District Court Orders DHHS to Reevaluate Out-of-Network Payment Regulations Relating to In-Hospital Emergency Medical Services

Commercial payors are not the only entities that complicate the ability of out-of-network providers to be justly compensated for their services – the agencies that regulate such payors, and in particular the Department of Health and Human Services (DHHS), are often equally to blame, as they issue the regulations under which payors must operate and, often, manipulate to their advantage.  Out-of-network providers are not without recourse in this regard, however, as a recent case, American College of Emergency Physicians v. Price, 2017 WL 3836045 (D.D.C. 2017), well illustrates.

In June of 2010, DHHS published an interim final rule regulating reimbursement for services rendered by out-of-network Emergency Physicians in a hospital setting. The rule, referred to as the “Greatest of Three” or “GOT” regulation, provided that a plan or issuer must “provide[] benefits for out-of-network emergency services in an amount equal to the greatest of three possible amounts – (1) The Amount negotiated with in-network providers for the emergency service furnished; (2) The amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services (such as the usual, customary, and reasonable charges) . . . or (3) The amount that would be paid under Medicare for the emergency service.” 75 Fed. Reg. 37, 188.  During the “notice and comment” period, in which the public has an opportunity to comment on the interim final rule before it passes into law, a multitude of physician advocacy groups expressed significant concerns about the inclusion of “usual, customary, and reasonable” rates (UCR) as an option under the rule, as the methods by which UCR rates are calculated are often opaque and deeply flawed. DHHS went on to issue the GOT regulation as written in November 2015, responding to the foregoing comments by simply stating: “The Departments believe that this concern is addressed by our requirement that the amount be the greatest of the three amounts specified” in the regulation. 80 Fed. Reg. 72, 192.

Dissatisfied with DHHS’ effective non-response to the commenters’ concerns, the American College of Emergency Physicians filed a Complaint in the United States District Court for the District of Columbia (D.D.C.), seeking a “declaration by the Court” that the GOT regulation was invalid or, at a minimum, procedurally infirm, and an order enjoining DHHS from enforcing it. Wisely, the Plaintiff availed itself of the Administrative Procedure Act (APA), a federal statute that regulates, among other things, the manner in which agencies may issue regulations. Specifically, the Plaintiff noted that DHHS had failed to comply with the APA’s requirement that, when in receipt of public comment, the agency “examine the relevant data and articulate a satisfactory explanation for its action . . .”  The D.D.C. agreed, holding that DHHS “acted arbitrarily and capriciously by failing to seriously respond to comments and proposed alternatives submitted by Plaintiff and others regarding perceived problems with the GOT regulation.” While the court did not invalidate the regulation or enjoin its enforcement, it did remand the issue of DHHS’ inadequate response to public comment to the agency, so that it could “adequately address the comments and proposals at issue.” The court further hinted that Plaintiff would have another bite at the apple should it find that DHHS’ supplemental response was still deficient, arbitrary or capricious.

Frier Levitt has extensive experience litigating on behalf of out-of-network providers and in bringing APA actions against the federal government to vindicate providers’ rights. For more information, contact Frier Levitt to speak to an attorney.