The Texas Medical Association is yet again challenging the federal government’s implementation of the independent dispute resolution process established by the No Surprises Act, this time arguing the $350 fee to initiate the resolution process is cost prohibitive.

The lawsuit, filed in the U.S. District Court for the Eastern District of Texas, challenges the Department of Health and Human Services, Department of Labor, and Department of the Treasury and the Centers for Medicare & Medicaid Services for increasing the fee from $50 in December.

TMA is the largest state medical society in the nation, representing more than 56,000 physician and medical student members. This is the fourth lawsuit TMA has filed against federal agencies related to the rules under the No Surprises Act, which was passed to help patients who found themselves stuck with hefty medical bills when out-of-network providers and insurers disagreed on pricing, with insurers paying only a portion of the provider’s claim, leaving the patient with payment that was much larger than expected.

The No Surprises Act established a process for providers and insurers to resolve disputes through arbitration, where both sides submit offers to a third party, who then selects one offer.

Fee Makes No Sense for Small-value Claims

The Texas Medical Association argued raising the fee sevenfold “effectively closes the door to IDR for many out-of-network physicians with small-value claims, threatening the viability of their practices and ultimately placing patient health at risk.”

The lawsuit claims the nonrefundable administrative fee – expected to be paid by both parties, win or lose – was increased dramatically and surprisingly on Dec. 23, less than two months after the Centers for Medicare and Medicaid Services said the administrative fee would remain $50 in 2023, as well as four business days before it took effect, providing no opportunity for affected parties to comment. The action will be devastating to specialties, such as radiology, that mostly have small-value claims, according to the lawsuit.

“If providers are forced to pay a nonrefundable $350 administrative fee just to have their claims heard, insurers—who are permitted under the statute to unilaterally decide how much they pay providers in the first instance—will be able to underpay providers with impunity,” the lawsuit states. “Whenever the amount in controversy (i.e., the difference between the amount offered by the insurer and the amount the provider believes it is owed) is $350 or less, it will be economically infeasible for the provider to initiate IDR. Even if the provider won, it would come out behind.”

Batching rule too restrictive

The lawsuit also puts forth that the law allows out-of-network providers to “batch” claims for all treatments or procedures in a patient’s treatment plan, episode of care, or even across patients with similar conditions, but the federal governments rules permit batching in a “significantly narrower range of circumstances.”

“Whereas the statute allows the Departments to permit batching if the items and services are “related to the treatment of a similar condition,” the Departments’ rule permits batching only if the items and services are “the same or similar items or services, if each is billed under the same service code. Under the same-service-code rule, a single radiology encounter between one radiologist and one patient can lead to a half dozen or more different claims, all of which must be submitted and reviewed separately in IDR, likely by different arbitrators,” the lawsuit claims.

TMA’s other three lawsuits, filed in August, September and November of 2022, challenged different provisions of both the July 2021 interim final rules under the No Surprises Act and the August 2022 final rules.

Harris Beach attorneys continue to follow the lawsuits and guide clients accordingly. If you have questions about this subject or related matters, please reach out to attorney Roy Breitenbach, who leads the Harris Beach Health Care Industry Team, at (516) 880-8378 and, or the Harris Beach attorney with who you most frequently work.