Affordability was one of the defining issues of the recent midterm elections, and healthcare costs ranked among voters’ top concerns. Now, a former federal official who helped write the rules implementing the No Surprises Act is warning that the law’s broken arbitration system is driving those costs even higher, putting more pressure on employers’ and families’ budgets.
In a new piece from The Conversation, published in The Washington Post, health policy expert Lindsey Murtagh, a former CMS employee, warns that the No Surprises Act’s independent dispute resolution (IDR) process has “run amok.” Murtagh emphasizes that “a small number of out-of-network providers are using the law to extract enormous payments from health plans,” and that employers, unions, and consumers are ultimately bearing the cost.
She points to awards far above in-network rates and dispute volumes that have vastly exceeded expectations.
Her analysis highlights three key concerns:
- Payments far above in-network rates. Murtagh writes: “As a federal employee, I worked on rules that would have required the arbitrators to treat the middle amount as a strong benchmark. But lawsuits from providers blocked those rules from going into effect. Without those rules, arbitrators are selecting offers that are far above what plans would pay in-network.” Providers win roughly 85% of disputes. As she writes: “Frequent and big provider wins at arbitration will not put downward pressure on healthcare prices. They will likely do the opposite.”
- Much higher dispute volume. “The federal government estimated there would be 17,000 disputes annually. Last year, there were more than 2 million disputes, many brought by providers with private equity investment.” Murtagh warns: “Right now, only a small portion of providers use arbitration. If volume continues to grow and providers continue to win big, the cost of arbitration will grow as well – and so too will costs for consumers.”
- Growing costs for coverage. Murtagh notes that “consumers as a group are the ones who ultimately will pay for the cost of arbitration.” She adds: “Researchers estimate the arbitration process alone cost health plans $22.4 billion in the law’s first four years. This doesn’t include the increases in in-network rates that are likely to occur if arbitration trends continue on pace.” She further explains: “We’re already seeing the costs of arbitration affect the price of health insurance.”
Murtagh is encouraged that Congress is taking notice, pointing to legislation from House Energy and Commerce Committee Ranking Member Frank Pallone (D-N.J.) to replace arbitration as part of the Lower Premiums, Faster Payments Act. And with pressure mounting on employer and family budgets, Pallone recently joined Energy and Commerce Chairman Brett Guthrie (R-Ky.) in asking the Congressional Budget Office for an updated cost assessment of the No Surprises Act’s arbitration process.
Still, she closes with a warning about the cost of inaction: “Absent action by Congress, I fear that the protection the No Surprises Act offers Americans will come at a cost that ultimately limits consumers’ access to health insurance.”
Read the full piece from The Conversation in The Washington Post here.
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