The Texas Medical Association (TMA) has brought a lawsuit against the Biden administration arguing that the interim final rule on surprise billing goes against the intent of Congress and will ultimately harm patients.
Filed Thursday in the U.S. District Court for the Eastern District of Texas, the case (PDF) is an escalation of the broad pushback the Department of Health and Human Services (HHS) received from providers after releasing the interim final rule in late September.
In it, the trade group asked the court to vacate provisions surrounding the resolution of payer-provider disputes over out-of-network charges, which TMA President Linda Villarreal, M.D., said in a statement “ignores congressional intent and unfairly gives health plans the upper hand in establishing payment rates.”
HHS developed the September interim final rule alongside other guidance to meet the requirements of the No Surprises Act passed by lawmakers in 2020. It set to go into effect on Jan. 1, 2022.
The releases spelled out limitations to patient cost-sharing for out-of-network care and banned balance billing for emergency services. In these cases, providers would need to negotiate with payers to determine reimbursement, with a third-party independent dispute resolution (IDR) entity ultimately choosing one side’s offer over the other as an appropriate payment amount.
The TMA and other providers’ contention comes from how the September interim final rule spells out the factors IDR entities should consider when making decisions.
Under the administration’s rule, the arbiter is instructed to prioritize whichever offer is closer to the qualified payment amount (QPA), the payer’s median contract rate for the same or similar service in that region.
The TMA argued in its complaint that this instruction will not only place long-run reimbursement rate pricing in payers' hands but also does not match the process outlined by lawmakers in the No Surprises Act. The TMA wrote that the legislation only provides a list of factors the IDR entity should consider and intends for the arbiter to weigh each one as relevant to the individual circumstances.
“These provisions of the September IFR are manifestly unlawful and will unfairly skew IDR results in payors’ favor, granting them a windfall they were unable to obtain in the legislative process,” the TMA wrote in its complaint. “At the same time, they will undermine providers’ ability to obtain adequate reimbursement for their services, to the detriment of both providers and the patients they serve.”
Villarreal specified in a statement that the TMA supports the patient protection intent of the No Surprises Act and does not seek to block those provisions from going into effect next year.
Rather, the TMA’s complaint asks the court to vacate the provisions related to the preference toward QPAs during arbitration “as having been unlawfully issued without notice and comment” and to require HHS to provide notice and comment prior to issuing any replacement rule.
The September interim final rule drew quick condemnation from the American Hospital Association, the American Medical Association and the Federation of American Hospitals, whereas insurers like the Blue Cross Blue Shield Association cheered on the release for crafting an “independent resolution process that focuses on affordability.”
Rep. Frank Pallone, D-New Jersey, and Sen. Patty Murray, D-Washington, who chaired committees that propelled the No Surprises Act, released a joint statement saying that the Biden administration had implemented the law “just as we intended.”
Other lawmakers like Rep. Kevin Brady, R-Texas, and Rep. Richard E. Neal, D-Massachusetts, have raised concerns in recent weeks that the rule doesn’t follow both the intent and the letter of the passed law.
Legal experts told Fierce Healthcare in October that HHS’ direction wasn’t too surprising due to other language in the bill that already leaned on the QPA. They also noted that the arbiter doesn’t necessarily have to go with the QPA but that the burden will be on providers to offer credible evidence of extenuating circumstances.