In a case brought by the Texas Medical Association (“the TMA”) and medical providers, the Fifth Circuit has determined that certain rules governing how the Qualifying Payment Amount (“the QPA”) should be calculated under the No Surprises Act (“the Act”) are contrary to the Act, and therefore should be vacated. The Court also found that one of the challenged rules was consistent with the Act.
Specifically, in a victory for TMA and medical providers, the Court agreed that the challenged rule’s inclusion of “ghost rates” and its exclusion of bonus and other payments in the determination of the median contract rate were contrary to the statute. The Court found, however, that the agencies’ exclusion of one-off, single-case agreements from the determination of the median contract rate, as advocated by air ambulance companies, was consistent with the Act’s language.
Congress passed the Act in order to prevent patients from being surprised by bills for services provided by out-of-network providers after treatment for an emergency service or for treatment for a non-emergency service by an out-of-network provider at an in-network facility. The Act also provided baseball-style arbitration for resolving disputes between payers and providers regarding the amount insurers would pay for out-of-network services subject to the Act.
The Act did not establish a benchmark amount for determining such payment amounts, but rather set various factors to be considered, including the QPA, which is, in broad terms, the median in-network contract amount. TMA and the air ambulance companies had challenged certain rules governing how the QPA is calculated as arbitrary and capricious and contrary to the statutory language. Hearing the case en banc, the Fifth Circuit agreed with the TMA on the ghost rates and bonus payment rules, but upheld the exclusion of the single case agreements from the calculation.
Ghost rates are rates in a contract for services that a medical provider does not provide. The example given by the Court was a contract for an OB/GYN who does not deliver babies. In finding the rule contrary to the Act, the Court stated:
By instructing insurers to use ‘each contracted rate,’ the Rule required insurers to count the rate for each service that appeared on the face of the default fee schedules – regardless of whether the provider negotiated for them and regardless of whether the provider ever provided or furnished that service. That renders the…Rule unlawful because the Act limits the QPA to an ‘item or service that is provided by a provider.’
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The agencies’ error has upended the NSA’s dispute-resolution process. Congress intended the QPA to serve as a focal point of provider-insurer negotiations….Because the agencies directed the insurers to include non-negotiated ghost rates, the resulting QPAs were artificially low.
Similarly, the Court examined the language of the Act to determine that bonus, incentive, and other payments must be included in calculating the QPA because the Act requires that “each contracted rate in the QPA calculation reflect the ‘total maximum payment’ ‘under such plan or coverage’ for an item of services….The agencies’ decision to exclude these payments means that the providers are receiving less than the ‘total maximum payment’ specified by the statute.”
With respect to the single case agreements, the air ambulance companies had argued that these were “contracted rates” that should be included in the determination of the QPA. The Court disagreed, finding that “even if one-off agreements were somehow contracted rates, they are not rates ‘recognized’ ‘under’ an insurer’s plan of coverage.”
In a statement, TMA President Bradford W. Holland, MD said:
TMA celebrates the federal appellate court’s en banc ruling, which is vital to implementing a fair process and promoting patient access to care under the No Surprises Act (NSA) as intended by Congress. The ruling reflects TMA’s strong commitment to protecting patients from surprise medical bills while requiring agency rules and associated insurer calculations to comply with the law.
The Court’s opinion is linked here and the TMA’s statement is linked here.