The Fifth Circuit Court of Appeals raised concerns Friday over a new policy from the Centers for Medicare and Medicaid Services (CMS) that could cost four Texas anesthesia practices up to $4 million in reduced reimbursements. U.S. Circuit Judge Cory T. Wilson questioned the government's justification for including nurse practitioners working in anesthesia practices as primary care providers under CMS' merit-based incentive payment system (MIPS), which holds primary care clinicians accountable for their patients’ total Medicare costs.

During oral arguments, Judge Wilson expressed skepticism about the policy's logic. He noted that while the government attributes costs to nurse practitioners, their role in a specialty practice like anesthesia shouldn’t be counted in the same way as those in primary care. “It does seem incongruous to me that you're attributing costs to nurse practitioners and physician assistants in a specialty practice that's otherwise excluded from attribution of cost,” Wilson said. “Why? How do you do that?”

The case centers on whether CMS' inclusion of nurse practitioners in MIPS, despite their role in non-primary care settings, is reasonable. Caroline Lopez, representing the government, argued that the courts cannot address this issue due to legal restrictions on reviewing cost measures under MIPS. She further contended that CMS' policy was sound because it tracks the types of care provided by clinicians, not necessarily the type of practice.

Lopez explained that nurse practitioners and physician assistants are classified by CMS as primary care providers because of their billing patterns, which suggest they typically provide primary care services. "If the underlying Medicare data did not indicate that these nurse practitioners were billing for primary care, they wouldn't come within the measure," Lopez said.

However, the anesthesia practices' attorney, Eric McArthur of Sidley Austin LLP, argued that nurse practitioners should not be considered primary care providers simply because they assist in running an anesthesia practice. McArthur emphasized that the inclusion of these practitioners in the cost attribution methodology could lead to unfair financial consequences for anesthesia practices, as it could result in them being held accountable for the entire cost of a patient’s Medicare care. This could include post-operative care such as monitoring pain levels and medication, which falls outside of primary care.

McArthur likened the situation to a car needing gasoline to function, arguing that while the car uses gasoline, it does not mean gasoline is part of the car itself. "My car needs gasoline to run," he said. "That doesn't mean that gasoline is part of my car, that means my car uses gasoline to run down the road."

The panel, which included Judges W. Eugene Davis, James E. Graves Jr., and Cory T. Wilson, will continue to evaluate the case. The outcome could have significant implications for how CMS applies its policies to different medical specialties.

The anesthesia practices are represented by attorneys from Sidley Austin LLP, including Eric D. McArthur, Brenna E. Jenny, Cody M. Akins, and Hundley Poulson. The U.S. government is represented by lawyers from the Department of Justice’s Civil Division and in-house counsel for the Department of Health and Human Services.

The case is U.S. Anesthesia Partners of Texas et al. v. U.S. Department of Health and Human Services et al., case number 24-10384, before the U.S. Court of Appeals for the Fifth Circuit.