Hospital and doctor groups sue Biden officials over surprise billing rules

The American Medical Association (AMA) and American Hospital Association on Thursday sued the Biden administration over regulations to prevent patients from getting stuck with “surprise” medical bills, escalating a fight over the rules. 

The lawsuit illustrates the intense lobbying battle that has been playing out among industry players over a major reform to the health care system that is intended to protect patients from getting massive unexpected medical bills. 

The regulations issued by the Biden administration stem from a bipartisan law signed in December 2020 to stop patients from getting surprise bills when they go to the emergency room or get other health services and one of the doctors treating them happens to be outside of their insurance network.

All sides say they support protecting patients from getting surprise medical bills. But an intense fight has raged for months between doctors and hospitals on one side and insurers and patient groups on the other over how much insurers will pay doctors once the patient is taken out of the middle. 

The lawsuit on Thursday argues that the Biden administration’s regulations departed from the delicate balance struck in the text of the law. Doctors and hospitals worry that the regulations will result in cuts to their payments, which they argue will end up hurting care for patients. 

“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,” said AMA President Gerald Harmon. 

The new rules are set to go into effect on Jan. 1, unless a court steps in, or the Biden administration decides to change the rules in response to the health care provider pressure.

The law sets up an arbitration process to determine how much the insurer should pay the doctor once the patient is taken out of the middle. The doctors and hospitals object to a provision in the regulations that says the arbiter should start by assuming the correct payment amount is the median price usually paid for that service in that geographic area. They argue other factors such as the training and quality of the doctor should be given equal weight. 

But some experts and consumer groups say that doctors and hospitals are simply seeking to inflate their payments by objecting to the rules. 

The dispute has split members of Congress as well, and the divisions have not fallen along the usual party lines. 

A bipartisan group of over 150 lawmakers, led by some members who are doctors themselves, backed the doctor and hospital objections last month.   

On the other side, two key committee chairs, Rep. Frank Pallone Jr. (D-N.J.) and Sen. Patty Murray (D-Wash.) have supported the administration’s regulations and urged it not to delay the rules.