Blog: Why hospitals and physicians are filing suit over No Surprises Act final rules that jeopardize patient access to care

Today, America’s hospitals and physicians filed a lawsuit in an effort to protect patients’ access to critical health care services. At issue is the implementation of the No Surprises Act, legislation that both the AHA and AMA worked vigorously to get enacted in order to protect patients from surprise medical bills for out-of-network care.   

Congress carefully drafted the No Surprises Act to protect patients from surprise medical bills and eliminate any unintended negative consequences for patients by ensuring a balanced and equitable process for resolving disputes. Federal regulators, however, deviated from this balanced approach in their implementing rules and created an unnecessary conflict between patient financial protections and access to care. Patients’ protection from surprise bills should not compromise their access to the hospitals and doctors they need. We have repeatedly called upon federal regulators to implement the law as Congress intended, with this careful balance in mind, to no avail. That is why we had to bring this lawsuit.  

One of the hospitals that joined the lawsuit, Renown Health in northern Nevada, said that the rule “will have a significant and devastating impact to both Renown’s financial viability, as well as our ability to serve the healthcare needs of our community.” 

The focus of our litigation is on a single provision that governs disputes. We are not asking the court to strike down or delay the regulations in their entirety. We seek only to have the Administration fix them in line with what Congress intended. 

The provision at issue is the way in which federal regulators incent commercial health insurance companies to add fewer hospitals and doctors to the networks of caregivers available to patients. They do this by creating a presumption in favor of the commercial insurers’ median in-network rate during the independent dispute resolution process. But doing so effectively deprives the independent arbitrator who leads this resolution process of his or her discretion to consider all the other factors that Congress believed were important – such as whether a teaching hospital might have higher costs than average, the training and experience of a treating physician, or the complexity of the care that physicians provided. Hundreds of members of Congress, from both sides of the aisle, have already informed the Administration about their concern with this deviation. 

The core of our legal argument is that the regulations are not supported by a plain reading of the law, and a primary objective is preserving patient access to care. 

Our concern that commercial health insurers will exploit this deviation is not hypothetical; it is already happening. Soon after the rule went into effect, a dominant health insurance company informed a group of providers that it would terminate their contract if they were unwilling to accept significantly lower in-network rates. The insurer said it could use the surprise billing regulations to get those rates regardless of whether the provider was in-network. This illustrates how this deviation from Congressional intent will result in a narrowing of the network of providers available to patients.

One concrete example: A patient could encounter significant difficulties scheduling a surgery because the hospital has no or very few anesthesiologists who are in-network. This is because the patient’s commercial health insurer no longer contracts with them.  

As a result, the insurer can simply walk away from negotiating network agreements with those and other specialists so they can undercompensate them when services are delivered. The insurer still gets the benefit of their services in most instances, but patients may not. That predicament is certainly not sustainable for many specialists.  

In addition, providers in rural areas may be particularly hard hit because they are more likely to have higher unit costs due it a lower volume of patients. Teaching hospitals and other highly-specialized providers who have higher cost structures due to the intensity of services they provide also are vulnerable to these tactics. 

The fix here is simple: Align the regulations with what Congress intended and make the process for resolving disputes fair and equitable for both sides. That is not only the right thing, but it also will avoid the kind of negative consequences for patients Congress sought to prevent. 

America’s hospitals and doctors worked hard with Congress to assure the dispute resolution process was fair and avoided these negative consequences. The federal regulators should honor those promises to patients and caregivers.  

Melinda Hatton is AHA general counsel and Molly Smith is AHA group vice president for public policy.