New surprise billing fix may not reduce disputes

• More than 5 million claims have gone to arbitration since 2022, and many remain unresolved.

Driving the news: The Trump administration last week finalized a plan to streamline arbitration by expanding which disputed items and services can be lumped together.

• It also imposes new requirements to promote the process providers and payers can use to strike voluntary settlements, and creates standardized codes to determine whether a claim is eligible for dispute resolution sooner.
• The administrative fee for entering claims to arbitration will be lowered from $115 to just $15 per party per dispute.

Between the lines: Rather than cutting the backlog, the changes likely will increase the overall number of disputes, according to investment research firm Capstone.

• The process is likely to benefit providers in radiology, anesthesiology, pathology and laboratory services, the firm concluded. That could encourage more practices to take claims to arbitration.
• "The reduction in administrative fees and expansion of batching allowability will continue to drive higher dispute volumes," analyst Eric Schiavone wrote.
• Capital Alpha analyst Kim Monk noted the changes could make arbitration more accessible to smaller, independent medical practices.

The process would also promote more communication and transparency between providers and payers, said Randy Pilgrim, an executive at national clinical services company SCP Health.

• The hope is that will lead parties to strike more voluntary agreements and avoid the need for third-party arbitration down the line, he said.

The other side: Insurance lobbyists blame providers for gaming the arbitration system and winning big payouts that, in turn, drive up the costs of care.

• They say the new plan is tilted in providers' favor — and plays into the hands of private-equity-backed medical practices and middlemen who handle disputes on their behalf.
• "Unfortunately, this rule is a missed opportunity to restore the balance that Congress intended — a balance that has been badly warped by activist courts and predatory provider interests," James Gelfand, president of the ERISA Industry Committee, said in a statement.
• The arbitration process added at least $5 billion to the overall health costs in its first two years, according to an analysis published in Health Affairs last year.

Other insurance groups including AHIP and the Blue Cross Blue Shield Association say the rule is a good start toward improving a flaw-riddled system.

• The administration should now focus on additional actions, like stemming the flood of ineligible claims and preventing settlements that far exceed what insurers typically pay for a service, said David Merritt, senior vice president of external affairs at the Blue Cross Blue Shield Association.
• The lower administrative fees and other policies to make the process more efficient will also decrease the costs of arbitration, which should ultimately mean more dollars going toward patient care, Pilgrim said.

Zoom out: The administration plan is mum on another friction point: how to calculate the median in-network rate for a service, which is used as a benchmark for negotiations over the amount in dispute.

• An appeals court review of the calculation methodology is still pending.
• But if the changes to the initial negotiation process work, "we could look up and see a meaningful drop in the number of disputes sitting in the queue," said Carol Skenes, chief of staff at Turquoise Health.

Reality check: Regulators said some key details in the plan will be fleshed out in future guidance.

• And there's always the chance that the plan will go the way of other surprise billing fixes and wind up being challenged in court.