AHIP, BCBSA Back HHS, Interim Final Rule in Surprise Billing Lawsuit

January 24, 2022 - AHIP and the Blue Cross Blue Shield Association (BCBSA) have filed amicus briefs that support the Department of Health and Human Services (HHS) in the surprise billing lawsuit raised by the Texas Medical Association (TMA).

TMA filed the lawsuit against HHS in October 2021, stating that the interim final rule on surprise billing violates the policies presented by Congress in the No Surprises Act.

Specifically, the nonprofit medical society raised an issue with how independent dispute resolution (IDR) entities negotiate reimbursement conflicts between payers and out-of-network providers.

When patients receive certain services from an out-of-network provider, the No Surprises Act prevents the providers from billing the patient for more than their in-network cost-sharing amount. It is up to the patient’s payer and the provider to determine the reimbursement amount. If they cannot agree, the responsibility falls to an IDR entity.

In the No Surprises Act, Congress stated that IDR entities should consider several factors when determining the payment amount, including the qualifying payment amount—the median of the payer’s contracted rate for the given item or service—the level of training of the provider, the market share of the provider, how difficult it was to provide the service, and if the provider or payer attempted to enter into a network agreement.

TMA claimed that IDR entities have been neglecting the other factors and only considering the qualifying payment amounts, resulting in lower reimbursement rates for providers.

“Congress worked hard to pass a law that protects patients from surprise medical bills, and Texas physicians are very supportive of the patient protection intent of that law,” E. Linda Villarreal, MD, president of TMA, said in a statement. “However, we are deeply concerned that the statutory process for settling billing disputes between physicians and insurance companies has been significantly altered, skewing the process in favor of insurance companies.”

TMA has requested that HHS vacate the provisions in the interim final rule that require IDR entities to select a reimbursement rate based on the offer that is closest to the qualifying payment amount.

Both AHIP and BCBSA have voiced their support for HHS and the interim final rule in their recent amicus briefs. The organizations agreed that using the qualifying payment amount (QPA) for services enforces Congress’s goal to keep healthcare costs low for patients and eliminate surprise medical bills, as the amount reflects fair market rates.

“Because the QPA is tied to the median contract rates from 2019 and then adjusted for inflation, the market distortions caused by surprise billing—and the inflated payment rates that have resulted—are already baked into the IDR process established by the Act,” BCBSA wrote in its amicus brief. “The IFR merely furthers Congress’s goal of preventing future market distortions and restraining costs for patients.”

Additionally, AHIP argued that basing the IDR process on qualifying payment amounts was necessary for health plans to comply with the January 1, 2022 effective date of the No Surprises Act.

“Requiring the IDR process to begin with the QPA, rather than an open-ended multifactor weighing with no structure, provided much-needed certainty,” AHIP wrote in its amicus brief.

Using the QPA to determine payment rates can also make out-of-network costs more predictable, which could benefit the healthcare market and patients alike, AHIP said. In addition, this predictability may help reduce administrative costs, as it could lead to fewer disputes.

TMA claimed that lower out-of-network costs would encourage payers to cut providers from their networks, leading to narrow provider networks and hindering patients’ access to care.

However, AHIP noted that, in addition to costs, health plans consider quality of care, proximity of services, and market demand when building their network. BCBSA added that consumers tend to prefer health plans with broader networks.

BCBSA suggested that the interim final rule incentivizes providers to join payer networks, as out-of-network providers that commonly billed patients excessively now have more motivation to enter a contract for a reasonable in-network rate.

The payer also noted how state surprise billing laws that were enacted before the No Surprises Act did not impact provider networks nor did it alter patients’ access to care.

The organizations both declared that the surprise billing interim final rule supports Congress’s intent and helps patients avoid pricey surprise medical bills, therefore the court should grant HHS’s cross-motion for summary judgment.