AMA, AHA sue federal government over No Surprises Act

Just weeks before a new law to limit surprise medical bills is supposed to take effect, two leading health organizations are suing the federal government over a key provision in the legislation.

The American Medical Association and the American Hospital Association filed the suit against the U.S. Department of Health and Human Services Thursday. The suit was filed in the U.S. District Court of the District of Columbia.

The two groups contend a provision of the legislation unfairly tilts the balance in favor of insurance companies in billing disputes with healthcare providers. The associations say as it stands, the new law would hurt patient access to care and result in providers getting paid less than they should.

The No Surprises Act is set to take effect Jan. 1. The AMA and AHA said they support the goal of protecting patients from unexpected bills and aggressively lobbied for the legislation’s passage.

The AMA and AHA aren’t seeking to block the implementation of the law. But they are seeking a stay of the provision regarding dispute resolutions.

The groups said the legal action is necessary because federal regulators are incorrectly interpreting key language in resolving billing disputes.

“Congress established important patient protections against unanticipated medical bills in the No Surprises Act, and physicians were a critical part of the legislative solution,” AMA President Gerald E. Harmon said in a statement. “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.”

An HHS spokesperson said the agency is focused on ensuring that patients are no longer subjected to surprise medical bills and is working with federal partners to implement critical consumer protections.

Many Americans fear the prospect of surprise medical bills. Two out of three Americans said they are worried about unexpected medical bills, according to the Kaiser Family Foundation. Among patients with private insurance, one in five emergency claims includes at least one out-of-network bill, KFF reported.

The medical associations said the issues centers over the provision to address disputes over billing. The law calls for an independent dispute resolution process when the provider and insurer clash over a patient’s bills for services outside the provider’s network.

Federal regulators are incorrectly interpreting the resolution process intended by Congress, the suit claims.

The key issue rests on the government’s direction to those hearing the disputes, the AMA and AHA argued. Regulators are directing the arbiters to presume the median in-network rate should be the out-of-network rate in billing disputes, the AMA and AHA said.

Critics, including lawmakers, said such direction is essentially setting a benchmark rate and subverting the dispute resolution process. They said Congress intended a variety of factors to be included in the resolution process, including the severity of the patient’s illness, the quality of outcomes, and the scope and complexity of services.

More than 150 members of Congress signed a letter asking the government to address the provision. The bipartisan group included several doctors who are serving in Congress.

The lawmakers said the approach of federal regulators “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 key patient protections in the No Surprises Act wouldn’t be affected by the legal challenge, the AMA and AHA said. But the groups argue the arbitration process in billing disputes needs to be addressed.

The groups have filed a motion for a stay of the provision in the rule regarding the dispute resolution process until March 1, 2022.

“No patient should fear receiving a surprise medical bill,” Rick Pollack, AHA president and CEO, said in a statement. “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.”

Renown Health, UMass Memorial Health, and two doctors based in North Carolina have joined the AMA and AHA in the suit.