- A federal judge in Texas struck down a narrow part of the surprise billing rule that outlines how to resolve payment disputes between payers and providers over out-of-network claims. Wednesday's ruling is a win for providers who were opposed to the dispute resolution process spelled out by CMS in an interim rule, arguing it favored insurers.
- The judge's ruling essentially tosses out a part of the dispute resolution process that instructs arbiters to begin with the presumption that the qualifying payment amount, or median in-network rate, is the appropriate payment amount for providers.
- Federal Judge Jeremy Kernodle for the Eastern District of Texas, appointed by former president Donald Trump, said that nothing in the No Surprises Act instructs arbiters to "weigh any one factor ... more heavily than the others." Before his 2018 appointment, Kernodle was a partner at Haynes and Boone and represented healthcare providers, according to a previous statement from the White House.
The case in Texas is just one of a few legal challenges seeking to eliminate a specific piece of the dispute resolution process.
However, the ruling does not strike down the ban on surprise billing that took effect at the beginning of the year, and protects patients from surprise bills in most cases.
Even though this is one ruling, from one judge in a single case, it does stop implementation across the country of the part of the dispute resolution process that instructs arbiters to rely on the qualifying payment amount, according to Katie Keith, a lawyer and health policy expert at Georgetown University.
With patients shielded from surprise bills, it places the burden on payers and providers to resolve payment disputes when an out-of-network claim arises. If they can't come to an agreement on reimbursement, payers and providers can opt to engage in an independent dispute resolution process and turn to a third-party arbiter. Each side submits a payment amount, leaving it up to the arbiter to pick one.
The law says arbiters can consider a range of information, including the physician's level of training and the patient's acuity level. In the rule-making process, to give arbiters a place to start, CMS put weight on the qualifying payment amount, or the median in-network rate for a specific service in a specific region.
Providers were upset at this instruction, arguing it tips the scale in favor of insurers and directly conflicts with Congressional intent. Kernodle agreed in his ruling.
"If Congress had wanted to restrict arbitrators' discretion and limit how they could consider the other factors, it would have said so — especially here, where Congress described the arbitration process in meticulous detail," Kernodle said.
But with Wednesday's ruling, some fear that without the anchor of the qualifying payment amount, payments to providers will rise.
AHIP, the lobbying group representing insurers, called the ruling "wrong and misguided" and said it "will result in higher health care costs and premiums for consumers and businesses — once again threatening health care affordability and access for all Americans."