Is it time to change the independent dispute resolution process of No Accident Law?
Before the No Surprises Act, patients were often involved in billing disputes.
For example, When they go to an in-network hospital but are treated by an out-of-network provider, or when they need urgent care but can’t choose who treats them. This often results in them receiving huge unexpected bills. The No Surprises Act, which takes effect in 2022, changes that. But new issues have arisen, particularly in relation to the independent dispute resolution process. At the center of the matter is Anthem's recent lawsuit against Prime Healthcare.
The No Surprises Act protects patients from surprise bills and removes payment friction between insurance companies and providers. The bill requires 30 days of public negotiations between insurance companies and providers to determine how much to pay providers. If an agreement cannot be reached, either party can use an independent dispute resolution (IDR) process, in which the provider submits a payment offer, the insurance company submits a payment offer, and a neutral arbitrator selects one.
This independent dispute resolution process is intended as a last resort. But some in the industry now believe the IDR process is being abused by providers, leading to a surge in cases using the mechanism.
Anthem Blue Cross Life and Health Insurance Company (an Elevance affiliate) A lawsuit was filed against 11 Prime Healthcare facilities in California in early January. Anthem accuses the agencies of “deliberately flooding” the IDR process with more than 6,000 ineligible disputes and “extracting millions of dollars in wrongfully obtained compensation.”
In addition to this lawsuit, Elevance has filed lawsuits against other companies in other states, including Georgia and Ohio.
“After this bill is passed, the federal government expects to see 17,000 of these cases in any given year,” Dr. Catherine Gaffigan, president of Elevance's health solutions business, said in an interview. “Instead, what we're seeing is millions of cases happening. And Elevance is actually seeing 17,000 of these cases every month. It's clear that this has been exploited in unexpected ways.”
Elevance isn't the only insurance company to be furious over alleged misuse of IDRs. UnitedHealthcare sued Radiology Partners in August, and BCBS Texas sued Zotec Partners in December.
One industry expert compared the problem to the 340B drug pricing program, which allows hospitals and clinics that treat large numbers of low-income and uninsured patients to purchase outpatient prescription drugs at a discount. It was intended to support safety net providers but has since grown exponentially. Between 2000 and 2020, the number of covered entity sites participating in the program increased from 8,100 to 50,000.
Michael Abrams, managing partner at Numerof & Associates, said, “The IDR process was invented for a good reason … similar to the good intentions behind 340B. But I think in this case, the IDR process, like the 340B process, has the potential to be repurposed to provide a revenue stream for hospitals that have reason to do so.”
Elevance calls on lawmakers to reform the IDR process to ensure it is used as intended.
Anthem v. Prime Healthcare
Anthem alleges in the complaint that the defendants use the IDR process as an “extractive tool to rip off the health care system,” rather than as a forum to resolve bona fide payment disputes.
Anthem announced that Prime Healthcare will begin flooding the IDR process in January 2024. The agencies received approximately $15 million more than Anthem initially paid for the services, and typical awards were more than six times higher than what contract providers paid for the same services. Anthem added that this is in line with Prime's reputation.
“Defendants and Prime generally have a reputation of putting profits over patients,” the complaint states. “Many hospitals acquired by Prime have canceled long-term network contracts in order to obtain higher reimbursement for the same services. Historically, out-of-network Prime hospitals have aggressively charged patients and often filed lawsuits against health plans such as Anthem to recoup higher payments. While Prime has contracts with health plans Hospitals will publicly threaten to cancel these contracts if they don't get higher reimbursement rates, leaving patients in the lurch.”
Although the No Surprises Act protects patients, Anthem alleges that Prime exploited the IDR process and frequently submitted emergency claims, whether eligible or not, to arbitration to maximize payment amounts. The insurance companies claimed that the defendants even initiated IDRs against Anthem for patients who were not Anthem members.
Anthem added that Prime knowingly files hundreds of IDR disputes every month.
