AMA, AHA Sue Feds Over No Surprises Act Final Rule

The nation’s leading hospital and physician groups have filed a lawsuit against the federal government over final rules implementing the independent dispute resolution (IDR) process detailed in the No Surprises Act.

The lawsuit led by the American Medical Association (AMA) and the American Hospital Association (AHA) argues that a final rule issued by HHS and other federal departments in late September ignores requirements for the mechanism lawmakers approved for resolving surprise medical bills sent to insured patients.

Healthcare industry groups have criticized the final rule since its release. Just recently, over 150 lawmakers also urged the federal government to alter its stance on the IDR process.

Specifically, the lawsuit challenges the final rule’s provision that the IDR entity selected to determine reimbursement amounts as part of the “baseball-style” arbitration process consider choosing the payment proposal based on the qualifying payment amount (QPA). QPA is the payer’s median of contracted rates for a specific service in a certain geographic area.

Congress specified in the No Surprises Act that the IDR entity “shall” consider the QPA among other factors, such as a provider’s training and experience, each party’s market share, previous contracting history between the parties, and complexity of the services provided.

The lawsuit contends that the September final rule places undue emphasis on the QPA as a determining factor, when in fact Congress did not intend for one factor to be weighed more heavily than the others.

HHS and the other federal departments issuing the final rule said the payment offer closest to the QPA must be selected “unless the certified IDR entity determines that credible information submitted by either party clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate, based on the additional factors set forth” in federal policies.

AMA and AHA argue that the reasoning behind the federal government’s approach to the IDR process is contrary to Congress’ “deliberate compromise” with the No Surprises Act.

The groups, joined by Renown Health, UMass Memorial Health and two physicians based in North Carolina, claim that the independent dispute resolution process as detailed in the September final rule unfairly favor payers. If allowed to be implemented early next year, the process will harm patient access to care by shifting negotiation power to payers, which could result in narrow provider networks and lower reimbursement rates for providers.

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

“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.”

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

The plaintiffs asked the courts to stop enforcement of the final rule on Jan. 1, 2022, pending a judicial review of the September final rule.