Payment Process Problematic Under Federal Surprise Billing Rules
By Joey Berlin

The Texas Medical Association has weighed in on federal rulemaking to help curb surprise medical bills, telling federal authorities medicine supports many patient protections in the rules – but is deeply concerned with a key piece of the criteria to determine fair payments for out-of-network care.

TMA and several state specialty societies delivered detailed written comments on rules to implement the No Surprises Act to leaders at the U.S. Department of Health and Human Services, Department of the Treasury, Department of Labor, and Centers for Medicare & Medicaid Services. The law passed in late 2020 after being absorbed into a major COVID-19 relief package.

The act, which takes effect at the start of 2022, established an independent dispute resolution (IDR) process to resolve disagreements between physicians and health plans over payments for certain out-of-network care, achieving the long-sought aim of removing patients from the middle of those disputes. The federal law has both similarities to and key differences from Texas’ IDR law that resolves similar billing battles involving state-regulated health plans. In both systems, an “IDR entity” (referred to informally as an arbitrator) ultimately picks either a physician’s proposed amount or an insurer’s.

However, TMA and the other organizations outlined “grave concerns” over the process health plans will use to determine the “qualifying payment amount,” which an IDR arbitrator will then consider as a factor in determining the appropriate payment. The federal provisions were issued as an interim final rule, meaning they may be changed later if “warranted by public comments” under federal rulemaking procedures. 

TMA’s letter outlines seven detailed worries about the  process to arrive at the qualifying payment amount, saying it “does not accurately reflect median contracted rates or the market.” For example, TMA is alarmed that under the rule, “each contracted rate for a particular item or service will be treated as a single data point when calculating the median contracted rate (so that group contracts are treated as a single data point and have the same weight as a single contract with an individual physician).”

TMA and the other societies “are very concerned with this approach as it is not reflective of market rates under typical contract negotiations and will artificially deflate the median contract rate,” the Sept. 7 letter said. “In the health insurance market, negotiations are entered into with a variety of physician practices of varying sizes (from solo practitioners to large group practices). In Texas, most physicians have historically practiced in small groups. But regardless of the size of a physician practice, each physician is a part of the market and affects market rates (even if the physician is part of a group contract).”

The letter cautions against “outsized IDR consideration of a skewed” qualifying payment amount. Among other recommendations, TMA requests that IDR arbitrators “be provided with direction that the IDR entity is not to weigh the [qualifying payment amount] more than any other submitted information when picking a party’s offer.”

Last Updated On

September 22, 2021

Originally Published On

September 22, 2021

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Joey Berlin

Associate Editor

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Joey Berlin is associate editor of Texas Medicine. His previous work includes stints as a reporter and editor for various newspapers and publishing companies, and he’s covered everything from hard news to sports to workers’ compensation. Joey grew up in the Kansas City area and attended the University of Kansas. He lives in Austin.

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