“When these disputes proceed to IDR payment decisions, as they often do, Defendants perfunctorily demand payment of 80 percent of their original billed charges, disregarding any individual circumstances of the episode of care or market realities regarding their value,” the complaint states.
Anthem also accuses Prime of repeatedly falsifying information throughout the IDR process to bypass eligibility rules and push ineligible disputes into payment decisions. To make matters worse, Prime only sends IDR-related communications to Anthem through an “unnecessarily restrictive and cumbersome online portal,” making it “impossible” for Anthem to respond.
Prime Healthcare called Anthem's lawsuit “meritless.” The organization said its facilities acted in compliance with the No Surprises Act and IDR processes and did not balance bill any patients.
“Anthem’s lawsuit ignores the fact that some large health plans, including Anthem, have amassed record profits by underpaying providers, delaying or denying care, and imposing administrative hurdles on patients, practices that erode the public’s trust,” a spokesperson told MedCity News.
beyond its original intention
What was supposed to be a “narrow, last-resort pressure valve” has become a “fire hose”, one healthcare expert said. Providers win the majority of payment awards (approximately 85% in 2024), with the median award in late 2024 reportedly being approximately 459% of the eligible payment amount.
“Few anticipated how far the No Surprises Act would stray from its original intent. While the law protected patients from being 'caught' in negotiations between providers and payers, Congress did not foresee the volume of arbitrations and a system in which provider groups prevailed more than 80 percent of the time in arbitrations. A system that was originally designed as a narrow patient protection guarantee instead became a parallel payment system with huge financial consequences,” said Dr. Adam Brown, an emergency physician and founder of a healthcare consulting firm. Abigail is healthy.
What was meant to protect patients has just evolved into a “high-stakes battleground between providers and payers,” he added.
Why is it easier for providers to win? Brown said the simple answer is they made a better case before the arbitrator. However, when you look at who wins these cases, they are typically private equity-backed who have “spent time and capital to increase the number of IDRs and build management and automated processes around IDR submissions,” he said.
Abrams of Numerof & Associates echoed these comments.
“I think one of the consequences of these cases may be to accelerate re-examination of the IDR process, raising questions about whether it actually works the way it's supposed to,” he said.
Gaffigan said Elevance is in conversations with lawmakers and the Centers for Medicare and Medicaid Services about changes to the IDR process, including requiring arbitrators to justify unusually high awards and clarifying which elective services qualify for IDR.
Anthem, meanwhile, has taken steps of its own to address the issue. Last fall, for example, the company announced plans to deduct 10% of hospital payments every time a doctor outside its network treats a patient enrolled in its plan.
Many provider groups opposed the new policy, including the American Hospital Association, arguing it would limit patients' choice of providers.
“The NSA's core goals are to protect patients and incentivize network participation,” the American Heart Association said in a statement in December. “Anthem undermines this landmark legislation by introducing new patient harms and targeting hospitals that participate in good faith in the program's network. The AHA calls on Elevance Health to treat Anthem participants right, ensure it is a reliable partner to its network hospitals and health systems, and repeal this deeply flawed policy.”
Asked about pushback to the policy, Gaffigan noted that it only applies to elective surgeries and only if there is an appropriate in-network provider. In addition, critical access hospitals, rural hospitals and safety net hospitals are also exempted.
“It's really like a situation like this where there were a lot of options, but somehow this patient ended up at an in-network hospital and found an out-of-network provider, and that out-of-network provider took advantage of the IDR,” Gaffigan said. “We'd rather never actually impose that penalty. We really just want our hospitals — those who are in network and our valued partners — to be part of the solution here.”
She added that while the No Surprises Act protects patients from surprise bills, they end up being harmed on the back end.
“The way in which the independent dispute resolution process is being abused is driving up costs, ultimately leading to higher premiums for patients,” she argued. “This ultimately increases costs for employers and drives up the cost of health insurance, and unfortunately it does so without driving any improvements in quality, disparities in care, etc. It's pure inflation.”
Photo: sdecoret, Getty Images
