Stakeholders Still Square Off, Lawsuits Continue Over Surprise Billing Rules

Inside Health Policy

December 8, 2021 4:18 pm

Stakeholders squared off again over what factors independent dispute resolution panels should consider when they settle payment disputes, as they met this week’s deadline to comment on the administration’s latest, highly controversial regulation implementing the surprise billing law. The law bans balance billing in out-of-network emergency rooms and OON care done at an in-network facility and sets up an independent dispute resolution process to address payment fights starting Jan. 1, 2022, but stakeholders are at odd over the factors that arbitrators must consider in their decision making.

The days and weeks ahead of the deadline to comment on the rule saw no shortage of action as stakeholders and lawmakers that oppose and support the interim final rule sent numerous letters to administration officials, groups filed two lawsuits, and the administration issued a call for nominees interested in joining a new advisory committee on ground ambulances.

Prior to release of the rule, stakeholders representing providers and payers and several bipartisan lawmakers were already battling over what factors the IDR entity should consider when making a payment decision. While stakeholders representing employers and payers say Congress wanted the IDR to focus largely on the qualifying payment amount (QPA), which is generally the median in-network rate, provider stakeholders and other lawmakers say Congress clearly wanted the IDR to weigh several other listed factors, including patient’s acuity, provider training levels and market share.

The October interim final rule leaned into the QPA, prompting an outcry from provider sources, and leading to two lawsuits: the Texas Medical Association filed suit in late October saying the administration overstepped its authority and violated the Administrative Procedure Act; the Association of Air Medical Services (AAMS) filed a separate case against the rule in November.

 Also, in November, Washington became the first state to issue draft regulations on how the state plans to align its existing surprise billing law with the No Surprises Act. Health care experts say that sorting through which law applies to what circumstances is one of the first and most critical steps for providers and payers as they prepare for implementation of the law on Jan. 1, 2022. One firm, Manatt Health, recently created a No Surprise Toolkit to help track new state and federal regulations in addition to offering insights and analysis as the law moves forwards.

And just before Thanksgiving, HHS’ Assistant Secretary for Planning and Evaluation (APSE) released a six-page report that underscores why the No Surprise Act was needed and briefly reviews existing state laws.

The report says despite some states’ efforts to tackle surprise medical bills, patients continue to experience exorbitant medical expenses due to lack of transparency and rules. The Biden administration will continue implementing federal regulations from the No Surprises Act to not only protect the patients but also curb rising costs in health care, HHS Secretary Xavier Becerra said.

APSE paper

The six-page report released Nov. 22 reviews research over the past few years and concludes that surprise billing is a “relatively common” problem among the 200 million Americans with private insurance. One 2018 survey found 57% of adults said they got a surprise bill, and an earlier study found 18% of emergency room visits by people with job-based coverage received at least one out-of-network bill, according to the report.

Most states have some type of protection against surprise bills, including 18 states that enacted comprehensive laws, meaning they ban balance billing and hold patients harmless, extend consumer protections to emergency rooms and in-network services, apply the laws to all types of insurance — including HMOs and PPOs — and have an adequate payment standard or dispute resolution process.

Nine of the states with comprehensive laws have an IDR process and six use the “baseball style” arbitration, which means both parties submit a payment offer and the arbitrators chooses one.

The impact of those laws in many states is still unclear because they’ve only been in place for a short time. However, New York’s law has been in effect since 2015 and APSE says that because arbitrators were told to consider the 80th percentile of charges when determining pay, payment decisions are now about 8% higher than the 80th percentile and threaten to undermine negotiations between providers and insurers. Another study that looked at New Jersey’s IDR process, which allows arbitrators to look at usual and customary charges, increased costs by 5.7%, according to APSE.

The paper also points out gaps in state laws, which have no jurisdiction over the millions of residents who get their coverage from employers that self-fund and are regulated by the federal government. States also have no authority over air ambulances.

