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Thursday, February 24, 2022

   

Court Rules Certain Payment Portions of CMS Regulation on No Surprises Act Must Be Set Aside

Reliance on insurer-determined payment amount found in conflict with statutory requirements
While maintaining key protections for patients, a federal judge on Feb. 23 ruled that a Centers for Medicare & Medicaid (CMS) regulation favoring insurance companies for payment of out- of-network services is unlawful and must be set aside. 
 
Over the last three years as Congress deliberated how to address instances when patients were surprised by a health care bill due to an out-of-network provider, WHA strongly supported the idea that patients should not be caught in the middle, but that to resolve any payment disputes the parties should use an independent arbiter to work out differences.
 
Although Congress had considered establishing a benchmark rate to help resolve such disputes, instead the No Surprises Act that was enacted in December 2020 outlined several criteria an independent arbiter should use to determine the appropriate payment rate. These factors include not just what CMS calls the “qualifying payment amount” (QPA), which is the median in-network rate, but also the level of training, experience, quality and outcomes of the provider; the market share held by the provider and/or the plan; patient acuity; and teaching status, case mix, and scope of services of the provider.
 
However, CMS in its rulemaking process determined that the single most important factor to be used by an arbiter in determining the proper payment was the QPA. Thus, under the rule, the arbiter would have had to presume that the median in-network rate was the appropriate out-of-network rate and would have had to select the offer closest to the QPA.
 
The federal judge for the Eastern District of Texas ruled that CMS’s rule was clearly a departure from the statute. Throughout the written opinion, the judge notes that the QPA is an insurer determined amount, and that “because insurers had ultimate say on what in-network rates they accepted in 2019, insurers now hold ultimate power…” Moreover, the judge ruled that the No Surprises Act itself is unambiguous, writing that, “If Congress wanted to restrict arbitrator’s discretion and limit how they could consider other factors, it would have said so—especially here, where Congress described the arbitration process in meticulous detail.”
 

“CMS’s interpretation upends the careful compromise Congress deliberately chose for resolving billing disputes,” said WHA President and CEO Eric Borgerding. “The skewed process unfairly benefits commercial health insurance companies, all but ensuring that hospitals, physicians, and other providers will routinely be undercompensated by commercial insurers and patients will have fewer choices for access to in-network services.”

The lawsuit was brought by the Texas Medical Association, which is one of several doctor and hospital groups that have sued over the regulations. Health care providers, including WHA, have long been concerned that overreliance on the QPA or any benchmark rate would effectively deter insurers from developing a robust network and negotiating in good faith with health care providers. 
 
The ruling only addresses provisions related to the payment between insurers and health care providers. Other key provisions of the act which protect patients from being caught in the middle for payment of out-of-network services are not impacted by the ruling. 
 

This story originally appeared in the February 24, 2022 edition of WHA Newsletter

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Thursday, February 24, 2022

Court Rules Certain Payment Portions of CMS Regulation on No Surprises Act Must Be Set Aside

Reliance on insurer-determined payment amount found in conflict with statutory requirements
While maintaining key protections for patients, a federal judge on Feb. 23 ruled that a Centers for Medicare & Medicaid (CMS) regulation favoring insurance companies for payment of out- of-network services is unlawful and must be set aside. 
 
Over the last three years as Congress deliberated how to address instances when patients were surprised by a health care bill due to an out-of-network provider, WHA strongly supported the idea that patients should not be caught in the middle, but that to resolve any payment disputes the parties should use an independent arbiter to work out differences.
 
Although Congress had considered establishing a benchmark rate to help resolve such disputes, instead the No Surprises Act that was enacted in December 2020 outlined several criteria an independent arbiter should use to determine the appropriate payment rate. These factors include not just what CMS calls the “qualifying payment amount” (QPA), which is the median in-network rate, but also the level of training, experience, quality and outcomes of the provider; the market share held by the provider and/or the plan; patient acuity; and teaching status, case mix, and scope of services of the provider.
 
However, CMS in its rulemaking process determined that the single most important factor to be used by an arbiter in determining the proper payment was the QPA. Thus, under the rule, the arbiter would have had to presume that the median in-network rate was the appropriate out-of-network rate and would have had to select the offer closest to the QPA.
 
The federal judge for the Eastern District of Texas ruled that CMS’s rule was clearly a departure from the statute. Throughout the written opinion, the judge notes that the QPA is an insurer determined amount, and that “because insurers had ultimate say on what in-network rates they accepted in 2019, insurers now hold ultimate power…” Moreover, the judge ruled that the No Surprises Act itself is unambiguous, writing that, “If Congress wanted to restrict arbitrator’s discretion and limit how they could consider other factors, it would have said so—especially here, where Congress described the arbitration process in meticulous detail.”
 

“CMS’s interpretation upends the careful compromise Congress deliberately chose for resolving billing disputes,” said WHA President and CEO Eric Borgerding. “The skewed process unfairly benefits commercial health insurance companies, all but ensuring that hospitals, physicians, and other providers will routinely be undercompensated by commercial insurers and patients will have fewer choices for access to in-network services.”

The lawsuit was brought by the Texas Medical Association, which is one of several doctor and hospital groups that have sued over the regulations. Health care providers, including WHA, have long been concerned that overreliance on the QPA or any benchmark rate would effectively deter insurers from developing a robust network and negotiating in good faith with health care providers. 
 
The ruling only addresses provisions related to the payment between insurers and health care providers. Other key provisions of the act which protect patients from being caught in the middle for payment of out-of-network services are not impacted by the ruling. 
 

This story originally appeared in the February 24, 2022 edition of WHA Newsletter