The surge in surprise billing disputes, evident from recent CMS data, highlights ongoing challenges in implementing the No Surprises Act. Despite the Act’s intention to protect patients from unexpected out-of-network medical bills, hurdles like legal battles and an overwhelming volume of disputes have impeded its smooth execution. Moreover, the dominance of a few providers in initiating disputes, coupled with concerns about arbitration outcomes favoring higher payments, underscores the complexity of the issue. While the Act has undoubtedly benefited patients by preventing millions of surprise bills, there are apprehensions about its potential to inadvertently escalate insurance premiums, necessitating a closer examination of its impact.
Surprise billing disputes are on the rise, as indicated by recent data from the Centers for Medicare and Medicaid Services (CMS). What’s striking is that judges tend to favor the higher payment offers in these billing dispute determinations. This trend has led some health researchers to suggest that implementing the No Surprises Act could potentially lead to higher consumer premiums.
The No Surprises Act, hailed as the most significant consumer health legislation since the Affordable Care Act, was passed in 2021 with the aim of shielding patients from unexpected out-of-network medical bills. However, the rollout of the law has faced challenges.
While provisions safeguarding patients came into effect at the beginning of 2022, the process established by the federal government to settle payment disputes, known as independent dispute resolution (IDR), encountered immediate legal challenges from physician groups. Consequently, regulators had to halt and restart the IDR process multiple times after opening the federal portal for disputes in April 2022.
Moreover, the IDR process has been overwhelmed by a higher volume of disputes than initially anticipated. The CMS noted that the first half of 2023 saw a significant influx of disputes submitted through the Federal IDR portal, accompanied by substantial complexity in determining their eligibility for the IDR process.
A key observation is that a small number of providers account for the majority of disputes, a point that insurers emphasize when arguing that providers may be exploiting the process to boost their profits. In the first six months of 2023, SCP Health, Team Health, and Radiology Partners, major physician staffing firms, initiated 58% of all disputes. Critics contend that these firms sustain business models reliant on remaining out-of-network with hospital employers and surprising billing patients.
The challenges posed by the implementation of the No Surprises Act have even led some staffing firms, like Envision Healthcare and American Physician Partners, to file for bankruptcy in the past year, citing the effects of the legislation.
Providers argue that IDR is both time-consuming and costly to access, and they allege that many insurers are not complying with payment decisions.
Despite these disputes between payers and providers, the No Surprises Act has undeniably benefited patients. Health insurance groups’ analysis indicates that over 10 million surprise bills were prevented in the first nine months of 2023 due to the Act.
However, there’s concern that the Act might inadvertently contribute to increased costs for patients, particularly in terms of insurance premiums.
In IDR, providers and insurers resolve payment disputes through baseball-style arbitration, where a third-party arbiter selects one payment offer submitted by either party. These arbiters are instructed to consider the qualifying payment amount (QPA), determined by the health insurer, which represents the median contracted rate for a service in a given area.
According to the latest data, the offer that prevailed was higher than the QPA in 82% of cases. Providers, who often emerged victorious in these determinations, typically based their offers on past in-network rates or past out-of-network payment amounts, which can be significantly higher than in-network rates.
On the other hand, health plans generally benchmarked their offers to the QPA, arguing that it represents fair market reimbursement.
The fact that the final allowed amount tends to be higher than prior median in-network prices has raised concerns that the No Surprises Act might inadvertently lead to increased premiums. Loren Adler, associate director of the Brookings Schaeffer Initiative for Health Policy, highlighted this potential consequence, suggesting that the Act might not be as effective in curbing costs as anticipated.
The No Surprises Act represents a crucial step towards protecting patients from the financial shock of surprise medical bills, yet its implementation journey has been fraught with challenges. While it has undeniably prevented millions of surprise bills, the escalating volume of disputes and concerns about arbitration outcomes raise valid apprehensions about its unintended consequences. The dominance of a handful of providers in dispute initiation underscores potential loopholes in the system that may be exploited to the detriment of patients and payers alike. As policymakers and stakeholders navigate these complexities, a balanced approach is needed to ensure that the Act fulfills its intended purpose without inadvertently exacerbating healthcare costs or burdening consumers with higher premiums.