Access to Care

Appeals court should uphold decision on No Surprises Act rule

. 4 MIN READ
By
Tanya Albert Henry , Contributing News Writer

What’s the news: The Litigation Center of the American Medical Association and State Medical Societies filed an amicus brief encouraging the 5th U.S. Circuit Court of Appeals to uphold a federal district court’s decision that said a rule governing how payers are allowed to calculate the rate they pay physicians under the No Surprises Act deviates from the law’s intent.

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The rule that the Departments of Health and Human Services (HHS), Labor and Treasury created in response to the No Surprises Act lets—and even encourages—insurers to calculate the qualifying payment amount (QPA) well below the market rate.

The qualifying payment amount is the median rate paid to in-network physicians, hospitals and others. The No Surprises Act says that the qualifying payment amount must be based on the median of the contracted rates for services actually “provided” to patients, not for every service listed in a provider contract.

However, the departments’ rule wrongly “permits insurers to include ‘ghost rates’—rates for services that are included in a provider contract but never or very rarely provided, and therefore not negotiated—in their calculation of the QPA,” the Litigation Center explains in its brief in the case, Texas Medical Association et al. v. U.S. Department of Health and Human Services et al.

Why it matters: If the qualifying payment amount is below market rate, there could be dramatic underpayments for out-of-network and in-network care, which threatens physicians’ ability to provide high quality care to patients.

And “the risk that non-negotiated rates will depress the QPA below market rates is real,” the brief says, noting that a recent survey found that of 75 primary care professional respondents, 57% had services that they never provide included in their network contracts services.

The qualifying payment amount calculation becomes problematic because the rule attempts to unlawfully overweight the qualifying payment amount in independent dispute resolution arbitration—an item that the Texas Medical Association challenged in a separate lawsuit and the AMA supported with an amicus brief.

“But whether or not it is unlawfully overweighted during the IDR arbitration, the below-market QPA has still become a lodestar for insurers, emboldening them to make extraordinarily low, take-it-or-leave-it offers in the knowledge that providers who object will be forced to go through a cumbersome and costly arbitration process,” the brief tells the 5th Circuit Court of Appeals.

Physicians have seen insurers demand they take across-the-board rate reductions as high as 50% and rate schedules that coalesce around the qualifying payment amount. For example:

  • A national insurer threatened to terminate a nonprofit, community-based health system’s contract if it didn’t agree to a 20% payment decrease, equivalent to a $4 billion loss over 10 years. The contract had been in place for more than 20 years. Ultimately, the system agreed to “only” $1 billion in cuts over the 10 years.
  • A physician-owned emergency physician group saw two insurers terminate their contracts. That pushed one-third of the group’s commercial patients out of network and allowed the insurer to pay up to 70% less than the previous contracts for what are now out-of-network services.

“Insurers’ insistence on below-market QPA-based rates comes at a perilous time, threatening the scope of provider services (especially those that historically lose money) and the viability of provider practices (in particular, small- and mid-sized physician groups that have operated under stable contracts for years),” the brief warns. “Rural and other underserved patient populations will bear the brunt of this sea change, losing their access to readily available and personalized care.”

Visit AMA Advocacy in Action to find out what’s at stake in creating fairness in surprise-billing disputes and other advocacy priorities the AMA is actively working on.

Learn more: A bipartisan group from the House of Representatives sent a letter (PDF) to the secretaries of HHS, Labor and Treasury outlining policy steps government officials need to take to properly implement the No Surprises Act.

Find out more about the cases in which the AMA Litigation Center is providing assistance and learn about the Litigation Center’s case-selection criteria.

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