If Daniel Haller gets his way, surprise medical bills will be back in full force.
Haller, an acute-care surgeon on Long Island in New York, is suing the federal government over the No Surprises Act, a new law that protects people from receiving unexpected bills from out-of-network doctors. He argues the entire law should be thrown out because it violates his constitutional rights to bill patients directly for any “balance of the fair value” of his services, according to his complaint.
It’s a stunning position, given how popular the consumer protections are — the law is one of the few health care policies that politicians in both parties brag about, and even doctors groups whose members have taken a hit from the changes don’t outright oppose it.
Haller doesn’t present himself as a ruthless businessman. He was on the frontlines of New York City’s initial Covid-19 surge, putting people on ventilators and calling families to let them know their loved ones had died. He gives his cellphone number to patients and encourages them to call at any hour — a commitment that earned him an “Excellence in Medicine” award from a local organization in 2020.
But like many emergency surgeons, Haller shuns most health insurance contracts and puts the onus on patients to pick up the tab.
Striking down the entire law is a long shot at best, as several legal scholars and consumer advocates criticized the legal arguments in the complaint. It also has almost no support within the health care community.
However, the lawsuit shows just how much some providers rely on out-of-network charges, and how far they are willing to go to dismantle a measure that shields patients from getting blindsided.
“[This lawsuit] really highlights that, fundamentally, these particular physicians who are working in specialties that are hard to fill are able to keep themselves out of network. It is part of their business strategy to say, ‘I want to be able to set whatever price I want with a patient,’” said Frederick Isasi, executive director of consumer health care group Families USA, which has supported the No Surprises Act. “This isn’t the way health care is supposed to work. It’s outrageous. It’s unethical.”
Haller, through his lawyers, declined repeated requests for an interview for this story. On an initial phone call intended to set up an interview, he gave some hints about the intent behind his lawsuit.
“You’re very negative towards physicians being able to get a fair living wage for the services they provide in emergency care,” Haller said. “So, given that, I’m not really sure we have much to discuss. I don’t want to feel like I’m under fire, and [my lawyers] don’t want me to discuss this with you.”
When asked under what circumstances he would do an interview, Haller said questions would have to be approved beforehand, and he and his lawyers would have to have the chance to read the story and remove anything they wanted before the story was published. STAT declined those terms.
Congress and President Trump passed the No Surprises Act at the end of 2020 with the goal of safeguarding patients from “drive-by doctoring” and other situations that lead to unanticipated bills. The law has holes. Most notably, it does not apply to ground ambulances and certain labs, and uninsured people could still fall prey to some surprise bills.
But people who have health insurance and get care at in-network hospitals no longer have to face hefty charges from out-of-network physicians who they almost never choose — such as emergency room doctors, anesthesiologists, and assistant surgeons. Patients who are flown in air ambulances also are protected.
Most providers don’t bill out of network. A small chunk of hospitals and doctor groups — especially those owned by private equity — have conducted a vast majority of the nation’s balance billing, according to 2020 study published by Yale University researchers.
Haller falls within that latter group, which means the law has forced him to fundamentally shift how he operates. Roughly 78% of patients treated by Haller and others at his private surgical practice are enrolled in plans that have no contract with the practice, according to the lawsuit.
“For a practice like this that has 80% out of network, the No Surprises Act is going to change how they have to do business,” said Katie Keith, director of the Health Policy and the Law Initiative at Georgetown University Law Center’s O’Neill Institute, who monitors No Surprises Act litigation.
Out-of-network disputes boil down to two powerful actors who have never liked each other. Doctors contend insurers lowball them, and they therefore have to bill patients for the remaining balance. Insurers say some doctors are demanding unrealistic prices. Each side accuses the other of bad-faith negotiations.
However, research has long shown doctors’ billed prices, also known as “usual and customary charges,” are astronomical. Out-of-network charges for ER care are 637% of what Medicare pays for the same services on average, according to the Yale study.
“Anyone who has spent time looking at health care bills knows that usual and customary charges are completely made-up amounts and outlandishly higher than what any reasonable human would pay,” said Karan Chhabra, a resident surgeon at Brigham and Women’s Hospital who has studied out-of-network billing.
