Legislation to protect patients against “surprise bills” is set to go into effect in January. However, provider groups are filing lawsuits against the Department of Health and Human Services, saying the way the agency is implementing the law would give insurers an unfair advantage in negotiations.
The American Hospital Association and the American Medical Association filed a complaint on Dec. 9, joined by UMass Memorial Health Care, Renown Health, and two physicians in North Carolina. HHS, the Labor Department, the Treasury Department, and the Office of Personnel Management were listed as defendants. Earlier in November, the Association of Air Medical Services (AAMS) also filed suit.
The lawsuits focus on a narrow provision that determines how disputes between insurers and providers are resolved, which providers argue “places a heavy thumb on the scale” of the resolution process.
When an insurer and a provider can’t reach an agreement on how much an out-of-network service should cost, they can work with an arbiter to reach an agreement. Where the AHA and the AMA raise issue, is that arbiters are directed to base those negotiations on a qualifying payment amount, usually insurers’ median in-network rate for that service.
One in five patients hit by surprise bills
Congress had faced similar arguments when it narrowly passed the No Surprises Act last year, amid an onslaught of lobbying. The legislation is intended to protect patients from balance billing, or getting unexpected bills for out-of-network services.
For instance, in an emergency, a patient might be transported to a facility that is out-of-network. Even for a planned in-network procedure, patients can still be stuck with the bill if one of the people who provided care, such as the anesthesiologist, was out-of-network. The law also applies to air ambulances, which can run tens of thousands of dollars, and are often not covered.
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A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
For people covered by large employer plans, roughly one in five emergency visits result in a surprise bill, according to an analysis by The Peterson Center on Healthcare and the Kaiser Family Foundation. The Congressional Budget Office estimated the legislation would reduce premiums by about 1%, by fixing out-of-network rates to the median paid by insurers.
Per the new law, insurers would be required to cover out-of-network claims and apply in-network cost sharing. It would also prohibit hospitals and physicians from billing patients for more than the in-network amount as determined by insurers, or else they could face fines of up to $10,000 per violation, according to an analysis by the Kaiser Family Foundation.
Providers would first submit an out-of-network bill to a health plan. That plan must respond within 30 days with the in-network cost sharing amount for that service. Only then can providers bill patients.
If they can’t reach an agreement, they can go through an independent dispute resolution process. However, arbiters are instructed to base those negotiations on insurers’ median in-network rates, which is where detractors say HHS’ implementation of the rule differs from Congress.
The lawsuit won’t necessarily stop implementation of the rule. According to the complaint, the AMA and AHA are seeking to remove provisions specifying that arbitrators must pick the offer closest to the qualifying payment amount.
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