There are numerous questions about the impact of the law that will only be answered over time, and the law requires monthly reporting requirements that will offer timely data on how the process is working the report says. Additionally, several other reports are required, including one that must be done with the Federal Trade Commission, which will consider how the law affects vertical and horizontal consolidation, overall costs, and access to services. The Government Accountability Office is also tasked with drafting a report on how the law affects premiums, networks, and fee schedules

Ground ambulances

HHS has opened nominations for stakeholders interested in serving on the newly established Ground Ambulance and Patient Billing (GAPB) Advisory Committee that was created under the surprise billing law.


The lobby representing air ambulances recently filed suit over the interim final rule, claiming that the rule’s focus on the qualifying payment amount (QPA) for IDP decision-making is counter to congressional intent and thus a violation of the Administrative Procedure Act.

The case, filed in U.S. District Court for the District of Columbia, follows a similar suit that the Texas Medical Association filed in the Eastern District of Texas, Tyler, in October.

On Nov. 23, the judge agreed to TMA’s request for an expedited hearing. The first briefings will be due by Dec. 10 and the hearing on the suit is slated for Feb. 4. AAMS did not respond by press time to a query on the status of the case.

 A flood of letters

While detailed comments were not due until Monday (Dec. 6), dozens of stakeholders have already laid out their position in letters to the HHS, Treasury, and the Department of Labor in recent weeks.

On Nov. 5, Rep. Brad Wenstrup (R-OH) and Tom Suozzi (D-NY) led a bipartisan group of 150 lawmakers on a letter telling the Biden administration that the IFR does not reflect congressional intent and must be revised. The letter was similar to an October letter from Ways & Means Chair Richard Neal and Ranking Republican Kevin Brady that said the rule does not reflect the carefully crafted statute and should be revisited.

Weeks later. House Education & Labor Chair Bobby Scott (D-VA) and ranking Republican Virginia Foxx (R-NC) praised the departments for their approach to the rule, saying it aligns with legislation reported out of their committee and with congressional intent. Specifically, the law’s preamble states that when selecting an offer, the certified IDR entity must look first to the QPA since it represents a reasonable market-based payment for related items and services, and then to other considerations. The approach also is consistent with the goal of lowering premiums, they say.

On Nov. 17, a group of about 60 stakeholders representing employers, unions and consumer groups wrote to HHS, Treasury and the Department of Labor commending them for focusing on patients over private equity groups and faithfully aligning with the statute.

No Surprises Act Toolkit

If the Affordable Care Act was the most transformative, overarching law in recent memory, the No Surprises Act may be a close second — and health policy consultants are kicking into high gear.

Last month, Manatt on Health unveiled a new No Surprises Act Toolkit that, in addition to offering clients insights and analysis on the law, and a checklist for stakeholders, will closely track federal and state guidance and regulations. So far, only Washington state has issued draft regulations on ways to align state law with the No Surprises Act. Those regulations lay out which state entity will be responsible for enforcement and more.

 There might be no law as disruptive as the ACA, but the NSA creates its own massive legal scheme dealing with the differing layers of federal and state law that will make it difficult for hospitals and insurance to comply, says Harvey Rochman, a partner at Manatt, Phelps & Phillips, who works with providers.

Rochman and Michael Kolber – who advises payers – say the most critical first step for stakeholders is to sort through which law will apply in a particular situation. And it won’t be easy — as Kolber notes that in some states different laws will apply depending on whether the claim is from a plan that is regulated by the state or the federal government.

Positive feedback

The American Heart Association is thrilled with the administration’s approach to the IDR process and is conducting a grassroots campaign that encourages officials to stay the course through the implementation process. The campaign will target the administration as well as lawmakers that also support the direction of the rulemaking and will stress that the approach truly puts patients first. Heart association sources say the campaign is needed because they know other stakeholders do not share their enthusiasm over the rule, and they want to make sure that the final version is not weakened.

The patient advocates say they’re cautiously optimistic that there will be no major changes to the IFR. But they do worry that the lawsuits could delay implementation.

The effort will also double as a way to inform consumers about their rights to be protected from surprise billing come Jan. 1.

That’s another reason the campaign is important, they say. They also hope the administration will conduct outreach, so consumers understand their rights, and they note the Build Back Better Act has funding that could be used for that purpose.