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The Texas Medical Association (TMA) a federal law designed to shield patients from surprise medical bills, arguing in a new lawsuit that regulators have stacked the deck against healthcare providers in their .

Essentially, TMA takes issue with the arbitration process for settling out-of-network bills, arguing that the regulation favors insurers over providers.

"This is a fight about money," said David Hyman, MD, JD, a professor of health law and policy at the Georgetown University Law Center who researches the regulation and financing of healthcare. "The providers who could use out-of-network billing strategies to get sizable additional amounts are not very happy that the legislation plus the regulation is going to clip their ability to do that far more severely than they thought it would."

The No Surprises Act, which is set to go into effect in January 2022, seeks to relieve the burden of unexpected bills on patients. Surprise billing can happen if a patient ends up with an out-of-network provider at an in-network hospital. The provider may receive only a portion of what they bill the insurance, and may pass the remainder to the patient.

Hyman said surprise billing (also called "balance billing") arose because physicians who provide one-time services learned they could be better off remaining out-of-network. "The patient is never going to go back to this provider," he said. "There's a big incentive to exploit your disparities in bargaining power, like [sending] a huge bill and balance billing for it."

In 2016, as many as resulted in an out-of-network bill, and these have gotten more costly over time. , emergency physicians recovered a higher portion of what they charged for services for likely surprise bills compared to other cases. The showed that two-thirds of Americans reported being worried about unexpected medical bills.

Under the No Surprises Act, patients would only pay the amount they would have for an in-network copay or deductible. Then, the provider and insurer must agree on the rest of the cost. If they can't agree on an amount, they can engage in arbitration, where a third-party -- an "independent dispute resolution" or IDR entity -- steps in to resolve the dispute for them. Each side must propose an amount, and the arbitrator then determines which of the two is the fairest for the insurer to pay the out-of-network provider.

But TMA takes issue with the HHS rules for the IDR, which they say are different from what Congress intended when they passed the law. While TMA's president, E. Linda Villarreal, MD, said that the organization "supports the patient protection intent of the No Surprises Act," their lawsuit argues the HHS interim final rule gives insurers an unfair advantage, which would have outsize consequences for Texas providers.

In particular, they point to using a "rebuttable presumption" of the Qualifying Payment Amount (QPA), or the insurance plan's median contracted rates, to determine payment. That is, arbitrators should presume first that the insurance plan's median in-network payment for a given medical service is appropriate.

In their lawsuit, TMA states that the law doesn't allow for regulatory agencies to dictate how arbitrators decide cases. They add that the rules "will unfairly skew IDR results in the payors' favor, granting them a windfall they were unable to obtain in the legislative process."

"This is a big change from the status quo, and it may be a financial loss to some practices," said Erin Duffy, PhD, a research scientist at the USC Schaeffer Center for Health Policy and Economics and a scholar with the USC-Brookings Schaeffer Initiative for Health Policy. "So I'm not surprised to see legal challenges."

Staff from the TMA's general counsel wrote in an email to Medpage Today, via a public relations representative, "TMA's request under the lawsuit is that the court strike the rebuttable presumption from the rule and to, instead, restore the fair, balanced dispute resolution process that Congress created."

TMA argues that the independent arbitrators should consider equally -- instead of prioritizing the median rate -- all factors that might influence the price of medical services. These include the level of training or expertise of the provider, the market share of the provider in the area, the "acuity" of the patient or how difficult it was to provide the service, the status of the facility that provided the service, and previous efforts made by the provider to enter into a network agreement.

Wrapped up in the lawsuit is a larger debate over the cost of healthcare, and who should determine the price tag. With balance billing or surprise bills, providers can, and are, paid more for a service than they would in-network, because the patient ends up covering the difference.

The new law, which removes the patient from the equation, leaves providers to battle it out with insurers or turn to arbitration. Using the QPA to establish the price marks "a substantial shift in the payment landscape for ancillary physicians and emergency medicine physicians," said Duffy.

Regulators argue that by emphasizing the QPA, out-of-network rates will become more predictable over time, which will ultimately discourage the use of the arbitration process. But TMA says the rules "undermine providers' ability to obtain adequate reimbursement for their services" at a time when they are "facing strained resources as they battle the virus."

The TMA also argues that emphasis on qualifying payment amounts "will make it harder for patients to access care by driving down reimbursement rates and encouraging insurance companies to continue narrowing their networks."

In other words, they argue that because out-of-network physicians might make less money, they'd leave the workforce (or fewer would enter it), leaving fewer physicians for patients to access. "I have not seen quantitative evidence of surprise billing laws leading to physician shortage," said Duffy, "but that is a common concern that is raised by medical associations."

In states that have implemented their own surprise billing legislation, like New York, regulatory guidance dictated that arbitrators prioritize not the QPA but the 80th percentile of charges, or the top end of what out-of-network providers would normally ask for. An arrangement like this might mean higher payment for emergency and ancillary physicians.

Lower payment for out-of-network providers is exactly what the TMA is worried about, says Hyman. In the case of California, for example, which passed a surprise billing law that sets reimbursement amounts based on insurer's average in-network rates, "there was downward pressure on payments," Hyman said. "But, you know, if your baseline is, 'I'm gouging you currently and I can't do it anymore,' that's exactly what you're trying to do, thank you very much."

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