If a federal appellate court doesn’t uphold a vital decision on how the No Surprises Act is implemented, the resulting below-market rates that physicians get paid will threaten patients’ access to care.
In an amicus brief filed in the 5th U.S. Circuit Court of Appeals, the Litigation Center of the American Medical Association and State Medical Societies urges the court to affirm the U.S. District Court Eastern District of Texas ruling that the rule that the Departments of Health and Human Services, Labor and Treasury created to implement the No Surprises Act conflicted with the Act’s text, including what is used in the qualified payment amount calculation.
The qualifying payment amount (QPA) is the median rate paid to in-network physicians, hospitals and others. The No Surprises Act says that amount must be based on the median of the contracted rates for services actually provided to patients, not for every service listed in a provider contract.
But the rule allows the qualifying payment amount calculation to include so-called ghost rates for services that are included in a provider contract but never, or very rarely, provided. Those ghost rates, in addition, are not negotiated, and including them pushes the qualifying payment amount below actual market rates.
In addition to explaining how the rule depresses physician payments to below-market rates, the AMA brief rebuts specific points that those who support the rule have made and illustrates the detrimental impact the rule will have on physicians’ capacity to provide the care that patients deserve.
“The severe rate cuts enabled by the Departments’ insurer-friendly regulations threaten the viability of physician practices and the scope of medical services nationwide. Ultimately, the victims will be the patients who lose ready access to care,” says the AMA Litigation Center brief in the case, Texas Medical Association et al. v. U.S. Department of Health and Human Services et al.
Find out more about the cases in which the AMA Litigation Center is providing assistance and learn about the Litigation Center’s case-selection criteria.
Lower payments allowed
The AMA has strongly supported Congress’ goal to protect patients from “surprise billing” and supports the legislative compromise that protects patients from surprise medical bills and establishes an independent dispute resolution process that doesn’t favor clinicians or insurers.
However, the goal of fair payment has not been achieved, the brief explains. Physicians in the same or similar specialties often do not provide overlapping services and consequently do not negotiate a rate for every service the specialty offers. For example, an ob-gyn’s contract will likely include unnegotiated rates for delivery service, even if the physician doesn’t perform deliveries. Meanwhile, orthopaedists usually focus on a certain part of the body, but their contracts cover more than the orthopaedists’ specialty.
So, while the qualifying payment amount’s calculation may account for what an anesthesiologist is paid compared with a dermatologist, it is crucial that rates are based on what services a physician actually provides to ensure the amount is based on rates that are negotiated—as the law specifies.
“The Departments’ rule makes it easy for insurers to lower the QPA by simply manipulating their standard rate schedule,” the brief says.
How it harms patients, physicians
Below-market qualifying payment amounts add to physicians’ financial stress with “dramatic underpayments for both out-of-network and in-network care,” the brief says. In turn, this threatens practices’ viability.
Physicians and others have shared their stories of considerable rate cuts they have encountered after the rule was implemented. These include:
- A chief financial officer at a nonprofit, community-based health system said a national insurer threated to terminate a contract that had been in place for two decades unless the health system agreed to a 20% pay cut, which would amount to a $4 billion loss in pay over 10 years. Ultimately, the health system negotiated “only” $1 billion in cuts.
- A physician-owned practice group of emergency doctors had two insurers unilaterally terminate the group’s contracts, pushing one-third of the group’s commercial patients out of network and paying up to 70% less than the previous contracts for what are now out-of-network services.
- A community health system saw a national insurer cut out-of-network rates by nearly 50%, or $50 million annually.
Learn more about bipartisan legislation that the AMA backs to help address shortcomings in the independent-dispute resolution process that the 2020 No Surprises Act established.
