Texas docs file latest legal challenge to surprise billing rule, arguing arbitration process unfair

The Texas Medical Association (TMA) filed a new lawsuit seeking to overturn parts of a surprise billing final rule they charge is too favorable for insurers. 

The association’s latest lawsuit (PDF)—the third it has filed over implementation of a ban on surprise medical bills—was filed Wednesday in the U.S. District Court for the Eastern District of Texas. The group's latest dispute centers on the calculation of a qualifying payment amount (QPA), which is used in an arbitration process to settle disputes over out-of-network charges. 

“TMA is concerned that these provisions unfairly disadvantage physicians in payment disputes with health insurers and will ultimately rob patients of access to physicians’ care,” said TMA President Gary Floyd, M.D., in a statement Wednesday.

TMA’s lawsuit centers on a final rule released earlier this year implementing the arbitration provisions in the No Surprises Act, a 2021 law that banned surprise medical bills. The law installed an arbitration process where a third party settled disputes between payers and providers surrounding out-of-network charges.

The final rule called for the arbiter to consider the QPA—which is the average geographic rate for a service—alongside other factors when picking between a payer and provider’s amounts. 

But the lawsuit said the calculation of the QPA is skewed toward insurers, tilting the playing field in their favor. 

“Calculating QPAs the way the agencies have required means that physicians have the scales tipped against them from the outset of negotiations,” said Floyd. “Shrouding these calculations in secrecy further disadvantages physicians, by preventing them from raising errors in QPA calculations to the agencies.”

TMA argues there are several methods payers can use to deflate the value of the QPA, thereby lowering the amount they would have to pay in an arbitration. For example, the lawsuit charges the rule enables insurers to include “ghost rates” in their QPA calculations. These rates are the contracted amount with physicians and providers that do not offer the service that is the subject of arbitration, a release said. 

It also allows insurers to include the rates of physicians that aren’t in the same or similar specialty as “the physicians involved in the payment dispute,” the TMA said. 

“This all adds up to rigging the arbitrations against doctors in favor of health insurance companies, and to patients’ detriment,” Floyd said.

The Department of Health and Human Services (HHS) did not immediately respond to a request for comment as of press time. 

The legal challenge is the latest fight surrounding the implementation of the No Surprises Act. An interim final rule released last year called for the arbiter to put heavy weight on the amount closest to the QPA. The TMA and several hospital groups sued, arguing the interim rule went against Congress’ intent for the law. The groups argued that Congress did not intend to introduce a benchmark average rate for the arbitration process. 

A federal judge agreed with TMA that the interim final rule should be struck down. HHS decided to forego appealing the decision and instead crafted a new final rule back in August. That rule called for the arbiter to give the QPA equal weight with other factors such as provider training and patient acuity.

However, TMA issued a second lawsuit in September against the rule. It argued that the new rule still tilted the arbitration process too much in insurers’ favor. 

A hearing on the new lawsuit is scheduled for Dec. 20.