March 2, 2022

How quickly things can turn on a dime.  Years of continental peace can suddenly break forth in major hostilities, as we are currently witnessing in eastern Europe.  Perennial underachievers in sports can surprisingly find themselves in a Super Bowl; look no farther than this year’s Cincinnati Bengals.  A sudden turn around in the state of affairs can also be found in the realm of public policy.  We have seen an example of this in just the last few days, and its implications will be far reaching.

A Bit of Background

Last week, a federal judge in Texas handed a major victory to healthcare providers in the ongoing legal wrangling over regulations that implement the No Surprises Act (NSA).  The NSA, which went into effect at the beginning of this year, contained provisions for equity in payment for all parties in cases where a nonparticipating [also known as out-of-network (OON)] provider was involved in the patient’s care at an otherwise participating facility.  The original legislation allowed for an arbitration process to be triggered when the OON provider had an issue with the level of insurance reimbursement.  The NSA allowed the arbiter to consider several factors before making a determination on the payment, including the physician’s level of training and the patient’s acuity level.

The problem arose when the Centers for Medicare and Medicaid Services (CMS) promulgated a series of rules implementing the statute—rules that the provider community claimed favored the insurance companies in the arbitration process.  The rules mandated that greater weight would be given to the payer’s average payment for the service in question within a given geographical area.  Providers complained that this would simply incentivize insurers to lower their average payment rates for in-network services.  Provider groups would be faced with either a choice of accepting lower contracted rates or be forced out of network—where they would again be subject to reduced average rates.  Indeed, we have already seen at least one major payer resort to this tactic in recent months.

The Court Steps in

Because of the potential for what some saw as unfair leverage on the part of the insurance industry, several groups have filed law suits to force CMS to adhere to the original language of the law and the intent of its supporters.  One of these legal actions has given the provider community the redress it has been seeking.  On February 23, U.S. District Court Judge Jeremy Kernodle, serving the Eastern District of Texas, struck down what the plaintiffs held as the most onerous parts of the federal government’s surprise medical billing regulations.  In an action brought by the Texas Medical Association, the judge overturned the CMS arbitration process for determining payment for services by OON providers, stating that the regulations conflict with the text of the NSA.

In essence, the judge ruled against the Sept. 30, 2021 rule that directed arbiters under the independent dispute resolution process to presume that the median in-network rate is the appropriate out-of-network rate.  In his opinion, Judge Kernodle wrote: “The Court determines that the Act unambiguously establishes the framework for deciding payment disputes and concludes that the Rule conflicts with the statutory text.”  According to multiple legal sources, the Texas court’s action is effective “throughout the country”–at least until another court of equal or higher standing rules differently.

This is not the only law suit against CMS involving the NSA regulations at play in the courts.  You will recall that the American Hospital Association (AHA) and American Medical Association (AMA) filed a similar action this past December, under the assertion that the Biden Administration rule “places a heavy thumb on the scale of an independent dispute resolution process, unfairly benefiting commercial health insurance companies.”  That action is being considered in the U.S. District Court for the District of Columbia.

So, here is the takeaway: while the average payment amount has been removed as the determining factor in the arbitration process, the rest of the NSA remains in place, along with patients’ protection against surprise medical bills.  If you have further questions about this or about our hospital-specific business solutions, please contact us at info@miramedgs.com.