BREAKING: Providers win in new Texas Medical Association ruling
No Surprises Act
This update will be discussed in more detail on tomorrow’s episode of the FLATLINING Podcast. Subscribe now (for free) on Apple Podcasts, Spotify, the iHeartRadio app, Amazon Music, Google Podcasts, Stitcher, Pandora, TuneIn, and Audible.
On Monday, February 6th, Judge Jeremy Kernodle of the Eastern District of Texas, United States District Court, issued a summary judgment in the case of Texas Medical Association, et al. v. United States Department of Health and Human Services.
This is the second case brought by the Texas Medical Association (TMA) against HHS and as such is commonly called TMA 2.
Previously, TMA filed the first suit against HHS when the department issued its interim final rule that directed how the Independent Dispute Resolution (IDR) process was to be followed by contracted IDR entities. The plaintiffs argued that rule put out by HHS did not follow the process clearly outlined in the federal No Surprises Act (NSA) and that HHS did not have the authority to change the law as written and passed by congress and signed by the president. The plaintiffs also argued that HHS failed to follow the process and timelines required for rules promulgation. In the filings, TMA requested the judge set aside the interim final rule and require the federal government to follow the law as written.
In that case, also called TMA 1, the court agreed with the plaintiffs’ arguments and eliminated the interim final rule released by HHS. This required the department to follow the rules and processes as originally outlined in the Federal Act.
So what is TMA 2?
In August of 2022, HHS issued a new Final Rule, replacing the provisions vacated in the prior case with new requirements for arbitrators when adjudicating the IDR process. Once this rule was released, the Texas Medical Association filed another suit against HHS for basically the same reason and with the same arguments as TMA 1. In the suit, the Texas Medical Association argued HHS was still trying to re-write the law and change the provisions it contained. They also argued that once again the correct rule-making process was not followed. Finally, as in TMA 1, the plaintiffs requested that the Judge issue a summary judgment and vacate the offending provisions of the final rule and revert to the original language in the NSA to govern the IDR process.
On Monday, the judge in the case issued a summary judgment and once again ruled that HHS had overstepped its authority. HHS’ new final rule did not follow the correct process in its passing. As such, the court once again vacated the problematic sections of the release.
Why does it matter?
This is good for both physicians and hospitals. Once again, a federal judge has stopped the Department of Health and Human Services from changing the No Surprises Act to support their desires to help insurance companies gain even more leverage than they already have. The ruling also, hopefully, sets us up for a favorable ruling in TMA 3 and TMA 4, which are still pending.
There are some very interesting statements in the ruling that may indicate the judge’s feelings about what HHS is trying to do here. Let me highlight just a couple of them.
The judge points out that in TMA 1 the court first held that the interim rule improperly “places its thumb on the scale for the QPA, requiring arbitrators to presume the correctness of the QPA and then imposing a heightened burden on the remaining statutory factors to overcome the presumption.” In TMA 1 the court ruled that this conflicted with the Act itself.
The judge also writes that “The Final Rule still limits the discretion of the arbitrators in determining the payment amount. This time, the Departments were more circumspect in explaining why they wanted to limit arbitrators’ discretion, stating only that the Departments seek greater predictability in payment outcomes.”
The plaintiffs argued that this exceeds the Departments’ statutory authority and conflicts with the Act. The Judge agreed.
The court ruled that, just like in TMA 1, “as the Court previously held, the Act is unambiguous” and “the Court concludes that the challenged provisions of the Final Rule conflict with the unambiguous statutory text and must be set aside.” It went on to say that “it is a core administrative-law principle that an agency may not rewrite clear statutory terms to suit its own sense of how the statute should operate.”
The DHHS argued the Final Rule merely imposes “reasonable evidentiary and procedural rules” on the IDR process. The Court disagreed.
The Departments also argued that the Final Rule simply fills a “gap” in the statute “concerning how to evaluate the various pieces of information that go into selecting payment amounts.” The response from the Court was short and sweet; “But there is no ‘gap.’”
In the end, the court ruled as follows:
In sum, the Court holds that (1) Plaintiffs have standing to challenge the Final Rule, (2) the Rule conflicts with the unambiguous terms of the Act, and (3) vacatur and remand of the challenged portions of the Rule is the proper remedy.
That, my friends, is a win for the good guys. Now let’s hope our luck continues and we get similar, just rulings from the court on TMA 3 and TMA 4.
Ron Howrigon is the President and CEO of Fulcrum Strategies and the co-host of the FLATLINING Podcast. He is also the author of the book Flatlining: How Healthcare Could Kill the U.S. Economy. You can follow him on Twitter @RonHowrigon.