TX Physicians Win No Surprises Act Rule Court Case

A federal judge has ruled in favor of the Texas Medical Association’s (TMA’s) challenge of a No Surprises Act rule released by HHS to flesh out the independent dispute resolution (IDR) process for out-of-network claims.

The US District Court for the Eastern District of Texas granted TMA a motion of summary judgment in its lawsuit opposing aspects of the interim final rule. Specifically, TMA challenged the rule’s requirement that certified IDR entities select the out-of-network rate closest to the qualifying payment amount (QPA) for final payment determination.

Physician groups and hospitals have criticized the weight the rule has given to the QPA over other factors identified in No Surprises Act regulations, including physician training, market share, and case mix. They argue that the QPA, which is generally the median contracted rate for the same or similar item or service in 2019, adjusted for inflation, gives payers an advantage since they set the rates.

Judge Jeremy D. Kernodle said in the ruling earlier this week that the interim final rule “places its thumb on the scale for the QPA, requiring arbitrators to presume the correctness of the QPA and then imposing a heightened burden on the remaining statutory factors to overcome that presumption.”

“[T]he Court concludes that the Rule conflicts with the [No Surprises] Act and must be set aside under the Administrative Procedure Act (‘APA’). Defendants also improperly bypassed notice and comment required by the APA, and thus the Rule must be set aside for this additional reason,” Judge Kernodle added.

TMA called the ruling a “major victory for patients and physicians” and an important reminder that federal agencies must craft regulations in accordance with law and Congress’ intent. Many industry groups have argued that the rules implementing the No Surprises Act deviated from Congress’ intent for the IDR process.

“The decision will promote patients’ access to quality care when they need it most and help guard against health insurer business practices that give patients fewer choices of affordable in-network physicians and threaten the sustainability of physician practices,” TMA president Gary W. Floyd, MD, said in a statement.

The ruling is for one of TMA’s four lawsuits challenging the implementation of the No Surprises Act. This lawsuit was filed in September, claiming the final rule favored payers over providers in the IDR process. TMA’s latest lawsuit focuses on the fees payers and providers must pay to enter the IDR process. Recently, the administrative fees associated with the process increased by 600 percent.

The government recently said in a report last month that it has received more cases for arbitration than it had anticipated. From April 15 through September 30, 2022, payers and providers initiated over 90,000 disputes through the federal IDR portal. The government only estimated about 17,000 claims per year.