A federal judge poked at the government’s defense concerning a key mechanism that is designed to help third parties tasked with resolving payment disputes between healthcare providers and insurers.
Federal Judge Jeremy Kernodle heard arguments Tuesday in a case challenging the implementation of a federal law that protects consumers from surprise medical bills.
The No Surprises Act was a win for consumers who found themselves stuck with hefty medical bills after being caught between provider and payer pricing disputes. Patients were sometimes stuck with the remaining balance of a medical bill from an out-of-network provider with insurers paying only some — or none — of the bill. Patients were sometimes surprised by these bills after going to an in-network facility and unknowingly treated by an out-of-network clinician.
The law set up a process for how payers and providers could resolve disputes by allowing parties to enter baseball-style arbitration. Unable to come to pricing terms, each side submits an offer to a third party, known as an arbiter, who is then supposed to select one offer.
At issue in these cases is the instruction given to arbiters on how to pick the most appropriate offer.
The Texas Medical Association is challenging the rule, arguing it unfairly benefits insurers by anchoring pricing decisions to the qualified payment amount, or median in-network rate for healthcare services, which is calculated by insurers.
Through his line of questioning, Kernodle challenged the intent of the final rule and the reason behind the QPA.
“What is the point of the rule, if it's not to to sway the arbitrator to pick the number closer to the QPA?” Kernodle asked the government’s trial attorney Anna Deffebach.
The point is to provide a consistent process to guide the arbiters, Deffebach responded.
“The final rule actually instructs arbitrators to choose the offer that best reflects the value of the item or service at issue,” Deffebach said.
But Kernodle pushed back and reminded Deffebach that in the first court challenge of the rule, the government said the intent behind the QPA was to keep costs down.
“So at what point did the departments decide that that's not the goal?” Kernodle asked.
Deffebach said the goal changed after Kernodle’s previous decision struck down that part of the rule.
Kernodle seemed to take issue that the change in goal was not reflected within the record.
This is the second time Kernodle has heard arguments on the implementation of the surprise billing ban. He delivered a win to the Texas Medical Association earlier this year in a separate but similar case.
His earlier ruling tossed out a part of the dispute resolution process that instructed arbiters to begin with the presumption that the qualifying payment amount is the appropriate payment amount.
The ruling forced regulators to amend the rule and nix the presumption language.
Now, the final rule applies the “lightest possible touch,” Deffebach said.
The Texas Medical Association disagrees, arguing the amended rule still places the thumb on the scale for insurers.