The No Surprises Act (NSA) became effective January 1st. This bill protects consumers from most out-of-network surprise bills. That’s good news for you. There is bad news for insurance companies. The American Medical Association (AMA) and American Hospital Association (AHA) sued the federal government over the bill’s Independent Dispute Resolution (IDR) process.
What is Independent Dispute Resolution?
If a provider and insurance company cannot agree on a price for an out-of-network service, they can take the matter to arbitration. Under this NSA, arbitration is the Independent Dispute Resolution (IDR) process. The lawsuit challenged what data will be used by the arbitrator and how it will be weighted in order to reach a decision.
The patient won’t be billed no matter what cost decision is reached, . The insurer will pay the provider. Both the AMA and AHA say they support consumers’ protection under the No Surprises Act.
What are the Lawsuits About?
While the NSA was being written, the AMA, AHA and other groups lobbied hard not to allow arbitrators to favor reimbursement levels that were much lower than billed rates. Those groups, along with large private-equity-funded physician staffing groups (who spent millions fighting the NSA), won that round. The NSA, as written, says the arbitrator should assign “no particular weight or presumption for any one factor.”
Then last September the Biden Administration issued a new rule. This one directed arbitrators to lean toward reimbursement amounts closest to the insurer’s median in-network rate. That’s the focus of the lawsuits. Plaintiffs in the lawsuit say this rule “places a heavy thumb on the scale” against medical providers. They say it gives too much weight to in-network rates. But arbitrators can also consider the provider’s experience, type of hospital, and complexity of treatment.
Loren Adler, associate director of the USC-Brooking Schaeffer Initiative for Health Policy, provides this insight into why these organizations are suing: “The way the law is crafted, you only lose money if you were personally profiting from the leverage that surprise billing gives you.”
Who Supports the Rule?
There is a long line of organizations who support the rule. One supporter, The Business Group on Health, is an advocate for large employers in health care policy. They said the rule provided a “thoughtful and balanced approach to the interests of the various stakeholders.”
Sixty-three organizations representing patients, consumers, and employers wrote a letter of support to the Departments of Health and Human Services, Labor, and the Treasury. These groups “applaud the Biden Administration for the ongoing efforts to protect patients from surprise bills.”
Who’s Challenging the Rule?
On the opposite side of the divide, 152 lawmakers, nearly half of whom are Democrats, filed a letter of complaint to the Departments of Health and Human Services, Labor, and the Treasury. Lawmakers said the law specifically forbids arbitrators to favor a specific benchmark in order to determine what providers should be paid. The September rule does not “create a balanced process to settle payment disputes.”
The group alleges that favoring insurers’ in-network rates will push down in-network rates and make reimbursement rates too low. This will potentially cause financial harm to in-network providers.
The Texas Medical Association and Association of Air Medical Services have also filed suit against the federal government. These lawsuits follow the same general theme; specifically, the rule ignores the intent of the law by unfairly favoring insurers.
About Those Air Ambulance Rates
A recent study of air ambulance bills by the USC-Brookings Schaeffer Initiative for Health Policy reveals some potential reasons for the Association of Air Medical Services’ lawsuit.
- The average maximum amount an insurer paid for air ambulance transports provided by private equity or publicly traded companies was 60 percent higher than for air transports provided by hospitals, nonprofits and independent companies.
- From 2014 to 2017, 89 percent of the private equity/publicly traded providers’ claims were out-of-network. Only 59 percent were out-of-network for other provider types.
I will keep you updated as these lawsuits progress. No matter the outcome, however, the No Surprises Act still protects you from most out-of-network bills.