Certain private equity-backed providers are flooding the federal arbitration process with thousands of frivolous and ineligible claims, according to a new analysis from Brookings Institution researchers published in Health Affairs. The latest assessment confirms that private equity firms are overwhelming the arbitration process (also known as the Federal Independent Dispute Resolution or IDR process) to collect higher reimbursement at the expense of employers, consumers, and families.
Reviewing arbitration outcomes for emergency services across 2023, the researchers found that IDR entities—the individuals tasked with reviewing and making determinations on final payments between health plans and out-of-network providers—are picking reimbursement amounts that often exceed the Qualifying Payment Amount (QPA) by a substantial margin. As a result, the arbitration process has become so costly and expensive that it’s undermining the original cost-savings goals Congress intended to achieve under the No Surprises Act.
Read the full report here and see below for highlights:
- “We found that providers won the vast majority of cases, with decisions averaging 2.65 times the relevant QPA. This finding appears driven by private equity (PE)-backed physician staffing companies winning 90% of their disputes vs just 39% for other emergency physician groups, generating an average IDR payment 63% higher relative to the QPA than non-PE groups.”
- “If PE staffing companies continue to obtain much higher prices than competitors from IDR, it could create additional incentives for other emergency medicine practices to sell to their PE-backed competitors, accelerating the growth of PE-backed companies and reducing the number of independent physicians.”
- “Private equity-backed provider groups dominated the IDR process in case volume, win rates, and winning amounts in 2023.”
- “Only 8% of professional 99 284 dispute lines involved a provider group without a majority ownership by PE investment (USACS, an organization that formerly had majority PE ownership, accounts for 1% of dispute lines).”
- “TeamHealth, a PE-backed provider organization, accounted for 54% of dispute lines. Other PE-backed provider organizations that accounted for dispute lines are SCP Health (28% of dispute lines), Envision (5%), American Physician Partners (3%), and Sound Physicians (3%).”
- “At the mean, PE-backed provider organizations have higher offers relative to the QPA (2.89 times QPA) than non-PE provider organizations (2.79 times QPA) in IDR.”
- “Public data on IDR arbitration outcomes in 2023 reveal that arbiters are ruling in favor of providers in the vast majority of disputes and the prevailing offer is much higher than the QPA on average. This contrasts markedly with the expectations of the Congressional Budget Office at the time of enactment that, on average, IDR awards would come out close to the QPA.”
Despite these findings, new legislation was introduced that would directly undermine the No Surprises Act’s intent to protect patients and families from excessive costs by making an already flawed arbitration process vastly more expensive and cumbersome. Rather than wrapping an already pricey program in even more red tape, the administration and Congress should take common sense steps to make the process more streamlined and efficient.
For more information on the Coalition’s recommendations, click here.
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