Texas Medical Association sues federal agencies over No Surprises Act
The lawsuit claims that the dispute resolution process will be skewed toward payers.
The Texas Medical Association is suing several federal agencies in an effort to stop the implementation of the No Surprises Act, which is scheduled to take effect on January 1. Adam Corley, an emergency room physician in Tyler, Texas, has joined the lawsuit.
The group filed its 35-page complaint last week in the U.S. District Court for the Eastern District of Texas, the same branch of the federal court system that ruled the Affordable Care Act unconstitutional in 2018. The primary issue is the independent dispute resolution process that the regulations governing the law put in place.
Related: 3 things your plan participants should know about the No Surprises Act
The lawsuit filed against the Health and Human Services Department, Labor Department, Treasury Department and Office of Personnel Management claims that the dispute resolution process will be skewed toward payers because the final rules give too much weight to what is known as the qualifying payment amount, which is the median of contracted rates between payers and providers, in determining what reimbursements should be for out-of-network care.
The lawsuit contends that payers have an outsized amount of leverage in determining that rate, although providers are allowed to give evidence showing that the qualifying payment amount is materially different from the appropriate out-of-network rate. The No Surprises Act also established an auditing process to ensure that HHS and Treasury can audit rate-setting by payers to ensure that it is being done in an appropriate fashion.
The lawsuit also claims that the regulations were issued without proper notice for interested parties to submit comments. It has asked the court to vacate the portion of the rule regarding the qualifying payment amount. According to the suit, the association and Corley estimated it first would be used to settle disputes in March 2022.
Hospital lobbies also called the regulation a “total miscue” and “windfall for insurers.” “This rule violates the intent, if not the actual letter, of the No Surprises Act and shatters a rare bipartisan, industrywide agreement for equitable provider-insurer dispute resolution,” the American College of Radiology said in a statement.
However, America’s Health Insurance plans reacted favorably to the rule, saying it would encourage providers to join networks and avoid premium increases.
“This is the right approach to encourage hospitals, health care providers and health insurance providers to work together and negotiate in good faith,” the group said in a statement. The federal government has yet to file a formal response to the lawsuit. Congress passed the No Surprises Act late last year as part of an omnibus spending bill.
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