WASHINGTON — After years of certain private equity-backed providers scamming patients with costly surprise medical bills, new legislation S.2420 introduced in the Senate would add even greater costs for employers, health plans and patients. CASMB members and allies, which include leading employers, consumer groups, unions and health plans, warn that the proposed legislation would directly undermine the No Surprises Act intent to protect Americans from unexpected, skyrocketing medical costs.
While the No Surprises Act serves as a critical safeguard against egregious medical billing practices, private equity-backed providers and arbitration middlemen are systematically manipulating the law’s arbitration process—known as independent dispute resolution (IDR)—to extract maximum payments from employers and patients, often exceeding even the original billed charges.
This proposed legislation would exacerbate this issue, imposing substantial new penalties on employers and health plans—with interest—for any delay in the final payment adjustments. These penalties would apply even if the arbitrators don’t provide the information needed to process claims—a dominant source of delays. Worse, the legislation offers no process to prevent or address the significant number of ineligible claims that providers fail to screen and push through arbitration—overwhelming the system, wasting resources, and causing further delay, dispute, and expense to correct.
While arbitration was designed as a last resort for resolving legitimate payment disputes, providers are flooding the system with claims, including a substantial number ineligible for arbitration. Recent data from the Centers for Medicare & Medicaid Services (CMS), analyzed by Georgetown University researchers, exposes the extensive misuse of the arbitration system. The findings reveal a continued surge in arbitration filings, sky-high final payments that overwhelmingly favor providers and growing use of third-party IDR firms—raising alarms about the consequences for consumer premiums and health care affordability.
The IDR system under the No Surprises Act is increasingly marked by inconsistent decisions, limited transparency, and growing opportunity for manipulative behavior. Arbitrators vary widely in how they rule, often offering minimal rationale, while high-volume, provider-aligned entities dominate the process, proven by these key findings from the first half of 2024:
- 47% of all cases originated from just four private equity-backed organizations: Team Health, SCP Health, Radiology Partners and Envision
- 45% of filed cases were challenged as ineligible, compared to 37% in all of 2023
- “For one IDR entity in one year, the share of disputes ruled in favor of providers was as high as 99 percent. Conversely, the lowest share across years and IDR entities was 19 percent, an 80 percentage-point difference,” according to Health Affairs.
For instance, Nutex Health is one of the many companies leveraging the flawed IDR process to drive a highly lucrative business model. One investing advisor noted, the company achieved a “spectacular quarterly result in which the company went from red to black and raised more than $100 million through the arbitrage mechanism of the No Surprises Act.” By taking advantage of arbitration as a profit driver, the company was successful in securing reimbursements 150–250% higher than initial payments, according to Seeking Alpha. In Q4 2024 alone, arbitration payments generated $169.7 million in revenue, accounting for a significant share of Nutex’s $257.6 million in total quarterly revenue.
Median awards from the Q4 2024, the most recent period for which CMS has released data, show that providers are winning awards several times market rates, underscoring the extent of the issue:
- For Neurology and Neuromuscular Procedures (CPTs 95700 – 96020), median awards were 1,675% of the qualifying payment amount (QPA)
- For Surgery codes (10004 – 69990), median awards were 1,302% of the QPA
- For Anesthesia codes (99100 – 99140), median awards were 975% of the QPA
To protect employers, patients and families from private equity’s manipulation of arbitration, the Trump administration and Congress must implement common-sense reforms to address current flaws with the process, including:
- Prevent ineligible claims—including Medicare, Medicaid, state-arbitration claims, in-network claims, untimely claims, incorrectly batched claims and claims that have already been through arbitration—from being entered into the arbitration portal and prohibit IDR entities (IDRE) from issuing payment determinations on ineligible claims and disputes initiated with incomplete or inaccurate information;
- Establish timely processes for correcting or addressing errors on non-eligible claims and a formal process to reject payment determinations for non-eligible claims;
- Encourage IDRE performance audits and hold initiating parties accountable where there is a demonstrated pattern of making false or misleading representations in the IDR process;
- Require enhanced training and oversight of IDREs on the No Surprises Act statute and guidance to ensure compliance and mitigate instances of abuse or misuse; and
- Mandate timely and transparent disclosures on IDR utilization by individual providers, as well as transparency on IDREs’ performance to ensure objective decision-making.
These reforms will help restore the No Surprises Act to its original purpose: protecting patients from surprise medical bills rather than enabling corporate profit extraction.
For more information on the No Surprises Act, visit stopsurprisebillingnow.com
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