Judge on providers’ side in CMS out-of-network billing arbitration

The “No Surprises Act” – an act passed by Congress three years ago is in the news again. This act is meant to mitigate patients’ exposure to surprise medical bills and require insurers and providers to resolve payment disputes for out-of-network care independently or use a new arbitration process.

This summer the Centers for Medicare and Medicaid Services (CMS) suspended arbitration of out-of-network payment disputes between providers and payers due to a court order that the agency’s implementation of the act has gone against the proper notice and comment procedure.

A report from Fierce Healthcare says the decision stems from a Texas Medical Association (TMA) complaint filed in the U.S. District Court for the Eastern District of Texas back in January. The provider group argues that an increase in administrative fees from $50 to $350 that was implemented earlier that month was “arbitrary and capricious” and would curtail certain physician organizations’ ability to contest a health plan’s reimbursement offer.

The No Surprises Act gives payers and providers 30 days to settle any disputes on an out-of-network charge. If an agreement can’t be reached, both parties submit a preferred amount to a third-party arbitrator, which then chooses one — a process referred to as Independent Dispute Resolution (IDR).

CMS said its fee increase was necessary to cover expenses related to the arbitration process.

The newsletter also reported that TMA took issue with CMS’ updated requirement that joint consideration of multiple disputed items and services, a process referred to as “batching,” must be billed under the same or comparable code. The change, which CMS said was made to enable greater efficiency, would force providers to submit for multiple IDR processes, which, combined with the price hike would be prohibitive for certain providers, TMA argued.

In an order signed Aug. 3, Judge Jeremy Kernodle granted-in-part TMA’s motion for summary judgment. The court struck the higher fee and vacated and remanded three portions of the rule outlining the IDR process.

“In sum, the Court holds that the Departments improperly bypassed the [Administrative Procedure Act]’s notice-and-comment requirement in issuing the Fee Guidance and the September Rule’s batching regulations,” Kernodle wrote in the order. “The Court finds that vacatur of these rules is the proper remedy.”

Related: CMS to send $9B to 340B hospitals for underpayments, following court loss

TMA had also sought a refund of previously paid fees and an extension of the IDR deadline, but the judge ruled that the plaintiffs had not done enough to demonstrate that these were warranted under his court’s jurisdiction.