A federal appeals court says that the government overstepped its bounds when it attempted to dictate how certain factors should be weighed in an independent-dispute resolution process that Congress created with the No Surprises Act, leading the court to vacate parts of the rule.
The 5th U.S. Circuit Court of Appeals ruling is a win for physicians and upholds a lower court decision in the case, Texas Medical Association et al. v. U.S. Department of Health and Human Services et al.
“We hope this resolves the issue once and for all: Congress intended the NSA [No Surprises Act] to be a fair means of protecting patients from surprise bills. The federal agency rules must adhere to the law and cannot privilege the qualifying payment amount,” said Texas Medical Association (TMA) President G. Ray Callas, MD. The qualifying payment amount, known as the QPA, is the median rate paid to in-network physicians, hospitals and others.
The TMA and others challenged the final rule because they believed that wording in the rule favored insurers in payment disputes and it didn’t create the dispute-resolution process that Congress intended. The AMA submitted amicus briefs in support of TMA’s lawsuit at both the district and appeals court levels.
The appellate court ruled that the final rule wrongly imposed extrastatutory requirements, finding that Congress gives the Department of Health and Human Services and others “narrow rule-making authority” and that nothing in the No Surprises Act’s language “instructs arbitrators to weigh any one factor or circumstance more heavily than others, nor does the Act authorize the Departments to superimpose regulatory rules on the clear statutory mandate.”
“With these regulations, the Departments exceeded their authority by infringing on arbitrators’ discretion to balance the statutory factors. Congress has provided that it is not the Departments, but the arbitrator who ‘shall consider’ how to balance the factors under the statute,” the court said.
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.
Rule wrongly imposed 3 requirements
The court invalidated the final rule because the language went beyond what Congress called for in the No Surprises Act, favoring health plans over physicians, hospitals and other providers. The court said the language imposes these three “extrastatutory requirements on arbitrators” who are settling disputes.
The arbitrators must consider the QPA first and “then” the other factors. The court said that “by telling the arbitrators that they must consider the QPA before all other factors, the Departments place a thumb on the scale in favor of the insurer-determined QPA in derogation of other congressionally mandated factors. It would distort the statutory scheme for the Departments to impose such an extrastatutory requirement here.”
The arbitrators must not consider information that is not “credible” or “related to” the issue, or that is already accounted for in the QPA. The court ruled that “Congress imposed on the arbitrators a mandatory duty to consider all the factors listed in the statute ... the departments’ not-so-subtle attempt to prevent the arbitrators from considering some of them in some cases thus violates the express, unambiguous terms of the act.”
The arbitrators must explain their reasons if they depart from the QPA. The court said that “Congress has required the Departments to report how often reimbursements exceed the QPAs … the reports need not explain why this is so. Nor is there any requirement for the departments’ reports to reference explanations only when a non-QPA reimbursement is chosen. The departments’ skewed interpretation is inconsistent with the evenhandedness embodied in the act.”
What the law calls for
The No Surprises Act is a 2020 law designed to protect patients from unexpected expenses when they receive care at facilities outside their insurance network or from out of network physicians or other nonphysicians at an in-network hospital, ambulatory surgery center or freestanding emergency department.
The AMA supports protecting patients from receiving surprise medical bills and wants the law to succeed. The way government agencies have so far attempted to implement the law, however, threatens harming patients and the nation’s health care system because insurers would know that they can use the independent-dispute resolution arbitration to pay physicians, hospitals and others with a below-market QPA.
Language as Congress wrote it in the No Surprises Act intends for arbitrators to consider the QPA along with five other factors when deciding payment disputes. The level of training a physician or another health professional has, the acuity of the person receiving the health service and any other relevant information that either party submits are among the factors that the arbitrator must consider.
Future rulemaking on the issue is likely, but it not clear when that might happen. Learn more about the AMA’s advocacy to ensure fair and balanced No Surprises Act rules are implemented.
