Stakeholders File Lawsuit Over Fair Payment Dispute Resolution for Surprise Medical Bills

A lawsuit filed on December 8, 2021, by a coalition of stakeholders representing hospitals, health systems, and physicians sued the federal government today over the misguided implementation of the federal surprise billing law.

The lawsuit challenges a narrow but critical provision of a rule issued on September 30, 2021, by the U.S. Department of Health and Human Services (HHS) and other agencies. The provision being challenged ignores requirements specified in the No Surprises Act and would result in reduced access to care for patients. The rule and this flawed provision are set to take effect January 1, 2022. 

According to the plaintiffs, the legal challenge became necessary because the federal regulators’ interpretation upends the careful compromise Congress deliberately chose for resolving billing disputes. In short, congress created an independent dispute resolution process that is required when providers and insurers are unable to reach agreement on payment for out-of-network services from providers who are not under contract with the insurer. However, federal regulators have directed arbiters under independent dispute resolution to presume that the median in-network rate is the appropriate out-of-network rate and limiting when and how other factors come into play. The suit argues that the regulations are a clear deviation from the law as written and all but ensure that hospitals, physicians, and other providers will routinely be undercompensated by commercial insurers and that patients will have fewer choices for access to in-network services. 

The challenge does not prevent the law’s core patient protections from moving forward and will not increase out-of-pocket costs to patients. It seeks only to force the Administration to bring the regulations in line with the law before the dispute negotiations begin.

In November, ISASS and numerous other medical societies had urged the Department of Health and Human Services to revise requirements set forth in the most recent Interim Final Rule implementing the No Surprises Act. That same month, a bipartisan group of 152 lawmakers had urged the Administration to fix the independent dispute resolution provisions, noting the rule’s approach “is contrary to statute and could incentivize insurance companies to set artificially low payment rates, which would narrow provider networks and jeopardize patient access to care—the exact opposite of the goal of the law.” For additional information, please see copies of the filed complaint and motion to stay