AHA, AMA and others file lawsuit over No Surprises Act implementation
The rule, which goes into effect in January, gives insurers incentive to exclude higher-cost specialized services from their networks, lawsuit says.
Photo: Alex Wong/Getty Images
The American Hospital Association, American Medical Association and other provider organizations have sued the Department of Health and Human Services and other federal agencies over implementation of the No Surprise Act.
The groups are not against the legislation, they said in the lawsuit filed in federal court Thursday, but take issue with how HHS implemented the bill in its September rule set to take effect Jan. 1.
The September rule provides an internal dispute resolution process (IDR) to resolve payment rates between provider and payer. The arbitrator must select the offer closest to the qualifying payment amount. Under the rule, this amount is set by the insurer, giving the payer an unfair advantage, according to the lawsuit.
This is contrary to the legislation, which was passed Dec. 27, 2020, as part of the Consolidated Appropriations Act, 2021, which strove to create a balance of power between provider and payer, the groups said.
"Congress deliberately crafted the law to avoid any one factor tipping the scales during the IDR process," the lawsuit said.
The provider organizations want a declaration that HHS and other federal departments acted unlawfully in requiring internal dispute resolution entities to employ a presumption in favor of the offer closest to the qualifying payment amount, and they want an order vacating the rule's provisions.
The associations are joined by plaintiffs Renown Health, UMass Memorial Health and two physicians based in North Carolina.
WHY THIS MATTERS
The No Surprises Act protects patients from surprise billing by taking them out of the middle of disputes over out-of-network payment rates between providers and payers.
Because the rule gives the payment rate advantage to insurers, the lawsuit said, it will encourage them to narrow their networks by not contracting with providers who have higher costs. This includes teaching and other hospitals that provide trauma care, burn units and neonatal intensive care services, the lawsuit said.
"Because insurers can now rely on the IDR process for an unfairly low rate, they will have little incentive to include providers with higher costs (and frequently higher quality and specialized services) in their network, all to the detriment of patients," the lawsuit said.
This has already happened with Blue Cross Blue Shield of North Carolina, the provider groups said. BCBSNC has threatened to terminate agreements with providers who do not agree to lower rates in light of the new rule, on the grounds that '"the Interim Final Rules provide enough clarity to warrant a significant reduction in your contracted rate with Blue Cross NC,'" the lawsuit said.
Last month, the American Society of Anesthesiologists accused BlueCross BlueShield of North Carolina of abusing the No Surprises Act to push physicians out-of-network who didn't agree to lower their rates. The ASA said this was proof of its prognostication to Congress that insurers would use loopholes in the No Surprises Act to leverage their market power to boost their finances.
THE LARGER TREND
HHS issued an interim final rule Part I in July on consumer protections against surprise billing. It published an interim final rule on surprise billing, Part II, on Oct. 7.
The rules ban surprise billing for emergency services as well as certain non-emergency care furnished by out-of-network providers at in-network facilities. They limit high, out-of-network cost-sharing for patients.
Most patients get a surprise bill for unknowingly seeing an out-of-network provider, such as in the emergency room or from a clinical lab.
Traditionally, when a patient receives care from an out-of-network provider, the provider submits a bill to the patient's insurer and the insurer determines how much to pay the provider. The outstanding balance – the difference between what the provider billed and how much the insurer paid – is the patient's responsibility. To collect that balance, the provider sends the patient a balance bill.
The No Surprises Act ensures that patients will not be billed more than the cost-sharing amounts they would pay to an in-network provider. Providers not in the network are required to negotiate reasonable payment directly with the insurer. If that negotiation is unsuccessful, the No Surprises Act provides for binding arbitration.
The provider and insurer submit to the arbitrator the payment amounts requested or offered, and the arbitrator must select one as the appropriate payment rate.
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.
ON THE RECORD
"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."
Additionally, AMA President Dr. Gerald E. Harmon stated: "Congress established important patient protections against unanticipated medical bills in the No Surprises Act, and physicians were a critical part of the legislative solution. 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 healthcare providers and insurance companies."
Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com
