Texas Medical Association files third suit against No Surprise Act, claiming arbitration process is unfair to providers

Texas Medical Association files third suit against No Surprise Act, claiming arbitration process is unfair to providers the No Surprise Act 2021 is a federal law that aims to assist consumers when they are stuck with hefty medical bills and are in dispute with their provider over payer pricing.  The law establishes a process under which payers and providers seek third-party arbitration to settle pricing disputes, both parties submit a price they think is appropriate for the service in question to the arbitrator who then picks the price they think is most appropriate. In this process, patients are removed from the dispute.

The Act has been facing legal challenges since 2020. The first lawsuit that the Texas Medical Association (TMA) filed against the Act and won had to do with its implementation. The victory forced regulators to make changes to the language in the final rule. 

Previously, arbitrators were instructed to begin with the assumption that the qualifying payment amount (QPA), that is the median in-network rate for a specific service in a specific region, was an appropriate amount. Providers fought against this stipulation arguing that this set a ceiling on prices and in a February ruling, a federal judge agreed to strike down this language.

The Associate, however, was still not satisfied with how the judge drafted the final rule and claimed that the ruling still unfairly benefited insurers. This was because arbitrators were still putting undue weight on the QPA and so, a second suit was filed in September. 

In the latest lawsuit that the TMA has filed, they allege that certain aspects of how the QPA is calculated automatically deflate prices.

 In the final ruling, arbitrators were instructed to consider QPA when picking between a provider’s and payer’s proposed amounts, the TMA argues that there are several ways in which the QPA can be calculated by payers that deflate the value of the QPA, meaning that inevitably payers will have to pay a low amount.

For example, insurers can include “ghost rates” when calculating their QPA which essentially are rates that are the contracted amounts with the providers for the services that are not subject to arbitration. Insurers are able to include the rates of healthcare providers that are not necessarily in the same specialty as the provider in the payment dispute.

“TMA is concerned that these provisions unfairly disadvantage physicians in payment disputes with health insurers and will ultimately rob patients of access to physicians’ care,” said TMA President Gary Floyd. Floyd further explained how all these factors rig the arbitration process in favor of insurance companies to the detriment t of providers and patients.

Another objection against the ruling is that the ruling goes against Congress’s intent of the law as the body could not have intended to introduce a benchmark average rate for the arbitration process.