AHA, AMA sue Biden admin to challenge surprise billing arbitration process

The American Hospital Association (AHA) and the American Medical Association (AMA) have filed a joint lawsuit against the federal government, challenging the Biden administration's implementation of the No Surprises Act.

Rules finalized under the act have drawn significant ire from providers. They outline an arbitration model to resolve surprise billing disputes, which providers say favors health insurers in the negotiations.

The two provider organizations are joined by plaintiffs including Renown Health, UMass Memorial Health and two North Carolina physicians.

“Congress established important patient protections against unanticipated medical bills in the No Surprises Act, and physicians were a critical part of the legislative solution,” said AMA President Gerald E. Harmon, M.D., in a statement.

RELATED: Providers cry foul over new surprise billing rule's arbitration process

“But if regulators don’t follow the letter of the law, patient access to care could be jeopardized as ongoing health plan manipulation creates an unsustainable situation for physicians," Harmon said. "Our legal challenge urges regulators to ensure there is a fair and meaningful process to resolve disputes between health care providers and insurance companies.”

The two groups said the No Surprises Act established an independent dispute resolution process that triggers when providers and payers cannot agree on out-of-network charges. However, the administration's rulemaking directs arbiters to select the rate that is closest to the health plan's qualified payment amount, their median contract rate for the same or similar services in a geographic region.

The providers argue that this change will decrease access to care by preventing meaningful contract negotiations. The lawsuit says the finalized regulation "deviates from Congress' balanced design."

The groups stressed the lawsuit is not intended to challenge or overturn the No Surprises Act itself but rather to force the administration to rethink its implementation of dispute resolution processes.

“No patient should fear receiving a surprise medical bill,” said Rick Pollack, AHA president and CEO, in a statement. “That is why hospitals and health systems supported the No Surprises Act to protect patients and keep them out of the middle of disputes between providers and insurers. Congress carefully crafted the law with a balanced, patient-friendly approach and it should be implemented as intended.”

Earlier this week, providers urged the administration to walk back the provisions in comments on the final rule.