HHS Secretary Xavier Becerra recently testified before Congress. In these sessions, Becerra was repeatedly asked about implementation of the No Surprises Act. At the Senate Finance Committee meeting, Senator Michael Bennet (D.-Colo.) remarked that implementation of the law "is a big mess." He noted that even when medical practices prevail in arbitration, insurance companies are not consistently paying providers as required. The backlog of arbitration cases is impacting medical practices and their patients, with reports of practices waiting over 6 months to receive complete payment from insurers.
Becerra replied by repeating one of the myths that was addressed in an op-ed I published last month. He implied medical providers are to blame, commenting that most of the disputes being submitted for arbitration appear to be "frivolous." Becerra did not provide data to support this statement, nor did he explain why a physician would submit a frivolous dispute, as the non-prevailing party in arbitration must pay the arbiter's fee.
With bipartisan support, the No Surprises Act was passed in 2020 to protect patients from surprise medical bills while also preserving good faith network contracting negotiations between insurance companies and providers, like physicians and hospitals. To accomplish this, the law designed a balanced process for out-of-network reimbursement, rooted in arbitration (termed independent dispute resolution or "IDR") and charged the Departments of HHS, Labor, and Treasury with implementation. The administration's implementation of the law has led to numerous lawsuits as well as their own report describing a dispute process that is overwhelmed and struggling. There are several reasons for the problems.
Accessing Arbitration
Becerra stated there are so many dispute submissions because "there is no cost to file a claim." Not only is this false, but the costs are so significant that they prompted litigation. The Texas Medical Association filed a lawsuit after the administration increased the non-refundable fee to access arbitration by 600%. In addition to this expense and the separate arbiter's fee, Becerra failed to acknowledge there are inherent costs to a practice to create and submit a dispute.
Becerra went on to say that because there is no cost to file a dispute, "Everyone is just filing all sorts of claims...That's what is bogging down the system." In fact, the Departments' own report (from the HHS, Labor, and Treasury Departments) states that the main cause of the delays is difficulty determining claim eligibility for the federal arbitration process. The Departments have not required insurers to indicate this eligibility initially. This requirement would help address the problem and improve efficiency.
The Departments have also limited efficiency by restricting "batching." The law encourages placing numerous claims into a single dispute submission ("batch") for arbitration, but rulemaking has limited batching. As a result, many more disputes than would otherwise be necessary are being submitted. The net result of elevating fees and limiting batching is reduced access to arbitration.
Unbalanced Arbitration
To support a balanced process, the No Surprises Act describes several factors for arbiters to consider in making their decision between insurers and providers. One of these is the insurer's median in-network rate, known as the qualifying payment amount (QPA). Meaningful concerns with the QPA have been raised. For example, the calculation methodology does not result in real world, market-based rates. Further, insurers calculate their own QPA, and may do so in a non-transparent fashion, raising questions about QPA integrity. These loopholes prompted the third lawsuit from the Texas Medical Association.
As described in my previously referenced op-ed, despite concerns about the QPA calculation methodology and its lack of transparency, the Departments have repeatedly tried to establish the QPA as the primary factor arbiters should use in their decision making. These attempts have twice been rejected by a federal court. Recent guidance issued by the administration as a result of the second Texas Medical Association lawsuit more closely reflects the balance that Congress intended.
Suggested Solutions
The dysfunctional No Surprises Act process is adding burden and expense for medical practices, redirecting resources that would be better invested in the care of patients. The process is also adding administrative cost to the U.S. healthcare system.
To improve the system, several actions are necessary. First, instead of reducing access to arbitration, the administration should focus on reducing the need for arbitration. To do this, the arbitration process must be balanced. Hopefully, in future rulemaking the Departments will respect the balance reflected in the law and the recent guidance.
To limit the number of arbitration submissions and improve the efficiency of the entire process, unnecessary limits on the batching of claims should be removed. To further improve efficiency, insurers should be required to indicate claim eligibility for federal arbitration.
Finally, the Departments should enforce timely and complete payment after an arbitration determination, as specified in the law, with penalties for non-compliance.
The No Surprises Act was passed to end surprise billing while protecting access to care. The difficulties outlined in the Congressional hearings and the Departments' report are largely due to choices made in rulemaking and can be addressed through further rulemaking. Hopefully, in future testimony, Becerra can claim that not only is surprise billing improved, but wasteful administrative spending has been reduced and medical practices and the patients they care for are better protected than ever before.
Richard Heller, MD, MBA, is associate chief medical officer for Health Policy & Communications at Radiology Partners.