While the No Surprises Act took a critical step in banning unfair, egregious surprise medical bills, certain private equity-backed providers continue to abuse and misuse the law’s arbitration process (also known as independent dispute resolution, or IDR) as a “back door” to extract maximum costs, or even amounts higher than billed charges, from employers and patients.
According to CMS data, more than 657,000 arbitration cases were filed in 2023 – of which 70 percent came from just four private equity-backed organizations: Team Health, SCP Health, Radiology Partners, and Envision. Further, analysts at Brookings determined that 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.
Now, new legislation would directly undermine the No Surprises Act’s intent to protect patients and families from unfair costs by making an already flawed arbitration process vastly more expensive and cumbersome.
- The recently proposed changes would impose substantial new penalties on employers and health plans and charge interest even if the arbitrators don’t provide the information needed to process claims. Worse, the legislation offers no process for ineligible claims that slip through arbitration.
- In 2023, more than a third of arbitration cases were contested due to potential ineligibility. Most of the time, IDR entities are not scrutinizing cases for eligibility, but rather issuing determinations in the providers’ favor. Certain private equity-backed provider organizations seem to be intentionally submitting these ineligible claims in the portal, which is very likely to increase costs for patients and families.
Forcing health plans, employers, patients and families to pay higher reimbursement rates for ineligible claims – on top of interest and penalties – is the wrong approach.
- Providers’ claims that they are “not getting paid” under the No Surprises Act are demonstrably false. All approved claims receive an initial payment and roughly 80% of No Surprises Act claims are resolved pre-arbitration, and these claims are already subject to prompt pay rules.
- Further, arbitration was never intended as a loophole for reimbursement; it is meant as a last resort for dispute resolution. These perverse “prompt pay” requirements would incentivize increased use of arbitration as a go-to business tactic for private equity-backed providers, driving up the volume of cases and costs and incentivizing providers to stay out-of-network.
To protect employers, patients and families from private equity’s misuse of arbitration, the administration and Congress should take constructive, common-sense steps to address current flaws with the IDR process, including:
- Mandating that IDR entities provide employers and health plans all the relevant information needed to process payment determinations;
- Preventing ineligible claims — including Medicare, Medicaid, state-arbitration claims, in-network claims, and claims that have already been through arbitration — from being entered into the arbitration portal and prohibiting IDR entities from issuing payment determinations on these ineligible claims;
- Establishing timely processes for correcting errors on non-eligible claims;
- Ensuring clear and timely communications to all parties involved with IDR via a dynamic portal maintained by CMS;
- Requiring and enhancing training and oversight for IDR entities on No Surprises Act statute and guidance to ensure compliance and mitigate instances of abuse or misuse; and
- Establishing timely and transparent disclosures on IDR utilization by individual providers, as well as transparency on IDR entities’ performance to ensure objective decision-making.
For more information on the No Surprises Act, visit stopsurprisebillingnow.com.
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