Dive Brief:
- A Texas judge has vacated portions of the No Surprises Act dispute resolution process after the state’s medical group argued it was illegal and overly favorable to health insurers, leading the HHS to once again suspend arbitrations until further notice.
- Judge Jeremy Kernodle for the Eastern District of Texas on Thursday vacated regulators’ increase of the dispute resolution administrative fee to $350, and the “batching rule,” which allowed arbitration processes only on claims with the same service code.
- The judgment removes barriers for providers to file dispute resolution claims, and will likely increase the volume of claims, especially from physician groups and hospital outpatient departments, according to a health lawyer.
Dive Insight:
The Texas Medical Association filed the lawsuit in February, taking issue with the HHS increasing the administrative fee for arbitration processes from $50 to $350 at the start of the year. Regulators said the increase was necessary due to a surge in the volume of disputes and subsequent increase in costs for conducting the independent dispute resolution, or IDR, process.
The lawsuit argued the change made IDR not only “significantly more expensive for all IDR participants, but ... cost-prohibitive for many providers to access IDR at all,” and benefited insurers by making it more expensive for providers to initiate IDR.
Providers who bill small value claims, like radiology, were particularly hurt, because most claims billed are less than $350, according to the suit.
The lawsuit also challenged restrictions on batching claims, which allows multiple items and services to be considered in a single IDR determination. Regulators only allowed batching if those items and services were billed under the same or comparable code.
As a result of the restrictions, providers had to go through a separate payment dispute process for each claim related to an individual’s care episode. That, coupled with the high administrative fee, would limit providers’ ability to pursue dispute resolution, the TMA argued.
Judge Kernodle ruled in favor of the TMA on Thursday, finding the fee increase and batching rule violated the Administrative Procedure Act by being made without notice, and resulted in harm to providers.
“By permitting batching only if items or services share the ‘same service code,’ the Rule severely limits what claims providers and insurers may batch,” Kernodle wrote in his opinion. “And submitting separate claims to separate arbitrators (or IDRs) requires paying separate administrative fees — a costly and sometimes cost-prohibitive consequence of the Rule.”
The judge did not award the TMA requested relief from administrative fees or an extension of IDR deadlines, something doctors wanted to allow providers who didn’t submit claims to IDR during the suit to pursue those claims.
The decision will likely increase the number of smaller claims in the IDR process, according to Wolfe Pincavage lawyer Becky Greenfield.
Greenfield, who mostly represents hospitals, said her clients were able to bundle inpatient claims that were worth the higher administrative expense even if they didn’t win IDR, but that outpatient claims were “extremely difficult to pursue” because of the now-defunct requirements.
It’s the TMA’s fourth lawsuit against the No Surprises Act, a law meant to protect consumers against pricey and unexpected medical bills that went into effect on January 2022. Judge Kernodle has ruled in favor of the TMA in two of its past challenges to No Surprises, over particular metrics used in IDR.
Another challenge filed by the TMA at the end of 2022 over the metrics arbiters consider during IDR is still ongoing.
The HHS had to pause and revamp the process multiple times following the judge’s decisions.
Now, the process is once again on hold, according to an HHS notice sent to providers on Friday shared with Healthcare Dive.
The CMS did not respond to a request for comment on how long IDR will be on hold while regulators hash out updated guidance.
For the administrative fee, regulators might have to revert back to $50 while they initiate the rulemaking process, including a notice-and-comment period, Greenfield said.
”All of this is a moving target,” Greenfield said. “I understand why the agencies increased the fee — they totally missed the ball on how many IDRs are going to be pursued, and I’m sure it’s expensive to manage ... but at the same time, they just didn’t do it the right way, according to the court.”
Increasing claims could put more stress on regulators, which are currently dealing with a backlog in disputes after they received more requests for IDR than anticipated.
