Under the No Surprises Act, which went into effect Jan. 1, providers and insurers can use a new arbitration process to resolve payment disputes over out-of-network care. However, the arbitration process has so far "gotten off to a rocky start," Maya Goldman and Nona Tepper write for Modern Healthcare.

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Background

In December 2020, Congress passed the No Surprises Act to mitigate patients' exposure to surprise medical bills and require insurers and providers to resolve payment disputes for out-of-network care independently or use a new arbitration process.

In 2021, CMS released two interim final rules to implement the law. One restricted out-of-pocket costs for consumers as a result of surprise and balance billing, and the other established a process to settle disputes between out-of-network providers or facilities and health plans over these surprise bills, also requiring providers and facilities to provide uninsured patients a "good faith estimate" of charges expected after an item or service is scheduled or upon the patient's request.

Last week, HHS and the Labor and Treasury departments finalized the independent arbitration process after providers argued that the rule unfairly favored insurers. Under the final rule, arbiters should first consider an insurer's median contracted in-network rate "and then must consider all additional permissible information submitted by each party to determine which offer best reflects the appropriate out-of-network rate."

The final rule requires insurers to provide information about their median contracted rate for each payment or payment denial when that rate is used to calculate cost-sharing, as well as explain any potential downcoding for a service and what the rate would have been otherwise.

The final rule also requires arbiters to explain their decisions on payment disputes, including how much weight was given to the median contracted rate. If an arbiter uses additional information to decide the final payment amount, they should explain why that information was not already reflected by the contracted rate.

Surprise billing arbitrations are 'off to a rocky start'

According to Goldman and Tepper, the surprise billing process has so far "gotten off to a rocky start." While insurers argue that providers are submitting all possible claims for arbitration, even those that are not eligible, providers allege that insurers are delaying the federal dispute process by not providing clear and complete information.

"I'm a generally optimistic person. But I'm not so optimistic," said Lisa Maurer, a physician at Emergency Medicine Specialists and CMO for ConsensioHealth.

As of Aug. 11, mediators have decided just 1,200 out of 46,000 payment disputes submitted to the federal government, and CMS noted that it has received "substantially more" cases than it initially expected. Currently, three out of 11 independent dispute resolution entities have reported they are no longer accepting new cases.

"If all of that potential revenue is just being delayed six months, nine months, who knows—that really does affect the bottom line," Maurer said.

According to CMS, the time it takes to determine whether cases are eligible for federal arbitration has been the primary cause of delays. So far, insurers and providers have challenged the eligibility of more than 21,000 cases, and arbiters have rejected another 7,000 cases.

Ed Gaines, VP of regulatory affairs and industry liaisons at Zotec Partners and a member of the reimbursement committee at the American College of Emergency Physicians, said providers are often unsure whether cases should be arbitrated by federal or state mediators since insurers are not disclosing the types of plans patients have.

"[Mediators] need more resources, they need more [independent dispute resolution entities], they need more training and they need more clarity around their rules and regulations," Gaines said.

However, even with the current backlog of cases, Loren Adler, associate director of the University of Southern California-Brookings Schaeffer Initiative for Health Policy, said providers are likely to submit more arbitration requests to potentially increase their reimbursements.

"The final rule means that you do likely get somewhat higher expected average outcomes in arbitration. In turn, providers get paid a little bit more, consumers pay a little bit more in premiums and federal deficits go up a little bit," Adler said. "There's just a lot more uncertainty injected into this process and we're gonna have even more claims go to arbitration after the already tens of thousands that have gone in."

Under the No Surprises Act, CMS is required to issue quarterly reports on the number of cases that go through arbitration and how they were resolved. Currently, the agency does not have data to report for the first quarter of the year due to a lawsuit delaying the launch of its arbitration portal, but will "produce quarterly reports for subsequent quarters and are committed to transparency in this process," according to a CMS spokesperson.

In the meantime, CMS has provided information on how to request expended deadlines for federal arbitration. "We will continue to publish additional guidance to help independent dispute resolution entities and disputing parties resolve disputes expeditiously," the spokesperson said. (Goldman/Tepper, Modern Healthcare, 8/30)