Axios

The XBB.1.5 COVID-19 subvariant — a new version of the Omicron variant — is sweeping through the United States right now amid a chaotic travel season and the early days of winter.

Why it matters: Cases tied to the new variant nearly doubled over the last week, according to estimates from the Centers for Disease Control and Prevention. And that's stoked fears that more cases could be on the way nationwide.

The Arizona Court of Appeals issued a ruling Friday saying abortion doctors can't be prosecuted under an 1864 law that criminalizes nearly all abortions.

Driving the news: But the court declined to repeal the pre-statehood law, which has been barred from being enforced for nearly 50 years.

Insurers and providers are overwhelming an arbitration system Congress set up to resolve billing disputes as part of the law to prevent surprise medical bills, according to CMS data.

Why it matters: The No Surprises Act, which went into effect earlier this year, protected privately insured patients from getting stuck holding the bag when there's a disagreement over the cost of out-of-network care.

• But the mechanism for deciding who ultimately pays — which allows providers to appeal out-of-network payments they find unreasonable with a third-party arbitrator — has been bogged down by onerous backlogs.

By the numbers: Federal agencies estimated there would be 17,333 claims a year submitted to the independent dispute resolution process.

• But, CMS data shows, there were more than 90,000 disputes initiated in less than six months.
• Determining which disputes are eligible for review is taking longer than anticipated as well, CMS officials said in the report.
• An analysis released last month by AHIP and the Blue Cross Blue Shield Association (BCBSA) found there have been at least 275,000 claims submitted for dispute resolution during the first three quarters of 2022.

The big picture: Health insurers lay the blame on some provider groups, especially ones backed by private equity firms, who are abusing the process and overwhelming the system in a way that could increase health care costs.

• They urged the administration to "make clear that IDR is meant to be used sparingly as a backstop."
• But providers say since the law took effect, the arbitration process has been skewed in favor of insurers because arbitrators consider factors including the median of contracted rates for a specific service in an area as calculated by health plans.
• Earlier this month, the Texas Medical Association filed its third lawsuit challenging the methodology for calculating these so-called qualified payment amounts, or QPAs, saying it will "deflate" payments, Healthcare Dive reported.

Zoom in: Officials at Envision Healthcare — one of the largest hospital staffing firms in the country, which is owned by private equity firm KKR — have seen a spike in out-of-network reimbursements that are below Medicare's rates. Commercial rates are typically much higher than Medicare.

• Envision estimates about 13% of services in 2022 were reimbursed at a rate lower than Medicare rates compared to just 2% in 2021.
• "We’ve seen some pretty strange QPAs which frankly I don’t think pass the smell test," said Patrick Velliky, vice president of government affairs.
• "We have a high volume of QPAs from different payers that are either, to the penny, the same amount or up to 25% below the Medicare rate for the same service in the same geography," he said.
• He can't be sure why that is happening, but said it's likely due to the methodology insurers were given to calculate QPAs under the Biden administration's final rule to implement the surprise billing ban. He suggests improved oversight is needed for the law's implementation, in the form of a federal audit which was due to be completed this year.

Between the lines: When providers do dispute payments, they face months-long waits to work out whether their claims are eligible and to ultimately receive reimbursements, Velliky said.

• Envision has found most insurers are not providing specific enough information to determine the right venue for a dispute, despite CMS giving insurers a standardized way to do that.
• It's "not because providers are trying to flood the IDR system with disputes. There’s a lack of information available to the providers in determining eligibility," he said.
• CMS data shows Envision has had at least 2,800 disputes within the roughly six-month window. But Envision officials said the company actually has had nearly 5,000 disputes over the course of the entire year.
• Fewer than 10% of those disputes have been resolved so far, they said.
• The company has been waiting for a resolution on about 1,000 of those disputes for more than 120 days, and waiting for a resolution of a handful of them for more than 180 days, its officials say.

While waiting that long is problematic for a large company like Envision —  it can be devastating for smaller practices, Velliky said.

• "It is nearly impossible to manage for some of the small, two- or three-person practices that are looking to make payroll," he said.

What they're saying: "There are a number of reasons that disputes are taking longer to process than expected," a CMS spokesman said in an email response to Axios.

• There are many more disputes than the department expected and determining whether those disputes are eligible for the federal process requires more time and processing, he said.
• "Sometimes initiating parties make mistakes related to necessary process steps, items ... or services are [incorrectly lumped] into a single dispute, and items or services that are subject to a state law are incorrectly submitted to the Federal [independent dispute resolution] process."
• "The Departments continue to release guidance, conduct outreach, and education, and make technical improvements to the federal [independent dispute resolution] portal to improve processing of disputes," he said.

The bottom line: While data shows patients aren't getting hit with as many surprise bills, the process for settling disputes between insurers and providers isn't working as intended, and is leading to costly delays.

• CMS said the Department is conducting QPA audits and will produce the reports to Congress as required in the law.
• But with legal challenges still swirling, some of the fixes may wind up getting worked out in the courts.

Editor's note: The story has been corrected to reflect that under a Biden administration rule, arbitrators who settle billing disputes may consider a set of factors including the median of contracted rates for a specific service in a geographic area, not only the median rates.