ACR says insurance companies gaming the No Surprises Act with ghost rates
The American College of Radiology is speaking out against insurance companies’ manipulation of the No Surprises Act, backing the Texas Medical Association’s third federal lawsuit (TMA3) targeting what ACR says is a systemic abuse of the law’s reimbursement provisions by insurers.
"The ACR supports the No Surprises Act because it's the right thing to do for patients," Alan Matsumoto, MD, head of the ACR Board of Chancellors and chair of radiology at the University of Virginia, explained in and interview with Radiology Business. "But the TMA lawsuit calls out the insurance companies because they are gaming us and we're actually getting paid less than Medicare and Medicaid rates. This is not how it was supposed to play out; it was supposed to be fair and reasonable for the patient and the insurance companies, not a way to manipulate the system,"
He said the TMA lawsuits are related to how the No Surprise Act (NSA) qualified payment amount (QPA) is calculated by insurance companies. But insurers have found a way of distorting the QPA to underpay physicians. The courts recently decided to re-review the TMA3 suit because of indecision, this time with more experts weighing in on the merits of the case.
Matsumoto said the ACR is joining with the American College of Emergency Physicians and the American Society of Anesthesiologists to file an amicus brief that specifically calling out the flawed QPA process.
Gaming the payment system with ghost rates
Under the No Surprises Act, when a billing dispute arises between a provider and an insurer, an independent dispute resolution (IDR) process is triggered. A key component of that process is the QPA, which is an insurer-calculated median of contracted rates for a given medical service in a geographic area.
But according to Matsumoto, insurers are padding their QPA calculations by including artificially low "ghost rates" embedded in contracts with providers who never actually deliver the services in question.I used the example of pediatricians or family physicians who sign contracts that include a token reimbursement for radiology services they would never perform themselves.
"When insurance companies negotiate a contract with a physician or physician practice, they may put in these rates for things the practice never does. Let's say they work with a pediatrician or family practice office and say, we're going to pay you this rate for your services in the fine print. That doesn't matter to the pediatrician or family medicine doctor that the insurance will only pay them a penny on the dollar for radiology services, and they sign it because it doesn't affect their practice. But the insurance companies are using those ghost rates where they're paying someone a penny on the dollar and averaging it out. So even though all the radiologists in that community, the average rate would come out to a dollar, they're now adding all these ones for a penny, so the QPA is really low," Matsumoto explained.
Federal court will reconsider TMA3 later this year
A previous ruling on TMA3 left the matter unresolved, but on May 30, an order by the U.S. Court of Appeals for the 5th Circuit granted TMA’s petition for rehearing en banc in TMA’s NSA lawsuit. This vacates the circuit panel’s Oct. 30, 2024 opinion and will result in a hearing by the full panel of judges at a later date this fall.
TMA filed the TMA3 lawsuit challenging the No Surprises Act’s interim final rules in November 2022. The federal agencies involved in the lawsuit, the U.S. departments of Health and Human Services, Labor, and the Treasury, along with the Office of Personnel Management, appealed the initial decision by the U.S. District Court for the Eastern District of Texas. The initial decision was in TMA’s favor on four provisions that the court stated the federal rules unlawfully deflated the QPA arbitrators consider when resolving disputes over health plans’ payment for out-of-network care in federal arbitrations under the No Surprises Act. The TMA said these include:
• Including ghost contract rates with physicians and other health professionals who do. Not provide the particular service.
• Including rates of physicians who are not in the same or similar specialty as the physicians involved in the dispute.
• Requiring payers to use an amount other than the total maximum payment in calculating a QPA when a contracted rate includes contingent payments, such as risk sharing or incentive-based bonuses.
• Permitting self-insured plans to essentially opt in to a lower QPA for payment disputes with physicians by using the rates of other self-insured plans.
TMA said early in their briefing on appeal, federal regulators dropped their appeal of two of the four provisions, ultimately only appealing the district court’s ruling prohibiting the inclusion of ghost rates and requiring the inclusion of bonus and incentive payments in QPA calculations. That left intact TMA’s district court win on two of its four challenges in this lawsuit. The U.S. Court of Appeals for the 5th Circuit then found in favor of the federal agencies on the remaining two issues.
TMA petitioned the court to rehear the case on these two points. The new order, filed in May, vacates the decision and sets the remaining two points in the case for rehearing by the full 5th Circuit later this fall.
“TMA appreciates the federal appellate court’s order granting TMA’s petition for rehearing by the full court," TMA President Jay Shah, MD, said in a statement. “TMA repeatedly urged the federal government under the Biden administration to implement the NSA in a manner that is lawful and preserves patient access and physician practice viability. The appellate order is another step in the right direction.”
Matsumoto said ACR also welcomed the review.
"What's nice about this declaration is that the court has said that they will take a look at it again and hopefully we'll be able to emphasize and call to light how the insurance companies are using these ghost rates to manipulate the system to reduce what they have to pay out and therefore keep more profit for them and hurt hospitals, facilities and physicians in the long run," Matsumoto explained.
A broken medical insurance payment system
Matsumoto also noted that pricing opacity and insurer variation make it nearly impossible for patients, or even physicians, to navigate or understand healthcare costs.
"Within a 50 mile radius, an insurance company could have 30 different types of plans with different premiums and deductibles. So it's variable from payer to payer, and that's why the whole healthcare system, frankly, is a little out of whack because it's not a fair free market, buyer-purchaser kind of thing. You are working through an intermediary, a payer, and the customer, the patient, doesn't even know what's being bought and paid for and it's very opaque," Matsumoto said.
Further complexity arises when radiology is outsourced through teleradiology services, often involving providers licensed in one state reading scans for patients in another, and each governed by different insurance contracts and state regulations. For example, he said you could have two radiologists reading the same scan in different states, contracted with the same insurer, but getting paid completely different amounts.
"I don't know how else to describe it. It's just so complicated and it makes no sense. To be honest, the whole healthcare payment system is broken. I can't fix it. I can see the problems, but I don't have a solution," Matsumoto said.
Dave Fornell has covered healthcare for more than 17 years, with a focus in cardiology and radiology. Fornell is a 5-time winner of a Jesse H. Neal Award, the most prestigious editorial honors in the field of specialized journalism. The wins included best technical content, best use of social media and best COVID-19 coverage. Fornell was also a three-time Neal finalist for best range of work by a single author. He produces more than 100 editorial videos each year, most of them interviews with key opinion leaders in medicine. He also writes technical articles, covers key trends, conducts video hospital site visits, and is very involved with social media. E-mail: [email protected]