What They Are Saying: Private Equity-Backed Providers’ Taking Advantage of IDR at Consumers’ Expense

Apr 24, 2024 | Arbitration, Private Equity

Policy experts across the political spectrum are sounding the alarm on how private equity (PE) is manipulating the independent dispute resolution (IDR) process under the No Surprises Act (NSA). As a result, concerns are mounting that the now-expansive IDR process could be ripe for misuse.

  • The Commonwealth Fund: “In the first half of 2023, 288,000 new IDR cases were filed, well above the 200,000 cases in all of 2022. Both numbers far exceeded the government’s estimate of 17,000 cases per year. … In the second quarter of 2023, four organizations accounted for about two-thirds of all cases. All four are backed by PE, some with a pre-NSA history of exploiting surprise billing as a business strategy.”
  • Paragon Health Institute: “In addition to an overwhelming flood of cases, the selected prices are much higher than expected. … the median IDR decision is nearly four times what Medicare would pay and the median decision is at least 50% higher than historical mean in-network commercial prices.”
  • The Brookings Institute: “These outcomes reflect the fact that providers are submitting relatively high offers and that IDR entities are selecting the provider’s offer more than three-quarters of the time. And they contrast with Congressional Budget Office projections that outcomes would hew close to prior in-network rates.”
  • Health Affairs: “PE has aggressively pursued strategies to increase payments for hospital-based out-of-network physician practices despite NSA curbs. …This evidence suggests that PE-practice owners may be using the IDR process to skirt Congress’ intent for the NSA, leading to higher overall commercial market spending.”

Implementation of the No Surprises Act got off to a strong start in 2023 by preventing more than 1 million surprise bills per month. But pending lawsuits from out-of-network providers and PE-backed doctors threaten its future, and patients are taking note. Morning Consult recently released new data showing that three in four voters are concerned about these pending lawsuits and worry they could weaken the critical patient protections that stop surprise bills from reaching patients in the first place.