Surprise billing arbitration on hold again as physician group's legal wins continue

The Centers for Medicare and Medicaid Services (CMS) put its surprise billing arbitration process on hold again after the Texas Medical Association (TMA) and other health care providers prevailed in a lawsuit concerning increased administrative fees and flawed batching rules.

As a result of the Aug. 3 ruling, CMS initially suspended the Federal Independent Dispute Resolution (IDR) process altogether, including the ability to initiate new disputes until additional instructions are provided. The agency has since stated that arbitration can resume for all disputes initiated in 2022, as well as disputes initiated in 2023 in which the administrative fees were paid or due before the court decision. All other arbitration remains on hold.

The TMA and other health care providers have filed four separate suits challenging different regulations CMS enacted to implement the No Surprises Act (NSA). The lawsuits state that the rules are skewed toward payers in ways that disadvantage physicians and other health care providers. CMS put the arbitration process on hold in February after a court ruled in the TMA's favor in a separate case. The agency revised the IDR process to comply with that decision and restarted arbitration in March, but has now pressed pause again as it responds to the latest court decision.  

The latest decision stems from a lawsuit filed in January challenging the government’s decision to increase IDR administrative fees from $50 to $350 and interim final rules (IFR) CMS issued in October that narrowed the criteria for batching arbitration claims.

Physician groups and hospitals argued the increased, nonrefundable administrative fee, which is required to begin the IDR process, would in many cases be more than the disputed amount, thus making it economically unviable to initiate a dispute. They also argued the October rule wrongfully requires them to submit claims from a single episode of care by individual service codes rather than bundled together in one batch. The NSA as written by Congress had established that claims may be jointly considered during the IDR process if they satisfy certain batching requirements, including that they be for services “related to the treatment of a similar condition.” The October IFR expressed this as “the same or similar” services, which the health care professional plaintiffs argued is both narrower than Congress intended in writing the NSA, and a different way to group claims together.  

The court ruled that in increasing administrative fees and changing the batching rule, CMS violated notice and consent requirements that mandate government agencies first publish a notice of proposed rulemaking and give interested persons an opportunity to participate. Consequently, the court has vacated those provisions. It remains to be seen if CMS will appeal the decision or amend the rules it enacted in October.

For more information, see this CMS FAQ page. 

— Brennan Cantrell, AAFP Commercial Health Insurance Strategist

Posted on Aug. 10, 2023