American College of Emergency Physicians sues HHS over emergency payment rules

Hubert H. Humphrey Building, DHHS Headquarters-Washington, D.C.

The American College of Emergency Physicians is suing the Department of Health and Human Services and other federal agencies for setting payment rules that result in inadequate reimbursement for out-of-network emergency medical services, according to the civil lawsuit filed in U.S. District Court on May 12.

The crux of the issue is ACEP's claim that insurers set lower reimbursement amounts than what Health and Human Services has deemed as a reasonable payment.

"The stakes are extremely high for the nation's emergency physicians, including ACEP's members, and the patients that they serve," the lawsuit states. "As it stands now, the Departments have ensured that ACEP's members will be underpaid for out-of-network emergency services because insurers have proven by their past behavior that they will manipulate UCR (usual, customary and reasonable) amounts downward if given the chance."

The American College of Emergency Physicians wants the court to overturn the federal regulation saying a reasonable payment for out-of-network emergency services is required by law.

[Also: CMS tests payment model for skilled nursing, ups reimbursement for on-site assessments]

Emergency room treatment is different than other healthcare services because patients are often brought to the nearest facility and the physician may not be a member of the patient's contracted network of providers, the lawsuit states.

In 2010, the federal government issued a final rule on out-of-network emergency services provisions, establishing the "greatest of three" methodology for determining payment. The insurer must pay the greatest of the following: the in-network amount; the usual, customary and reasonable amount; or the Medicare amount.

Usually, the highest amount is the UCR amount.

"However, insurers have historically understated and prevented public verification of the UCR amounts," the lawsuit states.

Many insurers use proprietary databases that are not subject to verification by emergency physicians or the public, according to the court documents.

ACEP asked federal officials to require insurers to use UCR amounts that are transparent and publicly verifiable, but the departments refused to modify the regulation and issued the final rule in November 2015, the physicians' group said in the lawsuit.

[Also: CMS proposal for prescription drug reimbursement called 'perverse' and 'dangerous' by one opponent]

The rule may force physicians to leave the practice of emergency medicine if they cannot receive fair payment for out of network services, the lawsuit states.

Before the Affordable Care Act, physicians billed the patient for the difference between the amount paid by the insurer and the amount billed, an amount known as the balance bill.

The way the federal government interpreted the ACA is that the law does not require insurers to pay any amount that out-of-network providers balance bill to patients, and that a reasonable amount be paid before a patient becomes responsible for the balance billing, an amount determined "by some objective standard," according to court documents.

Because there is no objective standard, patients will end up paying a balance that should have been paid by insurers had they correctly determined the UCR amount, which is in violation of the ACA, the lawsuit states.

The group wants the court to deem the federal regulations invalid, and award costs and fees incurred from the litigation, said Attorney Ronald S. Connelly, with Powers Pyles Sutter & Verville PC, in Washington D.C. 

Twitter: @SusanJMorse