UMass Memorial Health among plaintiffs suing over federal interpretation of surprising billing law

UMass Memorial Health Care's Memorial campus in Worcester

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UMass Memorial Health is joining the American Hospital Association, American Medical Association, and several other healthcare providers in suing the federal government over the implementation of the No Surprises Act, a law tackling surprise medical bills, the healthcare provider and its co-plaintiffs announced last week.

The U.S. Congress passed the act in December 2020, and it is set to go into effect in January. Ahead of the rollout, federal agencies have issued rules related to how the law should be implemented. Among them was a rule issued on Sept. 30, which would go into effect at the same time as the law.

The rule in question pertains to how health insurers and healthcare providers who aren’t under contract with the insurer must manage disputes over payments for services resulting in surprise medical bills. According to a brief from the Kaiser Family Foundation examining the law, both parties will be given an opportunity to resolve the dispute. However, if they can’t agree to a solution, they may enter into an independent dispute resolution process run by a third-party.

In this dispute process, arbiters will be directed to assume the median in-network rate is also the appropriate out-of-network rate for the service in question. This is the piece UMass Memorial and its co-plaintiffs take issue with, arguing it unfairly benefits insurance companies.

“The skewed process will ultimately reduce access to care by discouraging meaningful contracting negotiations, reducing provider networks, and encouraging unsustainable compensation for teaching hospitals, physician practices, and other providers that significantly benefit patients and communities,” the AHA and AMA said in a joint statement announcing the lawsuit.

They pointed to a November letter signed by 152 lawmakers, urging the federal government to alter the arbitration process. The letter was addressed to Secretary of Health and Human Services Xavier Becerra, Secretary of Labor Marty Walsh, and Secretary of Treasury Janet Yellen. Congressman Jim McGovern was among its signatories.

“This directive establishes a de-facto benchmark rate, making the median in-network rate the default factor considered in the IDR process,” the letter said. “This 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.”

Lawmakers asked federal regulators consider all other factors without defaulting to or disproportionately considering median in-network rates.

Both the AHA and AMA reiterated their support for the law, and said their lawsuit would not stop its key provisions from going into effect.