Physicians Win Again in ‘No Surprises Act’ Ruling
By Jarrod Fowler, MHA, FMA Director of Healthcare Policy and Innovation | Sept. 7, 2023

As a result of a lawsuit filed by the Texas Medical Association (TMA), several components of the Centers for Medicare & Medicaid Services (CMS) rule concerning the “No Surprises Act” have been invalidated. This is the fourth lawsuit filed by the TMA, and the ruling is substantially beneficial to physicians.

The TMA’s first lawsuit alleged that CMS’s interpretation of how to apply the Qualifying Payment Amount or QPA (i.e., essentially the median in-network rate adjusted for inflation) in disputes between physicians and insurers was in conflict with the law and unfairly benefited insurers. The judge overseeing the case agreed with the TMA. The TMA’s second lawsuit alleged that arbitrators were required to give the QPA outsized consideration in disputes between insurers and physicians under CMS’s newly issued final rule. The judge overseeing the case once again agreed with the TMA. That lawsuit is now being appealed by the federal government.

For the sake of brevity, this article does not include all aspects of the latest ruling. However, several of its provisions are noteworthy.

For instance, the judge ruled that “ghost rates” cannot be used in calculations for determining the median in-network rate for physician services, as this is in conflict with the law. That is, the median in-network rate cannot include services that are technically contracted for but which the physician has no intention of providing. For instance, an anesthesiologist who, say, technically contracts for dermatological services that the anesthesiologist does not actually provide and never will provide cannot be included in the median in-network rate calculation. A ruling to the contrary could artificially suppress the median in-network rate.

The judge further ruled that insurers must include potential incentive-based payments to physicians in their calculations of the QPA. This is because the law states that the QPA is based on the total maximum payment attainable by the physician without exclusions of exceptions. Therefore, the QPA must be calculated using the highest total possible payment that the physician could receive for an item or service under their contracted rate, including any potential incentive and bonus payments.

Finally, the judge ruled that self-insured group plans must calculate the QPA using only the rates negotiated under their plans, and not the aggregated rates of all self-insured plans that utilize the same third-party administrator (e.g., UnitedHealthcare). Under CMS’s rule, self-insured plans were permitted to choose whichever option led to a lower QPA. However, the judge stated that the Act does not permit plan sponsors to “pick and choose from among plans or rates to calculate a lower QPA” and that this third-party administrator provision unambiguously violates the law.

In short, the ruling offers several potential benefits to physicians who are affected by the “No Surprises Act.” The TMA stated that it is “pleased a federal court has once again agreed with medicine in nearly all” of the Association’s complaints pertaining to the No Surprises Act.