AMA – American Hospital Association Prosecute Over Surprise Billing Law
On behalf of clinics, health systems, and doctors, the American Hospital Association (AHA) and the American Medical Association (AMA) have filed a lawsuit against the U.S. government over its surprise billing law issued on September 30, 2021. Complainants include Renown Health, UMass Memorial Health, and two North Carolina-based physicians.
According to an AMA press release, the challenged provision ignores requirements specified in the No Surprises Act and could reduce patient access to care, unfairly benefiting insurance companies.
Rick Pollack, AHA president and CEO, said that no patient should fear receiving a surprise medical bill. That is why clinics and health systems supported the No Surprises Act to protect patients and keep them from the middle of conflicts between providers and insurers. Congress carefully prepared the law in a balanced, patient-friendly way, and it should be implemented as planned.
Congress set important patient protections against unexpected medical bills in the No Surprises Act, and physicians were a crucial part of the legislative solution. Still, if regulators don’t follow the letter of the law, patient access to care could be threatened as ongoing health plan manipulation creates an unsustainable situation for physicians. Therefore, our legal challenge encourages regulators to ensure a fair and meaningful process to resolve conflicts between medical care providers and insurance firms.
The lawsuit, filed in the U.S. District Court for the District of Columbia, says the new rule places a heavy thumb on the scale of an independent dispute resolution process, unfairly benefiting commercial health insurance firms.
According to the lawsuit, the process will eventually reduce access to care by discouraging meaningful contracting negotiations, reducing provider networks, and encouraging unsustainable payment for teaching hospitals, physician practices, and other providers that benefit patients and communities.
The condition being challenged ignores requirements specified in the No Surprises Act, resulting in reduced patient access to care. The rule and this inadequate provision are set to effect on January 1, 2022.
The AHA and AMA strongly supported protecting patients from unplanned medical bills. They were instrumental in passing the landmark No Surprises Act to protect patients from billing disputes between providers and commercial health insurers.
The legal challenge became necessary because the federal regulators’ interpretation upends the careful compromise Congress purposely chose for resolving billing disputes.
Moreover, the process will ultimately reduce access to care by discouraging meaningful contracting negotiations, reducing provider networks, and encouraging unsustainable compensation for teaching hospitals, physician practices, and other providers that significantly benefit patients and communities.
Congress created an independent dispute resolution process that is required when providers and insurers cannot reach an agreement on payment for out-of-network services from providers who are not under contract with the insurer. However, federal regulators have directed arbiters under independent dispute resolution to presume that the median in-network rate is the appropriate out-of-network rate and limit when and how other factors come into play. The suit argues that the regulations are an apparent deviation from the law as written and all but ensure that hospitals, physicians, and other providers will routinely be under-compensated by commercial insurers, and patients will have fewer choices for access to in-network services.
Importantly, today’s challenge does not prevent the law’s core patient protections from moving forward and will not increase out-of-pocket costs to patients. Instead, it seeks only to force the Administration to bring the regulations in line with the law before the dispute negotiations begin.
Last month, a bipartisan group of 152 lawmakers urged the Administration to fix the independent dispute resolution provisions, noting the rule’s approach is contrary to the law. It could incentivize insurance companies to set artificially low payment rates, which would narrow provider networks and jeopardize patient access to care – the exact opposite of the goal of the law.
Under this rule, a key benchmark for payment disputes would be the qualifying payment amount (QPA), which is pegged to median contracted rates. There is a presumption that the QPA is the appropriate out-of-network rate in the dispute-resolution process outlined in the rule.
The rule allows for exceptions in which the independent mediating organization handling the payment dispute resolution has “credible information” as to why the QPA is materially different from the appropriate out-of-network rate.
In the view of the federal agencies that issued the rule, this approach “encourages predictable outcomes,” which likely would reduce the number of disputes that go through the resolution process while also “providing equitable and clear standards” for cases to deviate from QPA appropriately. HHS was joined in issuing the rule by the Treasury and Labor Departments and the Office of Personnel Management.
AMA and AHA disagree because this approach is a boon for insurers at the expense of physicians and hospitals.
AMA and AHA said the rule’s approach to surprise billing would “all but ensure that hospitals, physicians, and other providers will routinely be under-compensated by commercial insurers, and patients will have fewer choices for access to in-network services.”
The rule is part of implementing a federal law passed in December 2020, known as the No Surprises Act. In their statement, AHA and AMA said their legal challenge would not prevent “core patient protections” of that law from moving forward.
AHA and AMA included with their statement a link to a November letter from more than 150 members of Congress, who also opposed the approach taken in designing the independent dispute-resolution (IDR) process.
This directive establishes an actual benchmark rate, making the median in-network rate the default factor considered in the IDR process.