenditures in carrying out the Federal IDR process since the development of the prior 2023 guidance."

TMA said the steep jump in fees will dramatically curtail many physicians' ability to seek arbitration when a health plan offers insufficient payment for care.

"The problem is that many payment disputes in these cases amount to less than the fees physicians would have to pay to dispute the unfair payments," said TMA president Dr. Gary Floyd. "Why would doctors and providers pay the $350 nonrefundable administrative fee to arbitrate a $200 or so payment dispute with a health insurer? The fees deny physicians the ability to formally seek fair payment for taking care of our patients, and that's just wrong."

TMA argues the administrative fee hike is difficult for all physician specialties to bear, but especially those specialties that have more small-dollar claims, such as radiology.

The nonrefundable administrative fee is in addition to the separate fee that each party must pay the IDR entity for its services, though that fee is refundable to the party that wins the arbitration dispute.

TMA also disputes the rules' narrowing of the law's provisions on "batching" claims for arbitration, which Congress authorized to encourage efficiency and minimize costs in the IDR process.

THE LARGER TREND

TMA's first lawsuit – filed in 2021, and which TMA won at the district court level – alleged that in the interim final rules governing arbitrations between insurers and physicians, the agencies unlawfully required arbitrators to "rebuttably presume" the offer closest to the qualifying payment amount (QPA) was the appropriate out-of-network rate.

TMA filed its second lawsuit in September 2022 challenging the NSA's August 2022 final rules published by the federal agencies alleging the final rules unfairly advantage health insurers by requiring arbitrators to give outsized weight or consideration to the QPA. The court's ruling on that suit's December 2022 hearing is anticipated at any time.

The group filed its third lawsuit in November 2022 challenging certain portions of the July 2021 interim final rules implementing the federal NSA. No hearing date has been set for that case, which challenges certain parts of the rules that artificially deflate the QPA.

Austin-based TMA is the largest state medical society in the U.S., representing more than 57,000 physician and medical student members.
 

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