Surprise Billing Regulations: A Surprise Attack on Anesthesia?
Summary: Even before the No Surprises Act went into effect, major national healthcare organizations raised concerns about conflicts between the Act and its implementing regulations. Battle lines are now being drawn.
As most of our readers know, federal law now protects insured patients from receiving surprisingly high medical bills from ancillary providers, such as anesthesiologists, who do not participate with the patient's insurance. This protection is extended to such patients in connection with emergency department services—whether the ED participates with the patient's health plan or not—as well as services provided in healthcare facilities, such as hospitals, that participate with the patient's health insurance. The idea is that a patient who is having a procedure performed by a participating surgeon in a participating facility should not be blindsided by an inordinately high bill coming from a non-participating anesthesia provider—especially where the patient had no idea the anesthetist or anesthesiologist was not a participant with the patient's insurance plan.
All that has now been rectified by the No Surprises Act (NSA)—at least as far as the patient being protected from this sticker-shock scenario. The NSA, which became effective January 1, 2022, was hammered out by Congress with the intent to not only protect patients from unexpected charges but to facilitate equitable compensation for these non-participating providers. The Act mandated the Department of Health and Human Services (HHS), via its Centers for Medicare and Medicaid Services (CMS), to issue a series of regulations that would implement the provisions of the NSA. In October and December of last year, we provided our readers with alerts summarizing these regulations. However, not everyone is happy about the interpretive track these regulations took, and some are actually pushing back in a big way.
Double-Teaming the Bureaucrats
According to a December 9, 2021 press release, the American Medical Association (AMA) and the American Hospital Association (AHA) have filed suit against the federal government over what they deem to be "the misguided implementation of the federal surprise billing law." These national healthcare organizations were joined in the suit by other plaintiffs, including Renown Health, UMass Memorial Health and two physicians based in North Carolina.
Notice that these entities are not attacking the law itself but rather the enabling regulations released in 2021 that were meant to address how the law is to be implemented. Specifically, the lawsuit is based on the plaintiffs' assertion that a particular provision of the NSA-based Final Rule, issued on Sept. 30, 2021, ignores certain requirements that are specified in the Act and thus contravenes the intent of Congress.
According to the AMA's press release, the legal challenge became necessary because "the federal regulators' interpretation upends the careful compromise Congress deliberately chose for resolving billing disputes." The lawsuit asserts that the September regulations rely too much on the independent dispute resolution (IDR) process, which we have described in our previous alerts. This process is believed by the plaintiffs to unfairly benefit commercial health insurance companies. The AMA and AHA allege that the IDR process, as currently conceived in the regulations, will ultimately result in reduced access to care. They reason that the process will discourage meaningful contract negotiations, reduce provider networks and encourage unsustainable compensation for teaching hospitals, physician practices and other providers.
By way of background, Congress created an IDR process that would be triggered when providers and insurers are unable to reach agreement on payment for out-of-network services. Federal regulators at HHS, however, have directed IDR arbiters to presume that the median in-network rate is the appropriate out-of-network rate and to limit 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 will mean that patients will have fewer choices in accessing in-network services.
Back in November, a bipartisan group of 152 lawmakers urged the Biden Administration to fix the IDR provisions, noting the September 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."
Payers Take Advantage
In a show of solidarity with the AMA and AHA, the American Society of Anesthesiologists (ASA) released a statement late last year expressing support for these organizations in their action against the government, calling it an attempt to correct "flaws" in the NSA regulations. The ASA has every reason to see the lawsuit succeed as they believe the regs, as currently constructed, will inevitably lead to lower commercial reimbursement rates for anesthesia services. And there is already evidence of this.
In late November, the ASA pointed to a move made by BlueCross BlueShield of North Carolina (BCBS) as an early indicator of what may become a general strategy by many commercial payers to lower overall anesthesia rates. In its press release, the ASA revealed that BCBS sent letters to anesthesia and other physician practices in the state that contained threats of contract termination unless the groups immediately agreed to payment reductions ranging from 10 to over 30 percent. Implementation of the 2021 NSA regulations was cited in the letters as the rationale behind the reductions. According to the press release:
The clear intent of the insurance company in taking this action is to improve its negotiating position against community physician practices in the dispute resolution process outlined in the recently released Interim Final Rule implementing the legislation.
In other words, since the NSA regulations—not the statute itself—connects provider payment to the "median" reimbursement in a particular geographical area, the ASA sees this as an impetus for commercial payers to simply lower their rates across the board in order to reduce what would be considered the median rate. If you don't agree to the lower contract rates, you're kicked out of network and will be subject to an ever-plummeting median rate.
If this tactic is taken up by other third-party payers, the end result will be a potentially deleterious consequence not originally intended by Congress: the shrinking availability of healthcare services. As ASA President Randall M. Clark stated:
Insurance companies are threatening the ability of anesthesiologists to fully staff hospitals and other health care facilities. Left unchecked, actions like these of BlueCross BlueShield of North Carolina will ultimately compromise timely access to care for patients across the country.
We can only hope that either the lawsuit succeeds or Congress steps in to readjust the payment determination mechanism so that it more closely reflects its original intent. We will keep you updated as more developments arise. In the meantime, please feel free to reach out to your account executive if you have further questions on this issue, or you can contact us directly at info@anesthesiallc.com.
With best wishes,
Tony Mira
President and CEO