UPDATE: TMA Sues Feds – Again – Over Unfair Arbitration Process Under Federal Surprise Billing Rule
By Amy Lynn Sorrel


The Texas Medical Association was back in court – again – to hold federal regulators accountable for implementing a key piece of the No Surprises Act as Congress intended it: to operate an arbitration process that does not skew the dispute resolution process in favor of health plans.

A hearing in the case took place Dec. 20. As of this writing, a decision was still pending. 

Back in October 2021, TMA sued federal regulators and won, challenging an interim final rule that similarly skewed the federal independent resolution (IDR) process in health plans’ favor. A federal court in the Eastern District of Texas agreed with TMA across the board and struck down the rules TMA challenged, saying they conflicted with clear direction from Congress. Federal regulators then rewrote the rules for the IDR process and issued new final rules in August of this year.

But despite the court’s initial ruling, as TMA explains in its complaint, the federal agencies simply rewrote the new final rules with the same result: They still unfairly advantage insurers by allowing arbitrators to default to an opaque, insurer-calculated amount called the qualifying payment amount (QPA), instead of looking at a range of factors (as required by the law) when choosing between an insurer’s offer and a physician’s offer. The QPA – calculated solely by health plans – is an amount that is supposed to be the median in-network rate under the law but is deflated based upon the federal agencies’ methodology.

The case carries serious implications for physicians and patients nationwide, which is why this is such an important battle for TMA to fight, says TMA President Gary W. Floyd, MD. Giving priority to a health plan-determined amount – without appropriately considering other factors relevant to the value of physicians’ services – puts practices at a disadvantage, threatening their sustainability and ultimately patients’ choices of affordable in-network care.

“This is unfair to physicians and the patients we care for, so we had to seek a fairer process. There should be a level playing field for physicians in payment disputes after they’ve cared for patients,” Dr. Floyd said.

“TMA was hopeful the federal agencies would write final rules fair to everyone, especially after the federal district court ruled the agencies’ previously challenged rules were unlawful. Unfortunately, the federal agencies returned with a plan tipping scales in health plans’ favor once again,” he added.

TMA’s first lawsuit alleged that the federal agencies’ first round of rules unlawfully required arbitrators to “rebuttably presume” the bid closest to the QPA was the appropriate out-of-network rate, whereas the law intended for the arbiter to take into account several factors, such as contracted rates between the insurer and the physician during the previous four plan years; the physician’s training and experience; and patient acuity and case complexity, among others.

In the new lawsuit, TMA argues the U.S. Departments of Health and Human Services, Labor, and the Treasury have “doubled down” by issuing a new final rule that replaces the earlier presumption with a new set of requirements that give health insurers the same advantage. TMA’s lawsuit contends that although the prior interim final rules and the new final rules contain different language, the latter still give outsized weight to the QPA by requiring arbitrators to:

  • Consider the QPA first in all cases;
  • Evaluate the credibility of any information presented to them – except the QPA;
  • Not give weight to information already accounted for by the QPA; and
  • Not give weight to information concerning the law’s additional factors (mentioned above), unless they relate to the party’s offer.

Each of the challenged requirements in the federal agencies’ final rule unlawfully ties arbitrators’ hands and place an unmistakable “thumb on the scale for the [health plans’ QPA],” TMA’s lawsuit says, even though the law does not call the QPA the “primary” or “most important” factor, nor does it suggest that other factors listed in the law are less important than the QPA.

TMA is asking the district court, once again, to invalidate the challenged provisions for failing to heed Congress’ direction in the No Surprise Act for the IDR process. TMA is also asking that the court instruct the agencies that any additional rules or guidance to IDR entities on the weighting of the factors may not privilege the QPA.

As with TMA’s first lawsuit, the rest of the No Surprises Act patient protections remain in place and unaffected by the new litigation.

Last Updated On

February 10, 2023

Originally Published On

September 22, 2022

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Amy Lynn Sorrel

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Amy Sorrel

Amy Lynn Sorrel has covered health care policy for nearly 20 years. She got her start in Chicago after earning her master’s degree in journalism from Northwestern University and went on to cover health care as an award-winning writer for the American Medical Association, and as an associate editor and managing editor at TMA. Amy is also passionate about health in general as a cancer survivor, avid athlete, traveler, and cook. She grew up in California and now lives in Austin with her Aggie husband and daughter.

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