Dive Brief:
- A Texas judge on Thursday ruled to vacate several regulations relating to the No Surprises Act that set up payment dispute resolutions between certain out-of-network providers, group health plans and payers.
- In a consolidated case ruling, Judge Jeremy Kernoodle for the Eastern District of Texas ruled that certain guidance regarding the No Surprises Act arbitration process are unlawful. The ruling vacates provisions that allowed “ghost rates” when calculating the qualified payment amount, in addition to regulations regarding disputes of medical air transport.
- The ruling prompted the CMS to announce it would again pause all independent dispute resolution processes. The department previously announced earlier this month that it would suspend all IDR processes after Kernoodle vacated additional provisions of the No Surprises Act dispute resolution process in a separate ruling.
Dive Insight:
The Texas Medical Association and other plaintiffs, including those representing air ambulance providers, argued in their lawsuit that federal regulations favored insurers and allowed them to artificially depress the qualifying payment amount, resulting in low payments to providers. The QPA is the median rate an insurer would have paid for the service at an in-network facility and that amount factors into the independent dispute resolution process. The air ambulance plaintiffs also challenged air-specific QPA calculation and arbitration rules.
The Thursday ruling vacated provisions that allowed “ghost rates,” or rates for items and services that providers have no intention to provide, in calculating the QPA. Ghost rates were included in the QPA as contracted rates for similar services provided by clinicians, but plaintiffs argued that the rates were below fair market value, because providers had little incentive to negotiate them.
Kernoodle also vacated regulations that allowed out-of-specialty rates to be included in calculation of QPAs and those that permitted self-insured group health plans to use rates from plans administered by a third party in calculating the QPA.
For air transport, Kernoodle ruled against requiring two separate IDR processes for a single medical air transport and excluded other calculations from air-specific QPAs.
The ruling is one of several lawsuits brought by the Texas Medical Association challenging provisions of the No Surprises Act. The law, which went into effect in January 2022, was meant to stop unexpected medical bills that occur when patients receive out-of-network care at an in-network facility.
The law set up an independent dispute resolution process between payers and providers through a baseball-style arbitration process where each side submits a payment offer to a third-party arbiter, who then selects one amount.
Several lawsuits have focused on the dispute resolution process, including the QPA, which an arbiter is meant to consider during the IDR. Kernoodle has twice ruled in favor of the Texas Medical Association and providers regarding aspects of the IDR and the QPA, arguing that the process unfairly favored insurers.
Earlier this month, Kernoodle vacated portions of the No Surprises Act that increased the dispute resolution administrative fee and a “batching rule” that allowed arbitration processes only on claims with the same service code.
The court rulings have prompted the HHS to pause and restart the dispute resolutions process several times.
