In a bold, unprecedented move, ACEP sued the federal government to contest a regulation that impedes emergency physicians from receiving reasonable payment for out-of-network services.

At issue is a regulation from the Centers for Medicare & Medicaid Services (CMS) for out-of-network emergency physician payment, which outlines the “greatest of three” options. As written, this rule opens the door for insurers to use black box methods to determine physician payment without providing any means to verify the data.

“It’s clear from the recent CMS ruling that, despite our best efforts, the insurance companies have more influence in terms of federal regulation than physicians do,” said ACEP President Jay Kaplan, MD, FACEP. “The term ‘health insurance company’ is an oxymoron—they exist just to make profits for the shareholders, not for the health care of our patients.”

A Lengthy Fight

Since 2010, ACEP has had numerous meetings with federal officials, sent formal comments, and drafted guidance to voice the concerns of its almost 35,000 members that the “greatest of three” rule cannot be enforced and has the potential to be manipulated by insurers without a transparent database of usual, customary, and reasonable charges.

Receiving little to no concern for this issue from the CMS leadership, the ACEP Board of Directors decided at its April 2016 Board meeting to move forward with a lawsuit urging the courts to rescind this rule.

“Not only is it not fair, we believe it’s a violation of the law,” Dr. Kaplan said. “We want our members to know we are fighting for them and our patients.

“We did our best to be included in the decision making, but it is clear that the insurance companies had an open ear with the regulators, and the regulators had a deaf ear to us,” he added.

In March 2010, shortly after the Patient Protection and Affordable Care Act (PPACA) was passed, CMS released an interim final rule addressing a number of provisions in the law—including patient protections, preexisting conditions, and out-of-network (OON) payment to emergency physicians.

ACEP and others, including the American Medical Association (AMA) and the American Hospital Association (AHA), sent formal comments criticizing the provision on OON payment for being unworkable, but because of tight start-up deadlines in the new law, CMS did not respond.

The issue for physicians and hospitals is the payment of the greatest of three options, described by CMS as: 1) the median in-network negotiated amount; 2) the amount the plan uses for OON services based on usual, customary, and reasonable charges; or 3) the amount paid by Medicare.

“Allowing insurance companies to use opaque payment methodologies for out-of-network services not only lowers reimbursement for emergency services but transfers massive amounts of financial liability to patients,” said Jeff Bettinger, MD, FACEP, a member of the ACEP/Emergency Department Practice Management Association (EDPMA) Joint Task Force on reimbursement issues and Chair of the Work Group on out-of-network/balance billing issues.

“Currently, fee-for-service billing underwrites the vast majority of the practice of emergency medicine,” Dr. Bettinger said. “Allowing insurance companies to pervert the language of the ACA to lower payments removes the foundation for fair compensation of emergency physicians for services that they perform.”

ACEP leaders and staff had meetings with five successive directors of CMS’s Center for Consumer Information and Insurance Oversight (CCIIO). At each meeting and in every correspondence, it was pointed out that, without guidance to insurers to use a transparent database where local charges could be verified, the regulation is unenforceable.

“It is a reminder of when the then attorney general of New York, Andrew Cuomo, took on UnitedHealthcare’s subsidiary Ingenix for manipulating charge data to underpay physicians and the company was fined $300 million,” said Barbara Tomar, ACEP’s federal affairs director. “Those funds were used to set up an open, nonprofit database for charge data, FAIR Health,” she added. “Unfortunately, the interim final rule basically re-creates the same environment for insurers to use black box methods to determine physician payment.”

“It feels like the 10 meetings that ACEP had with CMS to address the deficiencies with these interim regulations never happened, and that the numerous letters from ACEP, the AMA, state medical societies, EDPMA, the AHA, and others were never given the slightest bit of credence,” ACEP wrote in a letter to CMS dated December 2015.

In 2014, ACEP prevailed on the CCIIO leadership, which hired a contractor to review emergency medicine concerns about significant payment reductions. Meanwhile, CCIIO leadership changed for a fifth time, and when the report was finally provided in July 2015, the results were disappointing. Instead of a quantitative analysis of claims data, the study produced a weak qualitative report with equivocal findings. Current CCIIO Director Kevin Counihan downplayed the report but agreed to continue to look into the concerns, asking for more data and more time. Then, in September 2015, ACEP representatives were told that his office would not intervene after all.

The final rule, released in November 2015, caught the emergency medicine community by surprise.

“It feels like the 10 meetings that ACEP had with CMS to address the deficiencies with these interim regulations never happened, and that the numerous letters from ACEP, the AMA, state medical societies, EDPMA, the AHA, and others were never given the slightest bit of credence,” ACEP wrote in a letter to CMS dated December 2015.

Additionally, CMS noted that it will “consider ways to prevent providers from balance billing” despite the PPACA being very clear that balance billing is a permitted practice.

The December 2015 letter to CMS cautioned, “By adding language promoting a prohibition against balance billing for these claims in the face of a set of benefit standards that effectively permit plans to pay whatever benefits they choose, you have exceeded the authority provided by Congress in the PPACA, which recognized the right of out-of-network providers to receive the reasonable value of their services through, if necessary, balance billing.”

The letter, which has yet to garner a response from CMS, was the last straw prior to ACEP’s decision to take the matter to federal court.

“In light of the EMTALA obligation to provide emergency care regardless of payment, these Final Regulations, by allowing plans to unilaterally determine the reasonable value of these services, encourage an unconstitutional taking of physician and hospital services,” the letter stated. “In the plainest language we can use: these proposed Final Regulations pander to the profit motives of health plans, and they are biased and ill advised. In the strongest terms possible, we recommend that you reconsider this language in the Final Regulations, published or not, before you do irreparable damage to the emergency care safety net on which more than 130 million citizens a year, and health plans, for that matter, rely.”

CMS Rule Affecting Care

Dr. Kaplan said the CMS rule also affects emergency physicians’ ability to access other specialists as it fosters the creation of narrow networks of medical providers, making it more likely that patients will seek care out of network and receive additional bills from medical providers.

In a poll set to be released by ACEP in May, emergency physicians overwhelmingly said health insurance companies are misleading patients by offering “affordable” premiums for policies that actually cover very little.

Eight in 10 emergency physicians said they are seeing patients with health insurance who have sacrificed or delayed medical care because of high out-of-pocket costs, co-insurance, or high deductibles. This is more than a 10 percent increase over six months ago when emergency physicians were asked the same question.

ACEP filed the lawsuit in federal court on May 12 and the legal process could take several months. Funding for the legal complaint and early stages of this litigation has been underwritten by the Emergency Medicine Action Fund.

“ACEP will never be able to match the enormous war chest that insurance companies have devoted to their efforts to lower reimbursement for emergency services and increase their profits,” Dr. Bettinger said. “But ACEP will never back down from our efforts to protect the specialty of emergency medicine and protect the safety net of medical care that Americans have come to depend on. “