Modern Healthcare source article | Comments courtesy of Matt Zavadsky
Conservative legal expert calls surprise bill proposals unconstitutional
June 21, 2019
A prominent conservative legal expert is warning that congressional moves to regulate surprise out-of-network billing by physicians are unconstitutional and could be challenged in court.
In a new legal brief, Paul Clement, a former Republican solicitor general who led the unsuccessful effort to overturn the Affordable Care Act in 2012, said bipartisan congressional proposals to cap out-of-network rates would violate the takings clause of the Fifth Amendment as well as the First Amendment right to freely associate.
Other legal experts said Clement's arguments are dubious but could convince lawmakers to back off or water down legislation.
"These are extremely weak constitutional claims—the sorts of claims that, if accepted, would threaten the constitutionality of any kind of legislative price controls," said Nicholas Bagley, a health law professor at University of Michigan.
Nevertheless, Clement's brief may foreshadow a court challenge by provider groups or conservative legal groups if Congress passes legislation to protect consumers from surprise out-of-network bills and cap the rates insurers pay for out-of-network services.
The Senate health committee is planning to vote next week on a bipartisan bill that would cap payment for out-of-network care at a regional insurer's typical negotiated rate. House Energy and Commerce Committee leaders have offered a similar proposal.
With public outrage growing over surprise bills, President Donald Trump and lawmakers of both parties have called for protecting patients from these bills. "A very unpleasant surprise," Trump said last month. "So this must end."
Clement, a partner at Kirkland & Ellis who has argued nearly 100 cases before the U.S. Supreme Court, said the proposed legislation "threatens to take property from healthcare providers without just compensation" and "threatens to infringe on providers' associational activity."
He argued that any legislation should at least ensure that out-of-network providers who treat patients during an emergency or at an in-network facility receive the prevailing market rate as soon as possible after providing the service. In addition, he said Congress also should require a baseball-style arbitration process as an alternative.
Clement's office did not respond to a question about whether he wrote the brief on behalf of a particular client.
Physician and hospital groups strongly oppose the Senate health committee's "benchmarked cap" proposal as well as proposals to require hospitals to bring all their physicians into their insurance networks.
Provider groups didn't immediately indicate whether they agreed with Clement's legal analysis or would sue to block legislation. But the American College of Emergency Physicians echoed his arguments.
"While we can't speak to the legal or constitutional implications of the benchmarking approach of the Senate (health committee) bill, we have very strong concerns about the damaging impact that capping out-of-network reimbursement at the median in-network rate would have on patient access to care," said Laura Wooster, the association's associate executive director for public affairs.
Clement wrote that capping or eliminating balance billing would rob providers of the negotiating leverage they have with health plans, forcing them to accept unreasonable network rates. Over time, he said, rates would decline and physician practices would become economically non-viable for both network and out-of-network providers.
But those arguments are unlikely to hold up in court, said Tim Jost, an emeritus health law professor at Washington and Lee University.
"It seems to me a real stretch to say that requiring providers to accept a median in-network rate would be a taking prohibited by the Constitution or a violation of freedom of association," he said. "Government action has to be pretty extreme to constitute a taking."
Still, Clement's arguments "may give cover to politicians who are otherwise opposed to addressing surprise medical billing," he added.