Dive Summary:
- Many claims that providers submit for dispute resolution under the No Surprises Act are actually ineligible for the process, according to a new survey of health insurance groups.
- AHIP and the Blue Cross Blue Shield Association The plans found identified 39% of out-of-network disputes submitted for arbitration as ineligible. However, the arbitrators themselves decided that only 17% of the cases were inadequate, meaning that more than half of the ineligible cases resulted in binding payment determinations, according to the groups.
- The findings are notable given that disputes processed through surprise billing arbitration are most frequently won by providers and often result in payments well above in-network rates. As a result, providers are incentivized to file as many disputes as possible, even if they don’t qualify, which may be driving up premiums and other health system expenses, according to the survey and other research.
Diving information:
Since becoming law in 2020, the No Surprises Act has protected millions of consumers from unexpected medical bills. Insurers and providers who cannot reach an agreement on reimbursement for an out-of-network claim are required by law to undergo independent dispute resolution, or IDR.
During the IDR, a third-party arbitrator decides which party’s offer (the insurer’s or the provider’s) is fair, taking into account area rates, the quality of the provider, and other factors.
But what exactly “fair” entails has been a hot topic of debate among insurers and providers. Providers, in particular, have filed numerous lawsuits in an attempt to modernize the IDR to eliminate perceived bias toward insurers. It hasn’t helped that regulators are still ironing out operational issues, including how to address ongoing concerns about ineligible disputes overwhelming the system.
Now the new survey from AHIP, the insurance industry’s main lobby, and BCBSA, which represents independent Blues plans, sheds figures on how often ineligible disputes slip through the system.
The survey, which includes data from 25 health plans covering 154 million Americans (nearly three-quarters of the entire commercial market), found that independent mediators flagged fewer than half of the claims submitted that should have been deemed ineligible.
Specifically, the arbitrators decided that 15% of emergency disputes, 19% of non-emergency disputes, and 10% of air ambulance disputes were ineligible.
But the plans themselves found percentages more than double: 33%, 45% and 23%, respectively.
As a result, insurers had to pay out at least 184,500 improper disputes last year, according to the survey.
Disputes were ineligible for a variety of reasons. Plans most often found that claims were submitted for IDR outside the allowable time frame, were missing key information, were subject to a surprise billing resolution under state law, or were for services not included in No Surprises.
AHIP and BCBSA leaders blamed a small number of provider groups, many of them backed by private equity, for manipulating the arbitration process to force insurers to pay them inflated amounts for out-of-network care.
“The same private equity-backed companies that created the surprise billing business model have turned to arbitrage abuse as their new strategy to defraud consumers and employers,” Mike Tuffin, president and CEO of AHIP, said in a statement.
Some research supports the groups’ accusations. Since the IDR began in 2022, the process has been inundated with a significantly higher level of complaints than regulators initially expected. A small number of private equity-backed medical groups are responsible for the bulk of those claims: Radiology Partners and Team Health together accounted for 43% of all claims settled in 2023 and 2024, according to analysis of federal data.
Providers win most disputes and, on average, earn about four times what insurers would earn for services paid in-network, according to research.
Providers argue that they are forced to file many claims in IDR and enjoy high win rates due to unfairly low payment offers from insurers.
But overall, the IDR generates between $2 billion and $2.5 billion in unnecessary spending each year due to the large number of ineligible dispute filings and other system failures and abuses, according to estimates by Georgetown University’s Center on Health Insurance Reforms.
AHIP and BCBSA called on policymakers to address the problem, including through better oversight and accountability. Lawmakers and regulators in Washington are aware of the problems with the IDR, but reform is unlikely anytime soon given the current government shutdown.
The industry is still waiting for the CMS to finalize a standard from 2023 which both providers and insurers say would improve the dispute resolution portal, including by modifying the dispute eligibility review. Although CMS said its pace of rulemaking could be affected by the shutdown, the agency called back its furloughed employees Monday to help with operations during enrollment periods for government health plans.
