February 28, 2022
Texas Medical Association Prevails in No Surprises Act Challenge
Earlier this week, the U.S. District Court for the Eastern District of Texas upended a key aspect of the No Surprises Act, ruling against the Interim Final Rule’s (IFR) presumption that the qualifying payment amount, or the insurer-calculated median in-network rate, is the correct price unless proven otherwise during the independent dispute resolution (IDR) process.
The ruling comes in response to a legal challenge from provider groups in a case filed by the Texas Medical Association (TMA) that argues that the responsible federal agencies erred in creating an IDR process that empowers insurance companies to squeeze financial concessions from physician practices.
Congress passed the No Surprises Act in December 2020 to protect patients from surprise medical bills for services from providers outside their insurance network. The bill included a comprehensive and fair process for resolving fee disputes between insurers and out of network providers. The IFR failed to align with congressional intent, however, and established an IDR process that heavily favored health insurance companies in payment disputes by directing the arbiter to give the highest priority to the insurer-calculated median in-network amount over other considerations and arguments presented by physicians. In the law that was passed, the arbiter is directed to consider all information submitted by the physician and insurer, including the median in-network rate, complexity of the case, previously contracted rates and market power of the physician and insurance company, among other things. The ruling in Texas reverses the unlawful provisions of the rule and intends to uphold the law as Congress envisioned it.
The law states that the qualified payment amount (QPA) could be one of many equally weighted factors considered in payment disputes. However, the IFR made the QPA — an unverified rate set by insurers — the primary factor in the IDR process. This sets an artificially low benchmark payment, for all care – whether in network or not, which may not support wider access to care – particularly in underserved areas.
The TMA lawsuit was supported by a declaration signed by 13 of ASA's state component societies. Additionally, members of the U.S. House GOP Doc Caucus filed an amicus brief last month in support of the TMA lawsuit challenging the regulations implementing the No Surprises Act. In total, over 30 physician organizations expressed support for the TMA’s lawsuit.
Relatedly, ASA has a pending No Surprises Act lawsuit in Chicago, Illinois. The suit, filed jointly with the American College of Emergency Physicians (ACEP) and the American College of Radiology (ACR) similarly argues that the federal agencies erred in their IDR provisions of the implementing regulations.
ASA applauds the national effort to implement a more fair dispute resolution process as Congress intended to help ensure a level playing field for providers and continued access to quality care for patients. ASA will continue to monitor the impact of the court’s decision and will provide updates as they become available.