The U.S. Department of Health and Human Services (HHS) announced on Friday it will appeal a U.S. district court ruling that reforms the arbitration process in disputes surrounding surprise medical billing to the Fifth District’s federal appellate court.
Congress passed the No Surprises Act, which protects patients from receiving surprise medical bills for out-of-network services, in 2020.
Providers are at odds with how the federal government implemented the arbitration process. The Texas Medical Association (TMA) sued HHS in October over the federal government’s interim final rule on arbitration, contending that negotiations over disputed charges under the No Surprises Act unfairly benefit insurers.
The U.S. District Court for the Eastern District of Texas ruled in favor of state providers in February, stating that the Biden administration had tipped rate determinations in the favor of the qualifying payment amount (QPA), set by health insurance companies at the median in-network contracted rates for the same or similar specialty within the applicable geographic network.
The court also found that regulators bypassed federal law by failing to give notice or comment on the interim final rules.
The decision to appeal the ruling comes as HHS undertakes other legal fights over the regulation. Numerous provider-led lawsuits have been filed, including one joint challenge by the American Hospital Association and American Medical Association.
The main aim of the No Surprises Act was to resolve service reimbursement disputes between payers and providers through a third-party arbitration, or Independent Dispute Resolution (IDR), process that determines the final payment amount based on qualifying information.
In its brief, TMA contended that the rules rewrite the statute by requiring the arbitrator in the IDR to presume that the QPA is “the appropriate out-of-network rate,” creating a bias that prioritizes offers closest to that figure, rather than allowing arbitrators to exercise their discretion to weigh all relevant factors and select the reimbursement rate that most accurately reflects fair market reimbursement and individual circumstances.
CMS issued new guidance for arbitration by removing requirements for QPA consideration. Initially, QPA was the baseline for calculating the final payment amount and arbitrators were directed to select the amount closest to median in-network contracted rates.
Moreover, the Departments of Health and Human Services, Labor, and the Treasury initiated two web portals—one for hosting the IDR process and the other for hosting patient-provider dispute resolutions for self-pay and uninsured patients.