No Surprises Act Besieged by Lawsuits

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Latest lawsuit is one of four targeting the controversial legislation.

Oral arguments were heard a little over a week ago on the Texas Medical Association (TMA) lawsuit regarding the No Surprises Act. The Act, as you may know, is the law, effective this year, that protects patients against billing by out-of-network providers in cases in which the patient did not voluntarily choose to go out-of-network: for example, in emergency situations, or when an out-of-network specialist is used during a procedure in an in-network facility.

RACmonitor readers may remember that TMA’s lawsuit is one of four suits brought against the Biden Administration because of its regulation on how providers should be reimbursed for these out-of-network claims, now that the No Surprises Act has removed patients from the reimbursement calculation.

The No Surprises Act regulation, in essence, says that arbitration decisions on provider reimbursement should primarily be based on how close the payment is to the health plan’s in-network rate. This policy, according to the lawsuits, basically sets the in-network rate as the de-facto reimbursement for many out-of-network services.

The lawsuits against this policy say that the No Surprises Act itself has a list of five other factors, beyond the in-network rate, that should be considered as part of the reimbursement, including acuity of the patient, training and experience of the provider, and the facility’s market share in a particular region.

Because the law took effect a month and a half ago, these out-of-network claims are already coming in and being paid by health plans, so providers would like to see this in-network rate policy stopped now.

The Texas case was the first to get started; the Association asked for the court to give summary judgement (that is, to rule on the case based only on the oral arguments presented about a week ago). The American Medical Association (AMA) and the American Hospital Association (AHA) have also asked for summary judgement or a temporary hold on the reimbursement policy, and they asked for an answer from the court by March.

This is all to say that we should get a sense from the courts before March on which way they will go on such cases. Either of these courts may actually give a summary judgement, that is, rule in favor of the Administration or the providers.

It is more probable that the courts will not make a final decision, but they may temporarily stop the policy from going forward while the cases make their way through the courts. That, too, would be a win for the providers, as the court would be signaling that it thinks that the providers have a pretty good case.

In a related pricing story, last week we reported (Storm Chasing: Tracking Sweeping Healthcare Policies) that the state of Massachusetts was requiring Mass General Brigham, the premier academic nonprofit hospital in the state, to submit a plan on how it will lower costs to patients, after a report showed that Mass General had the highest prices in the state.

Similarly, legislators in Indiana have written a letter to all of their state’s hospitals, requiring those hospitals to come up a with a plan to lower costs within three months. Indiana’s hospital prices are 20 percent above the national average.

So, we have states pushing on specific hospital pricing. Sounds like a trend.

Finally, along with the No Surprises Act, both health plans and providers are struggling to implement the transparency regulations whereby plans and hospitals must publish the cost of basic medical procedures and services, including the rates that are negotiated between hospitals and specific health plans.

A recent study found that less than 15 percent of hospitals are compliant with those transparency regulations. The regulations were passed under the Trump Administration, and became effective the beginning of 2021.

Under the Biden Administration, penalties for noncompliance were raised to $10 a day per bed, which can come to $5,500 a day for larger hospitals. While the Administration has sent warnings to a number of hospitals, no penalties are known to have been assessed, as of yet.

With the transparency and No Surprises rules, we can expect a lot more attention on hospital pricing, and health plan reimbursement, with both states and federal government bodies increasingly tracking and reacting to it. 

Programming Note: Listen to Matthew Albright’s live reports on federal legislation Mondays on Monitor Mondays 10 Eastern, sponsored by Zelis.


Matthew Albright

Matthew Albright is the chief legislative affairs officer at Zelis Healthcare. Previously, Albright was senior manager at CAQH CORE, and earlier, he was the acting deputy director of the Office of E-Health and Services for the Centers for Medicare & Medicaid Services.

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