The No Surprises Act attempts to resolve these spats through a new federal arbitration process. Out-of-network providers and insurers that can’t agree on payment can request arbitration, where they each submit offers to an independent third party. That arbiter then selects an offer by considering the median in-network payment — essentially, the market rate — and then any additional submitted information such as a doctor’s experience or the severity of a patient’s illness or injury.
The law prohibits arbiters from considering doctors’ usual and customary charges. That means acute-care surgeons like Haller — a specialty that earns $400,000 per year on average — likely will make less money. And those financial concerns are the subtext for Haller’s entire case.
At a basic legal level, Haller contends Congress should not be able to interfere with him and his patients.
The No Surprises Act “illegally and unconstitutionally requires physicians … to submit their state common law claims for the reasonable value of the services they have provided to patients” to an arbiter, Haller alleges.
Law experts told STAT those arguments hold almost no weight.
“It is an extreme legal position that really has no support in current law,” said Mark Hall, director of the Health Law and Policy Program at Wake Forest University. “In effect, the argument is, ‘The government can’t tell me how to conduct my business.’ Well, sorry, but the government can.”
Since the 1930s, the Supreme Court has held that governments can regulate companies if those regulations protect “the health, safety, morals, and welfare of the people.”
“Your right to conduct business is not a foundational right like speech or religion,” Hall said. “That’s a form of individual liberty that’s subject to any type of legislation that has a rational basis.”
Haller does appear to support a law that favorably regulates his practice: New York’s state surprise billing law. Before Congress took up the issue, New York created an arbitration process for surprise ER bills that is similar to the federal one, with an important difference: Arbiters can consider doctors’ usual and customary charges.
Haller’s charges aren’t publicly available. But he argues that because federal arbiters can’t consider those charges, and because doctors can’t chase patients to pay more, the No Surprises Act “deprives the physician of this right under New York law to be paid the reasonable value of the physician’s services.”
However, Keith said that grievance isn’t valid because “the No Surprises Act doesn’t preempt state law.” The New York surprise billing law, like similar laws in other states, applies to people in health plans that are regulated by the state. The federal law applies to the roughly two-thirds of people with “self-funded” health insurance plans, which are exempt from state law.
“It doesn’t do anything to disturb the structure New York put in place,” Keith added.
One of Haller’s arguments against the No Surprises Act, however, does have broader support. His complaint takes issue with the portions of the law that require an arbiter to rely on median in-network rates — an argument that the American Medical Association and the American Hospital Association have also made in their own, joint lawsuit about the bill.
A federal judge in Texas recently invalidated those portions of the act, although the federal government is appealing.
Unlike Haller, however, groups like the AMA and the AHA that have taken issue with the arbitration process still support keeping the law in place.
“This is a law about consumer protections,” said Jeff Davis, an attorney at Bass, Berry & Sims who represents hospitals. “You don’t see much pushback against what is perceived as a popular protection for insured patients.”
Haller has few allies. He performs surgeries at hospitals owned by Catholic Health and Mount Sinai Health System. Both hospital systems said they are not parties to the lawsuit and directed all questions to Haller.
Physician groups are not rushing to Haller’s defense, either. The American College of Surgeons, where Haller has credentials as a fellow, declined to comment, saying: “We typically don’t comment on lawsuits involving individual physicians.” The American Medical Association declined to comment because it is “focused on our case.” The Society of Critical Care Medicine also declined to comment.
The Association of American Physicians and Surgeons, a fringe conservative group that opposes most federal health policy, is one of the only groups backing Haller’s case. AAPS filed a similar lawsuit against California’s surprise billing law in 2016. A federal court dismissed the case in 2019.
Jeremy Snavely, director of regulatory affairs at AAPS, said the group’s main issue is how the No Surprises Act restricts physicians from working outside of the traditional insurance system.
“We don’t want patients getting surprise bills,” Snavely said. “We also don’t like this law. We don’t think those are mutually exclusive.”
This month, Haller’s lawyers asked the court to stop the federal government from enforcing the surprise billing law while his case proceeds. The judge denied their request. Now, Haller and his team await a hearing in June, and the Department of Justice is gearing up to defend the law.
“American families believe a really skilled, high-quality physician should be able to receive appropriate payment for his or her services. This lawsuit isn’t about that,” Isasi of Families USA said. “When you see … physicians like this challenge the law … every time they try to water down the ability to set a fair price, they’re saying, ‘My greed is more important.’”
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