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From Health Law Daily, September 6, 2017

Out-of-network emergency services case remanded to administrative agencies

By Sara Cracau, J.D.

The Departments of Labor and the Treasury and HHS (the Departments) adopted a final rule that set forth how much insurers were required to pay out-of-network physicians for emergency services without giving adequate consideration to concerns and proposed alternatives expressed during the comment period, ruled a federal district court in the District of Columbia. Therefore, the court remanded the case to the Departments for re-consideration of the comments. Although the Departments were free to exercise their discretion to supplement the explanation of the final rule as they deemed appropriate and to reach the same or different conclusions, at a minimum, the court held, they were required to respond to the comments and proposals in a reasoned manner (American College of Emergency Physicians v. Price, August 31, 2017, Kollar-Kotelly, C.).

The Departments adopted a final rule that set forth how much insurers were required to pay out-of-network without responding to concerns expressed by the American College of Emergency Physicians, which pointed out that because the methods used to set payments were not transparent, they could be manipulated by insurers. Many commenters advocated using a transparent database to set payments, but the Departments ignored these comments.

Background information. The Emergency Medical Treatment and Labor Act ("EMTALA") requires hospitals with emergency departments to "provide for an appropriate medical screening examination" for anyone who visits the emergency room if an examination or treatment is requested for him. The hospital must provide services to stabilize the individual, within its capabilities, if it determines that the person has an emergency condition. During an emergency, a person does not have the luxury of choosing which hospital or doctor to seek services from on the basis of whether they are in their insurer’s network. The Patient Protection and Affordable Act (ACA) (P.L. 111-148) contains a patient protection provision which provides that if a group health plan or a health insurance issuer offers benefits for emergency room services and services are rendered by an out-of-network provider, the cost-sharing requirement must be the same as if services were provided by an in-network provider.

Interim and final rule. On June 28, 2010, the Departments published an Interim Final Rule (75 FR 37188). In that rule, the Departments remarked that situations may arise in which an insurer pays an unreasonably low amount to a provider and that, in many states, providers balance bill their patients. Therefore, the Departments announced that it was necessary to require insurers to pay a reasonable amount before a patient became responsible for paying a remaining balance to protect the patient against excessive financial risk. The interim rule incorporated the "greatest of Three" or "GOT" regulation requiring insurers to pay the greatest of the following three amounts if it covers out-of-network emergency services: (1) the amount negotiated with in-network providers for the emergency service provided; (2) the amount paid for the service according to the generally utilized method for out-of-network services (such as usual, customary, and reasonable charges); or (3) the amount that would be paid to Medicare for the emergency service. Although some commentators praised the interim rule, others expressed concerns, particularly about the second prong of the GOT regulation because it the method used by insurers to calculate "usual, customary, and reasonable" (UCR) was often not transparent. The American College of Emergency Physicians proposed that an independent database, such as one created by FAIR Health be used to determine payments for out-of-network emergency services. Other commentators made similar comments and many suggested use of the FAIR database. The Departments adopted the Final rule (80 FR 72192) adopting the GOT regulation without substantive revision. The American College of Emergency Physicians filed an action challenging the validity of the Final rule. Both sides brought cross-motions for summary judgment.

Court’s decision. The court agreed that the Departments acted arbitrarily and capriciously by failing to seriously respond to comments and proposed alternatives presented by the American College of Emergency Physicians and other commentators regarding perceived problems with the regulation. The court further remarked that although an agency is not required to address every comment made during the notice and comment period, "it must respond in a reasoned manner to those that raise significant problems." In the instant case, the court concluded that the Departments’ responses did not satisfy these standards. Consequently, the court remanded the case to the Departments to respond to the comments, granting in part and denying in part the American College’s motion for summary judgment. An agency is obligated to explain its action contemporaneously with the action and a court may not rely on post-hocrationalizations, remarked the court. Furthermore, agencies have to "respond to comments and raise points relevant to the agency’s decision and…if adopted, would require a change in an agency’s proposed rule."

The case is No. 16-913 (CKK).

Attorneys: Ronald S. Connelly (Powers Pyles Sutter & Verville PC) for American College of Emergency Physicians. Chetan A. Patil, U.S. Department of Justice, for Thomas E. Price.

Companies: American College of Emergency Physicians

MainStory: TopStory CaseDecisions CMSNews EMTALANews ProgramIntegrityNews DistrictofColumbiaNews

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