Texas Medical Association Sue Feds Over IDR for Surprise Billing

The Texas Medical Association is taking action against a regulation slated to implement the No Surprises Act, a federal surprise billing law taking effect on January 1st.

The Association recently shared that it filed a lawsuit against several federal authorities, including HHS which jointly released the regulation in September. The lawsuit filed on October 28th alleges that the September regulation “undermines Congress’s design” of the independent dispute resolution (IDR) process in the No Surprises Act.

The No Surprises Act was passed in December 2020 to prohibit surprise billing, which typically occurs when a patient receives an unexpected bill after receiving care from an out-of-network clinician at an in-network facility. Congress included in the Act an IDR process to resolve payment for these surprise medical bills, which patients would no longer have to pay in full in most circumstances.

Under the IDR process, the payer and provider must submit a rate to an IDR entity. The IDR entity then selects one of the proposed rates as a final, binding out-of-network reimbursement rate for the disputed charges based on a variety of factors, such as the qualifying payment amount (QPA), or payer’s median contracted rate for the specific service in question, the acuity of the patient who received the services, and the level of training, experience, and quality of the provider or facility that furnished the services.

The Texas Medical Association explains in the lawsuit that the No Surprises Act makes it clear that the IDR entity can consider all these factors and more, and that no factor will take priority over another. However, the September regulation says that the IDR entity must weigh the QPA more than other factors, according to the lawsuit.

“Nowhere did Congress specify that the QPA, or any other factor for that matter, should be given primacy over the other enumerated factors,” states the lawsuit. Instead, the flawed rule “will skew IDR results in favor of payers and undermine [physicians'] ability to obtain adequate compensation for their services,” it continues.

The federal authorities also limited providers from voicing their opposition to the IDR process by forgoing a notice and comment period when they released the regulation, the plaintiffs argue.

The Association fears that the IDR process as detailed in the September regulation would incent payers to reduce their provider networks and reduce physician reimbursement rates in order to pay out-of-network providers less for disputed charges under the new law.

Narrow provider networks are already a problem, according to a recent analysis from the American Medical Association (AMA), which also expressed disappointment with the September regulation. The analysis found that almost three-quarters of all metropolitan statistical areas are highly concentrated for payers. More than nine of ten markets also had one payer holding at least 30 percent of the market share and about half of markets had one insurer holding 50 percent of the market share.

Highly concentrated health payer markets impede competition, leaving patients with higher premiums and narrower provider networks, the AMA explained. The latter being a root cause of surprise medical bills.

The lawsuit from the Texas Medical Association seeks to vacate the provisions within the September regulation.

“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,” Linda Villarreal, MD, president of the Texas Medical Association, said in a statement. “Everyone knows the house always wins. With the current rule, patients, physicians, and our country lose.”