Oct 12, 2023 - Health

Surprise billing arbitration is still a mess

Illustration of a crumpled paper bill atop confetti

Illustration: Natalie Peeples/Axios

Nearly two years after a surprise medical bill ban took effect, the process for settling billing disputes between insurers and providers is still mired in litigation and many cases remain unresolved.

Why it matters: Uncertainty around how providers get paid for disputed out-of-network services isn't likely to ease as multiple challenges to the Biden administration arbitration rules continue to work through the courts.

Driving the news: The Centers for Medicare and Medicaid Services last week reopened its portal for providers to submit new claims for unpaid out-of-network services to arbitration for the first time since early August.

  • Federal officials also said last week that they don't have plans to release new guidance on how insurers should calculate a key benchmark used to determine payment for a disputed bill. Officials will exercise enforcement discretion over calculations for at least six months.
  • A federal district court tossed out portions of the regulations for calculating that benchmark in August, but the Biden administration said it plans to appeal.

Catch up quick: The No Surprises Act has protected consumers against unexpected medical bills since the beginning of 2022. But figuring out how insurers should actually pay out-of-network claims has proven to be a major headache.

  • The Texas Medical Association has filed four lawsuits against the administration over different aspects of the law and its corresponding regulations.

By the numbers: Between April 15, 2022, and March 31, 2023, while the claims resolution process was underway, federal arbitrators sided with providers in about 71% of disputed claims that were resolved, according to a government update published earlier this year.

  • Claims went to arbitration nearly 14 times more than officials expected in the first year of the process. However, a survey produced by insurers this summer found that providers accepted the insurers' initial payment offer in 88% of disputes.
  • Still, radiologists, anesthesiologists and emergency department physicians — some of the specialties most frequently involvedare "very concerned about this delay in full enforcement" of the arbitration rules, five trade organizations said in a joint statement this week.
  • Enforcement of insurers' compliance with surprise bill payment to providers is already lacking, and the latest federal guidance gives payers more leeway, the provider groups said.
  • Providers face "a bumpy and expensive road ahead," Jeffrey Davis, health policy director at McDermott+Consulting, wrote.

The other side: Insurers are frustrated, too. Continued lawsuits have eroded the structure around the No Surprises Act, said Adam Beck, a senior vice president at health insurance trade group AHIP.

  • "We, from the outset, said that an arbitration-based system is going to be costly, it's going to be cumbersome and it could end up increasing health care costs," he said. "And unfortunately, that's what we're seeing."
  • That said, many of insurers' challenges with the arbitration process could be solved with technical updates, Beck added. "It's not grand policymaking. Sometimes it's just adding a new drop-down menu," he said.

What we're watching: There's a good chance that some litigation over the No Surprises Act makes it all the way to the Supreme Court, Beck said.

  • In the meantime, the Biden administration's appeals over Texas court decisions on their arbitration rules will continue. Several individual court challenges over specific arbitration cases have popped up as well, noted Matthew Fiedler, senior fellow at the Brookings Schaeffer Initiative on Health Policy.
  • And while patients remain insulated from most surprise medical bills under federal law, these squabbles could have trickle-down effects.
  • The prices ultimately paid to providers after arbitration could drive up premiums, Fiedler said. The ever-changing rules being challenged in court could also lead to some incorrect cost-sharing for patients, according to Davis.
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