Texas Medical Association Files Lawsuit Against HHS Over Interim Final Rule on Surprise Billing

Recently, the Texas Medical Association (TMA) filed a lawsuit against the Department of Health and Human Services (HHS) over its interim final rule on surprise billing, alleging that it goes against the intent of Congress and will harm patients in the end.

The rule included limitations to patient responsibilities for out-of-network care and prohibition on balance billing for emergency services. In those situations, providers would need to negotiate with payers to determine reimbursement, with a third-party independent dispute resolution (IDR) entity determining the appropriate payment amount.

TMA takes issue with the factors that IDR entities are instructed to consider when making those decisions under the interim final rule. Specifically, under the interim final rule, the IDR entity is expected to prioritize whichever party’s offer is closer to the qualified payment amount (QPA), which is the payer’s median contract rate for the same or similar service in that region.

TMA believes that the way the rule it is written, it incentivizes health plans to shrink their networks and cut physician payments all while placing a huge burden on physicians in their attempt to receive a fair payment. Physicians “will often receive lower reimbursement that does not reflect the fair market value of their services, and some patients will lose access to their in-network physicians.”

TMA believes that by instructing IDR entities to consider the QPA in its decision, long-run reimbursement rate pricing will not only put the long-run reimbursement rate pricing in payers’ hands but also does not match up with Congressional intent as the legislation only provides a list of factors to be weighted equally, as relevant to the individual circumstances. “Nowhere did Congress specify that the QPA, or any other factor for that matter, should be given primacy over the other enumerated factors,” TMA noted in the lawsuit.

TMA argues that the IDR entities should consider all factors that might influence the price of medical services equally, including the level of training or expertise of the provider, the market share of the provider in the area, how difficult it was to provide the service, the status of the facility that provided the service, and previous efforts that were made by the provider to enter into a network agreement.

“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,” TMA stated 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.”

TMA asks the court to vacate provisions in the rule that cover the resolution of payer-provider disputes over out-of-network charges and restore the “fair, balanced dispute resolution process that Congress created.” In a separate statement, TMA President Linda Villarreal, MD, noted that TMA supports the patient protection intent of the No Surprises Act and does not want to block those provisions from going into effect next year.

“We are disappointed the Biden administration ignored congressional intent and essentially set up the arbitration system to operate like a casino, with health insurers playing the role of the house,” Dr. Villarreal said. “Everyone knows the house always wins. With the current rule, patients, physicians, and our country lose.”