Provider groups and members of Congress say the rules favor payers, federal judge agrees, but path forward in how providers bill patients remains unclear
Groups representing healthcare providers—including pathologists—are challenging the Biden administration’s implementation of the No Surprises Act, a bill passed in 2020 that aims to protect patients from surprise medical bills.
This will be of particular interest to pathologists who—as a study from the Health Care Cost Institute (HCCI) found—were second only to emergency room physicians among providers with the highest percentage of out-of-network billing.
Dark Daily’s sister publication The Dark Report covered the HCCI study and its findings in “Federal Rule to Revise Out-Of-Network Billing.”
The College of American Pathologists (CAP) and American Society for Clinical Pathology (ASCP), both of which supported the No Surprises Act, are now among numerous provider groups claiming that the bill’s rules for resolving payment disputes unfairly favor payers.
These groups have bipartisan support in Congress, Bloomberg Law reported, noting that some legislators are urging Health and Human Services (HHS) Secretary Xavier Becerra to change the rules. The lawmakers may seek to amend the law or turn to the courts if Becerra does not follow through on their requests.
“Either we legislate, we go to court, whatever it takes,” Rep. Brad Wenstrup (R-Ohio) told Bloomberg. Meanwhile, a federal district court judge has sided with the Texas Medical Association (TMA) in two lawsuits over the rules, Healthcare Dive reported.
“We need to make sure that the administration is implementing what we passed consistent with the legislative intent,” Sen. Michael Bennet (D-Colorado) told Bloomberg Law regarding the No Surprises Act. “We had a very complicated coalition of people to come together to support this legislation.” (Photo copyright: Senate.gov.)
Details of No Surprises Act
The No Surprises Act aims to protect patients from “balance billing,” in which they receive surprise bills for out-of-network medical services even when they use in-network providers. The bill was signed into law in December 2020, with most provisions taking effect on Jan. 1, 2022.
As Dark Daily reported in “ASCP and CAP Support New Legislation That Bars Surprise Medical Billing,” following passage of the bill, patients who unknowingly receive services from out-of-network providers are liable only for costs they would have incurred for in-network care. Providers and payers then have 30 days to negotiate a payment. If they can’t agree, an arbiter determines the payment as part of a federal independent dispute resolution (IDR) process.
Passage of the bill required the federal Department of Health and Human Services (HHS), Department of Treasury, and Department of Labor to craft regulations and guidance to implement the law—including the IDR process—according to the American Hospital Association (AHA).
Legal Pushback to Arbitration Rule
One contention was an interim rule that instructed arbiters to use the “qualifying payment amount” (QPA) as the primary basis for ruling in favor of either insurers or providers in payment disputes.
Writing in MedPage Today, pediatric radiologist Richard Heller, MD, National Subspecialty Lead for Pediatric Radiology at Radiology Partners in Chicago, and Radiological Society of North America (RSNA) Board Liaison for Public Information and Corporate Relations, described the QPA as “the insurer’s median in-network rate.”
Heller wrote that “the calculation methodology does not result in real world, market-based rates. Further, insurers calculate their own QPA, and may do so in a non-transparent fashion, raising questions about QPA integrity.”
He added, “The departments have repeatedly tried to establish the QPA as the primary factor arbiters should use in their decision making. These attempts have twice been rejected by a federal court. Recent guidance issued by the administration as a result of the second Texas Medical Association lawsuit more closely reflects the balance that Congress intended.”
In its first lawsuit, the TMA characterized the QPA as “an opaque and flawed insurer-calculated amount” that would result in reduced payments to providers. The lawsuit claimed that Congress, instead, intended for the dispute resolution process to look at “a range of factors.”
Federal Judge Jeremy Kernodle ruled in the TMA’s favor and ordered HHS to change the rule. He also sided with the TMA in another lawsuit, which alleged that a final rule issued in August 2022, while “formally abandoning the QPA rebuttable presumption,” unduly restricted use of non-QPA factors, according to a litigation update for certified IDR entities from Sidley Austin LLP.
The final rule “nevertheless continues to place a thumb on the scale for the QPA by requiring arbitrators to begin with the QPA and then imposing restrictions on the non-QPA factors that appear nowhere in the statute,” the judge stated in his ruling, the American Medical Association (AMA) reported.
In its latest lawsuit, the TMA is challenging a big hike in administrative fees for dispute resolution, which went from $50 initially to $350 beginning last January.
Another issue with the law has been the sheer volume of arbitration cases. The administration originally estimated that payers and providers would submit about 17,000 claims per year, but between April 15 and Sept. 30, 2022, about 90,000 disputes were initiated, according to a government report cited by RevCycleIntelligence.
The No Surprises Act reflected lawmaker compromises about arbitration, Sen. Michael Bennet (D-Colorado) told Bloomberg Law. Bennet indicated to the news outlet that he is not happy with the current arbitration process.
Pathology Groups Weigh In
The CAP and ASCP joined other physician organizations in raising early objections to the Biden Administration’s plans to implement the independent dispute process.
“The skewed IDR process outlined within the IFC [Interim Final Rule with Comment Period] will remove a critical incentive for insurers to negotiate reasonable contracts with physicians by establishing the QPA as a reasonable out-of-network payment,” the ASCP stated in a Dec. 6, 2021, letter to administration officials.
On Dec. 23, 2021, the CAP filed an amicus brief in a lawsuit brought by the AMA and AHA challenging an interim rule issued that September. The regulations “must support an equitable and balanced system for resolving out-of-network payment disputes,” said CAP President Emily Volk, MD, FCAP in a statement accompanying the filing. “As of today, the rules heavily favor the insurers when their power is already too great.”
The AMA and AHA later withdrew the lawsuit after the Biden administration revised the rule, Healthcare Finance News reported. However, the groups still contend that the rule favors payers.
High Stakes for Pathologists
When the law passed Congress, it appeared likely it would have a disproportionate impact on medical laboratories and pathology groups. The HCCI report ranked pathology number two among six specialties responsible for the highest percentage of out-of-network bills. And when the interim final rule was published in the Federal Register, the HCCI data was cited in an accompanying commentary.
However, the CAP told The Dark Report that the statistics about pathologists, though accurate, were “presented in a somewhat misleading manner.”
The No Surprises Act does permit balance billing when patients have given prior consent, but pathologists were among a group of specialties barred entirely from the practice, Dark Daily previously reported.