The American Hospital Association (AHA) and American Medical Association (AMA), representing hospitals, health systems, and physicians, sued the federal government today over the misguided implementation of the federal surprise billing law. The associations are joined in the suit by plaintiffs including Renown Health, UMass Memorial Health and two physicians based in North Carolina.
The lawsuit challenges a narrow but critical provision of a rule issued on Sept. 30, 2021, by the U.S. Department of Health and Human Services (HHS) and other agencies. The provision being challenged ignores requirements specified in the No Surprises Act and would result in reduced access to care for patients. The rule and this flawed provision are set to take effect Jan. 1, 2022.
The AHA and AMA strongly support protecting patients from unanticipated medical bills and 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 deliberately chose for resolving billing disputes. According to the lawsuit, the new rule places a heavy thumb on the scale of an independent dispute resolution process, unfairly benefiting commercial health insurance companies. The skewed 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 are unable to reach 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 limiting when and how other factors come into play. The suit argues that the regulations are a clear deviation from the law as written and all but ensure that hospitals, physicians, and other providers will routinely be undercompensated 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. It seeks only to force the Administration to bring the regulations in line with the law before the dispute negotiations begin.
“No patient should fear receiving a surprise medical bill,” said Rick Pollack, AHA president and CEO. “That is why hospitals and health systems supported the No Surprises Act to protect patients and keep them out of the middle of disputes between providers and insurers. Congress carefully crafted the law with a balanced, patient-friendly approach and it should be implemented as intended.”
“Congress established important patient protections against unanticipated medical bills in the No Surprises Act, and physicians were a critical part of the legislative solution,” said AMA President Gerald E. Harmon, M.D. “But if regulators don’t follow the letter of the law, patient access to care could be jeopardized as ongoing health plan manipulation creates an unsustainable situation for physicians. Our legal challenge urges regulators to ensure there is a fair and meaningful process to resolve disputes between health care providers and insurance companies.”
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 statute and 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.”
The AHA, AMA and their co-plaintiffs filed their lawsuit against the departments of HHS, Labor, and Treasury, along with the Office of Personnel Management in the U.S. District Court for the District of Columbia.