The evidence of certain providers’ routine abuse and misuse of the No Surprises Act’s Independent Dispute Resolution (IDR) process, also known as arbitration, has been overwhelming. Recent lawsuits reveal repeated and persistent patterns of fraudulent IDR submissions, including flooding the IDR process with ineligible claims and demanding payments that far exceed in-network rates.
The costly combination of high volumes of claims and inflationary final awards has translated into more than $5 billion in wasteful spending, driving up overall health care costs for employers and consumers.
Below is a snapshot of just a handful of costly IDR determinations, illustrating how far arbitration has strayed from the neutral, last-resort option it was intended to be.
Arbitrators are awarding extreme, unjustified payments.
In some of the most egregious cases, IDR entities have issued awards that bear little resemblance to market rates, billed charges, or common sense. Instead of serving as a neutral backstop, these arbitration outcomes dramatically inflate prices, driving higher costs for employers and consumers with little explanation or accountability.
- In one particularly striking case, a Blue Cross Blue Shield company went through arbitration and the provider was inexplicably awarded $230,000. Despite the plan submitting an offer of $6,193 and the median in-network rate for the service being $1,000, the arbiter sided with the provider for the full amount, offering no justification for the staggering 23,000% hike.
- Employers, unions, and health plans also report a concerning trend in plastic surgery arbitrations, particularly breast reduction procedures. While Medicare reimburses $1,145 for breast reduction surgery in Connecticut, one health plan reports that the average IDR award for the same procedure is $60,000. Unfortunately, this is not an isolated incident; similarly inflated awards are occurring repeatedly.
- In yet another example, misrepresentations by Zotec distorted the arbitration process and led to an extreme and indefensible outcome. The IDR entity ordered Blue Cross Blue Shield of Texas to pay an amount more than 300% higher than the provider’s own billed charges and over 5,000% greater than the median in-network rate for the same service — underscoring how easily the process can be manipulated to drive massive overpayments.
Ineligible or fraudulent claims are driving millions in excess payments.
Even when claims clearly fall outside the scope of the No Surprises Act, private equity-backed providers and IDR middlemen continue pushing them into arbitration — and winning. These ineligible or fraudulently submitted disputes result in millions of dollars in improper payments, exposing deep failures in eligibility enforcement and oversight.
- For example, NorthStar submitted a claim involving Medicaid, which is explicitly ineligible for IDR under the statute. Nevertheless, the IDR entity awarded NorthStar a payment nearly 500% higher than Pennsylvania’s Medicaid fee schedule, demonstrating how even plainly ineligible claims can still generate wildly inflated and unlawful awards.
- In another case, Anthem faced the consequences of routine abuse and misuse driven by HaloMD. Through arbitration, Anthem was ordered to pay approximately $15 million more than the providers’ original billed charges. Anthem alleged that more than 600 of these disputes were ineligible for IDR in the first place, yet they still resulted in over $6 million in excess payments.
- Similarly, AGS Health submitted hundreds of ineligible disputes supported by false attestations of eligibility. Despite the claims’ ineligibility, Anthem lost 329 of these arbitrations, with IDR entities ordering an additional $340,387 above amounts already reimbursed, along with nearly $181,999 in IDR administrative fees.
To learn more about the fraud, waste, and abuse stemming from IDR, click here.
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