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Judge Rules Against No Surprises Act Implementation in Texas Medical Association Lawsuit

TMA has launched four lawsuits focused on the process used to determine the payment for surprise bills and had favorable rulings in all of them.
Courtesy: Shutterstock

An Eastern District of Texas judge gave physicians a win if one of the Texas Medical Association’s four lawsuits against the federal No Surprises Act and the process by which arbiters determine a final price for services after a surprise bill. The judge vacated portions of the rules that TMA argued gave an unfair advantage to insurers and made reimbursement for services cripplingly low.

The No Surprises Act, which went into effect in January 2022, is meant to address surprise bills for patients receiving care from out-of-network providers they did not choose. The Kaiser Family Foundation found that this occurs in about 20 percent of emergency room visits, and between 9 and 16 percent of in-network hospitalizations for non-emergency care included surprise bills from out-of-network providers like anesthesiologists.

The law requires private health plans to cover out-of-network claims and apply in-network cost-sharing and prohibits providers from billing patients more than the in-network cost-sharing amount for surprise medical bills. It also establishes a process for determining the payment should a surprise bill occur, with negotiations between health plans, providers, and potentially an independent dispute resolution process.

But, the Texas Medical Association, air ambulance operators, and others have fought the law’s implementation since its inception, with several lawsuits focused on the arbitration process. The latest ruling results from a TMA lawsuit filed in November 2022 that argued the rules used to implement the law unfairly reduce the payments that go to providers and advantages insurance plans. The TMA represents 57,000 Texas physicians.

When determining the payment during surprise bill negotiations, arbiters consider the median rate plans pay in-network providers in a geographic area, called the qualifying payment amount. The ruling from Donald Trump appointee Judge Jeremy Kernoodle halted the use of “ghost rates,” which are reimbursement rates in contracts but are not negotiated or used when calculating the QPA. It also forced insurers to use bonuses and incentives for providers when calculating QPA. Using ghost rates and not including bonuses and incentives artificially deflated the QPA, TMA argued.

“TMA is pleased a federal court has once again agreed with medicine in nearly all our complaints against the federal agencies’ unfair July 2021 rules pertaining to the implementation of the federal No Surprises Act surprise-billing law,” said Dallas cardiologist and TMA president Rick Snyder. “These provisions unfairly disadvantaged physicians in payment disputes with health insurers, ultimately robbing our patients of access to physicians’ care. Calculating QPAs the way the agencies required meant physicians had the scales tipped against them from the outset of negotiations.”

The court’s ruling will mean that the federal agencies that implement the NSA will have to revise their rules for negotiating the payment for a surprise bill, and the Centers for Medicare and Medicaid Services announced it would suspend all new surprise billing negotiations as a result. Since the law’s implementation, the Centers for Medicare and Medicaid Services has been forced to start and stop the arbitration process several times to adjust to the new requirements imposed by the rulings. In January, a court ruled in favor of TMA’s argument that the rules gave too much weight to the QPA, a ruling that the federal government is appealing in the 5th Circuit Court of Appeals.


Will Maddox

Will Maddox

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Will is the senior writer for D CEO magazine and the editor of D CEO Healthcare. He's written about healthcare…