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CMS Again Pauses Out-Of-Network Billing Arbitration After Judge Sides With Providers

August 9, 2023 By Jay Baldauf

The Centers for Medicare & Medicaid Services (CMS) has again suspended arbitration of out-of-network payment disputes between providers and payers due to a court order that the agency’s implementation of the No Surprises Act had run afoul of proper notice-and-comment procedure.

The decision stems from a Texas Medical Association (TMA) complaint filed in the U.S. District Court for the Eastern District of Texas back in January. The provider group argued that an increase in administrative fees from $50 to $350 that was implemented earlier that month was “arbitrary and capricious” and would curtail certain physician organizations’ ability to contest a health plan’s reimbursement offer.

The No Surprises Act gives payers and providers 30 days to settle any disputes on an out-of-network charge. If an agreement can’t be reached, both parties submit a preferred amount to a third-party arbitrator, which then chooses one—a process referred to as Independent Dispute Resolution (IDR).

CMS said its fee increase was necessary to cover expenses related to the arbitration process.

Additionally, TMA took issue with CMS’ updated requirement that joint consideration of multiple disputed items and services, a process referred to as “batching,” must be billed under the same or comparable code. The change, which CMS said was made to enable greater efficiency, would force providers to submit for multiple IDR processes, which, combined with the price hike would be prohibitive for certain providers, TMA argued.

In an order signed Aug. 3, Judge Jeremy Kernodle granted-in-part TMA’s motion for summary judgment. The court struck the higher fee and vacated and remanded three portions of the rule outlining the IDR process.

“In sum, the Court holds that the Departments improperly bypassed the [Administrative Procedure Act]’s notice-and-comment requirement in issuing the Fee Guidance and the September Rule’s batching regulations,” Kernodle wrote in the order. “The Court finds that vacatur of these rules is the proper remedy.”

TMA had also sought a refund of previously paid fees and an extension of the IDR deadline, though the judge ruled that the plaintiffs had not done enough to demonstrate that these were warranted under his court’s jurisdiction.

“While the court declined to provide deadline extensions and certain other requested relief, we remain pleased with the overall outcome,” TMA President Rick Snyder, M.D., said in a Friday release. “Yesterday’s decisions on batching rule provisions and administrative fees will aid in reducing barriers to physician access to the law’s arbitration process, which is vital to both patient access to care and practice viability.”

As a result of the decision, CMS wrote in an online notice that it has “temporarily suspended the Federal IDR process, including the ability to initiate new disputes until the Departments can provide additional instructions,” effective immediately.

Fierce Healthcare has reached out to CMS for additional comment on the temporary suspension and what avenue the agency may pursue to restore it.

Implementation of the IDR process has so far been a headache for CMS. TMA has taken the process to task in four different lawsuits, two of which Kernodle ruled in the provider group’s favor while the third, filed in November and taking issue with the contentious method used to determine a “qualifying payment amount,” is still up for grabs.

Kernodle’s judgments had already forced CMS to put the whole process on hold for several weeks earlier this year, marking the second time CMS had been forced to amend the IDR process.

Those hiccups have earned derision from lawmakers disappointed with the staccato rollout of the No Surprises Act. In the administration’s defense, Department of Health and Human Services Secretary Xavier Becerra told legislators in March that the government had received “more than 10 times the number of claims than anyone ever expected,” and noted that most of the disputes appeared to be frivolous due to the low barrier of entry for arbitration claim submissions.

“These arbitrators are swamped,” Becerra told Congress.

Lawsuit Against Insurer Claims Retaliation Against Docs for Out-of-Network Referrals

August 2, 2023 By Jay Baldauf

Health Insurance Claim Denied? See What Insurers Said Behind the Scenes — ProPublica

California’s highest court has revived a high-profile lawsuit that could have a major impact on whether insurers can punish physicians who refer patients to out-of-network providers.

The case, which has bounced around courts in the Golden State since 2012, pits the nearly 50,000-member California Medical Association (CMA) against Aetna, one of the nation’s largest health insurers. The physician group alleges that Aetna illegally retaliated against physicians who sent patients to certain out-of-network clinics.

Out-of-network providers and clinics were involved in just 4.7% of professional medical claims in 2020, according to a federal report released this month. Such claims are more likely than others to be denied, and they result in unexpected medical bills, which have led to the passage of state and federal laws that target “surprise billing.”

In a July 17 ruling, the California Supreme Court unanimously resurrected the CMA v Aetna case after a judge and a state appeals court killed it on the grounds that the CMA ― which is affiliated with the American Medical Association (AMA) ― had no standing to sue Aetna. The high state court declared that the CMA could sue on its own behalf, but the justices noted that their ruling says nothing about the merits of the case.

The ruling appears to mean that CMA’s lawsuit will head back to Superior Court in Los Angeles County. The outcome of the case won’t have a direct national effect, since the case is in state court, not federal court. However, state rulings can influence the thinking of judges elsewhere.

The case, filed in 2012, alleges that Aetna harmed patient care by harassing and sacking contract physicians who referred patients to out-of-network ambulatory surgery centers.

According to the new ruling, Aetna responded by saying that “its policy, rather than interfering in medical judgments, was designed simply to encourage participating physicians, consistent with their judgment, to use in-network care providers, such as ambulatory surgery centers, and was adopted in part in response to physicians referring patients to facilities in which they had financial interests.”

In a 2012 letter to CMA, as reported by the Los Angeles Times, an Aetna attorney went further and claimed that “physicians and their business partners secure outsized and improper windfalls at the expense of Aetna’s plan members and employer plan sponsors.”