Dive Brief:
An appeals court is set to rehear a case from providers trying to restrict what factors insurers consider in calculating a key metric that arbiters use to determine fair payment amounts in disputes over out-of-network bills.
It’s a win for providers after a panel of judges from the 5th Circuit Court of Appeals previously sided with the federal government in the case — and an unexpected one, given petitions for such rehearings are rarely granted.
Still, a majority of 5th Circuit judges voted in favor of rehearing the Texas Medical Association’s case, vacating the panel’s decision from October, according to a court filing on Friday.
Dive Insight:
The lawsuit in question is one of a string of litigation from providers dead-set on changing how regulators implemented the No Surprises Act, a law passed in 2020 to hold consumers harmless for unexpected and often costly out-of-network medical bills.
Following No Surprises, federal agencies set up a process called independent dispute resolution, wherein insurers and providers that can’t agree themselves on a fair payment for out-of-network services head to independent arbitration. Both parties present an arbiter with a reimbursement offer and the arbiter selects one of the two as the final payment amount.
That element of the process — how arbiters determine which offer is fair — is at the center of many legal cases from provider groups arguing regulators’ original interpretation of No Surprises weighs the determination in favor of insurers.
Specifically, the TMA, which has brought many of the suits, is concerned with how insurers calculate a metric called the qualifying payment amount, or QPA, and how much weight arbiters give the QPA in dispute resolution.
The QPA is meant to represent the median amount for contracted in-network services in a specific geographic area. However, providers say insurers are setting QPAs artificially low, which could lead arbiters to side with insurers.
For example, the suit in Friday’s ruling takes issue with insurers being allowed to use an amount other than the total maximum payment for a service in calculating the QPA when contracted rates include other payments, like bonus awards. It also sought to exclude “ghost rates,” or rates for items and services that providers don’t actually provide, from the calculation of the QPA.
The provisions “unfairly disadvantage physicians in federal arbitrations conducted to resolve out-of-network payment disputes with insurers under the No Surprises Act. TMA looks forward to another opportunity for the court to hear our arguments on these important issues,” TMA President Jay Shah said in a statement.
The TMA initially filed the lawsuit in November 2022 and a Texas district court ruled in the group’s favor. Federal agencies appealed and late last year a panel of 5th Circuit judges agreed with the HHS and other federal agencies, mostly overturning the lower court’s ruling.
But now, the 5th Circuit is set to rehear the case. The court has yet to set a briefing schedule.
Since 2021, the TMA has filed four lawsuits over the No Surprises rules, arguing arbiters can’t presume the offer closest to the QPA is the appropriate rate, that arbiters can’t give outsized weight to the QPA and that fees to enter arbitration and other restrictions on providers lumping similar claims together into the same dispute are illegal and unfair.
To date, the TMA has largely prevailed in its suits, whether at the district level or on appeal.
Along with more disputes being lodged than regulators had anticipated, the TMA’s legal barrage has caused delays in No Surprises dispute resolution, contributing to a backlog in arbitration determinations, according to the CMS.
