AHA, AMA Sue Federal Government Over Surprise Billing Law

AHA, AMA Sue Federal Government Over Surprise Billing Law

Hospital and physician groups on Thursday announced their plan to sue the federal government over its plan for addressing disputes about surprise medical bills, which tilts toward using prevailing rates paid for services.

The American Hospital Association (AHA) and American Medical Association (AMA) said they will ask the US District Court for the District of Columbia to try to prevent implementation of certain provisions of new federal rules on surprise bills. This court is often a venue for fights over federal rules. Also joining the suit are Nevada-based Renown Health, UMass Memorial Health, and two physicians based in North Carolina, AHA and AMA said.

Federal agencies, including the Department of Health and Human Services (HHS), in September had unveiled the rule on surprise medical bills that will take effect January 1.

Under this rule, a key benchmark for payment disputes would be the qualifying payment amount (QPA), which is pegged to median contracted rates. In the dispute-resolution process outlined in the rule, there is a presumption that the QPA is the appropriate out-of-network rate.

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, as Medscape has previously reported.

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 appropriately deviate from QPA. HHS was joined in issuing the rule by the Treasury and Labor Departments and the Office of Personnel Management.

AMA and AHA disagree with their view, seeing this approach as a boon for insurers at the expense of physicians and hospitals.

In a press release, they said the rule’s approach to surprise billing would “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.”

The rule is part of the implementation of 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.

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

AMA President Gerald E. Harmon, MD, added the approach used in the rule on surprise billing could create “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,” Harmon said.

AHA and AMA included with their statement a link to a November letter from more than 150 members of Congress, who also objected to the approach taken in designing the independent dispute-resolution (IDR) process.

“This directive establishes a de-facto benchmark rate, making the median in-network rate the default factor considered in the IDR process. This 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,” wrote the members of Congress, including Rep. Raul Ruiz, MD, a California Democrat, and Rep. Larry Bucshon, MD, an Indiana Republican.

Kerry Dooley Young is a freelance journalist based in Washington, DC. She is the core topic leader on patient safety issues for the Association of Health Care Journalists. Young earlier covered health policy and the federal budget for Congressional Quarterly/CQ Roll Call and the pharmaceutical industry and the Food and Drug Administration for Bloomberg. Follow her on Twitter at @kdooleyyoung

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