Physician, Hospital Groups Challenge HHS' Surprise Bills Approach

Kerry Dooley Young

February 18, 2022

Physician and hospital associations argued this month in legal filings that federal agencies gave too much weight to a single factor — insurers' existing rates — in resolving disputes over surprise medical bills.

The groups want more equal footing for five other factors spelled out by Congress.

At the heart of the battle between the agencies and the medical associations is a question of what the word "additional" means in a key section of the No Surprises Act of 2020.

In creating a rule that took effect in January, federal officials placed heavy emphasis on using the prevailing insurance rates in a region in independent dispute resolution (IDR) of surprise medical bills. This was the first of six factors specifically outlined in the law as items to be considered in IDR processes.

The IDR framework in the current rule places the burden on physicians to show why the other five factors mentioned in the No Surprises Act should be factored into a decision on payment. This approach amounts to "a giveaway for private insurers," said the American Society of Anesthesiologists, the American College of Emergency Physicians, and the American College of Radiology in a February 9 statement.

These three groups said federal officials diverged from the will of Congress in designing the IDR framework. The American Medical Association (AMA) and the American Hospital Association (AHA) concurred.

The direct consumer protections in the No Surprises Act "are not being challenged in any way," AMA and AHA said in a statement emailed to Medscape Medical News.

"The only issue is whether the independent arbitration process between health insurance plans and providers will be implemented by federal agencies in the fair and balanced way Congress intended," AMA and AHA said.

The text of the No Surprises Act of 2020 directed federal agencies to create an IDR process that considers the qualifying payment amounts (QPAs), which is generally based on the median of contracted insurance rates in a region.

In a following section, lawmakers outlined five "additional" circumstances to be factored in:

  1. Training, experience, and quality and outcomes measurements of the clinician or hospital;

  2. The market share held by the nonparticipating provider or facility or that of the plan or issuer in the geographic region in which the item or service was provided;

  3. The acuity of the patient or the complexity of providing the service to the patient;

  4. Teaching status, case mix, and scope of services of the hospital or facility that furnished such item or service; and

  5. Demonstrations of good faith efforts (or lack of good faith efforts) made by the nonparticipating physicians or nonparticipating hospitals or the health plan or issuer to enter into network agreements and, if applicable, contracted rates between the provider or facility, as applicable, and the plan or issuer, as applicable, during the previous 4 plan years.

Dictionary Definitions

In the rule on the IDR framework, federal officials said the QPA is intended to "reflect the market-driven rate."

Thus, QPA should be considered the prevailing rate for dispute resolution unless "a party provides credible information that the characteristic of the teaching status, case mix, or scope of services of the nonparticipating facility was in some way critical to the delivery of the qualified IDR item or service, and not adequately accounted for" in prevailing rates, the rule says.

The rule was created by the Centers for Medicare & Medicaid Services, the Office of Personnel Management, the Internal Revenue Service, the Department of Labor, and the Department of the Treasury.

AMA and AHA challenged these agencies' interpretation of the law in a filing made to the US District Court for the District of Columbia. The two medical associations were in this case offering their support for a bid to block the federal IDR process in a case ― Association of Air Medical Services v. HHS (case 1:21-cv-03031-RJL). (AMA provided a copy of its filing to Medscape.)

In their filing, AMA and AHA cited the definitions of the word "additional" found in the New Oxford American Dictionary and the Oxford English Dictionary.

In creating the framework for dispute resolution, the federal agencies "hang their interpretation on the flimsiest of reeds: first, a single word in a statutory heading — 'additional' — which they attempt to wrongly redefine to mean 'subordinate,' " AMA and AHA said in the filing.

AMA and AHA then said the agencies wrongly emphasized the ordering of the text and engaged in a "fundamental misreading" of precedent that bars federal officials agencies from elevating "one statutory factor over others where Congress assigned no relative weights."

It's unclear when litigation against federal agencies, including HHS, will be fully resolved.

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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