Some medical groups are none too happy with the “surprise billing” interim final rule issued yesterday by the Biden administration.

The rule — issued jointly by the departments of Health and Human Services, Labor, and Treasury — implements part of the No Surprises Act, passed by Congress in December 2020 as part of a larger appropriations bill. The No Surprises Act was meant to get rid of the problem of “surprise bills,” such as when a patient goes to an in-network facility and later finds out that one of their providers was out-of-network, leaving the patient open to a large bill for out-of-network care. The rule spells out requirements for providers to give patients a “good faith estimate” of cost in advance of a procedure, as well as for independent dispute resolution (IDR) in cases where a surprise bill is issued.

“This marks a big win for the American people,” a senior HHS official said on a phone call with reporters Thursday afternoon. “No one should go bankrupt over medical bills, but two-thirds of all bankruptcies filed in the United States from 2013 to 2016 are tied to medical expenses. Currently, two-thirds of adults worry about being able to afford unexpected medical bills for themselves and their families.”

The rule “will not only allow consumers to plan for and compare costs, but also provide an avenue for consumers to dispute unexpected charges,” the official added.

But the American Medical Association (AMA) didn’t see it that way. “The interim final regulation … ignores congressional intent and flies in the face of the Biden administration’s stated concerns about consolidation in the health care marketplace,” said Gerald Harmon, MD, president of the AMA, in a statement Friday. “It disregards the insurance industry’s role in creating the problem of surprise billing at the expense of independent physician practices whose ability to negotiate provider network contracts continues to erode.”

“Congress appreciated the negative consequences of national price-setting for healthcare services and spent considerable time and effort developing a robust independent dispute resolution process to maintain market balance and preserve access to care, which the administration apparently ignored,” Harmon added. “It also is apparent that the administration failed to appreciate the importance of creating accessible and impartial dispute resolution processes as a backstop against even greater insurer abuses.”

The American Hospital Association (AHA) agreed. “Hospitals and health systems strongly support these protections and the balanced approach Congress chose to resolve disputes,” said Stacey Hughes, AHA’s executive vice president, in a statement Thursday. “Disappointingly, the Administration’s rule has moved away from Congressional intent and brought new life to harmful proposals that Congress deliberately rejected. Today’s rule is a windfall for insurers. The rule unfairly favors insurers to the detriment of hospitals and physicians who actually care for patients. These consumer protections need to be implemented in the right way, and this misses the mark.”

The provider groups’ beef with the bill largely has to do with how the IDR process works. “Congress was quite clear that to ensure an equitable and balanced system to resolve disputes, no single factor should be given preference over others,” said Emily Volk, MD, president of the College of American Pathologists, in a statement Friday. “However, the new rules will favor payment rates developed by insurance companies, which will only exacerbate ongoing health plan manipulation and disincentivize insurers from offering fair contracts to physicians caring for patients.”

The rule requires that dispute arbitrators start by looking at the insurer’s median contracting rate, otherwise known as the “qualifying payment amount” (QPA).

The arbitrator “must begin with the presumption that the QPA is the appropriate out-of-network rate for the qualified IDR item or service under consideration,” the rule states. “These interim final rules further provide that the certified IDR entity must select the offer closest to the QPA unless the certified IDR entity determines that credible information submitted by either party clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate.”

“Making a health plan’s calculated ‘qualifying payment amount’ — which does not reflect real-world payment rates — the primary factor in independent dispute resolution arbitration will cause large imaging cuts and reduce patient access to care, regardless of their insurer,” said Howard Fleishon, MD, chair of the Board of Chancellors at the American College of Radiology, in a statement. “We look forward to working with other provider groups and the departments of Health and Human Services, Labor, and Treasury … to bring regulatory implementation in line with what the new law actually demands.”

On the other hand, not surprisingly, the QPA provision seemed to please health insurers. “We are particularly encouraged to see the rules … direct that arbitration awards must begin with a presumption that the appropriate out-of-network reimbursement is the qualified payment amount,” said Matt Eyles, president and CEO of America’s Health Insurance Plans, a lobbying group for health insurers, in a statement. “This is the right approach to encourage hospitals, healthcare providers, and health insurance providers to work together and negotiate in good faith. It will also ensure that arbitration does not result in unnecessary premium increases for businesses and hardworking American families.”

During the call with reporters, senior HHS officials were asked for their response to providers’ concerns that they might not be able to comply with the rule in time for its Jan. 1, 2022 implementation date; the officials did not respond directly. “We’ve worked very closely with doctors, hospitals, and various specialties to make sure that we’re getting their input and we’re working with them,” a senior official said. “It is a little Pollyanna, but I do think it’s an important rule, and a rule that we worked very closely on with our partners.”

The interim final rule allows 60 days for submitting comments following its publication in the Federal Register, and will be followed by a final rule.