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The federal government is facing a 'severe backlog' of surprise billing disputes


A new report from the Biden administration revealed that the federal government has been inundated with billing disputes from providers under the No Surprises Act—and only 4% have been resolved with payment so far, Tara Bannow writes for STAT+.

New report reveals a 'severe backlog of disputes awaiting resolution'

The Biden administration recently released a progress report on the No Surprises Act's independent dispute resolution (IDR) process, which uses mediators to help out-of-network providers and insurers determine appropriate payment amounts for services.

Currently, the government has a much higher number of requests than anticipated, most of which are related to emergency services. Between April 15 and Sept. 30, health care providers, air ambulance providers, and the companies that work for them submitted around 90,000 out-of-network payment disputes—a significant increase over the roughly 17,000 disputes anticipated for the full year. 

In addition, the complexity of the cases and the time required to resolve them has surpassed expectations, leading "to a severe backlog of disputes awaiting resolution," Bannow writes. Of the approximately 23,000 cases that have been resolved, mediators only made payment determinations in around 3,600—or 4% of the 90,000 submissions.

"That ratio is just abysmal," said Lisa Churvis, an associate with Arnall Golden Gregory who represents providers. "It just shows you that the process is not working." 

The No Surprises Act, which went into effect Jan. 1, 2022, helps prevent patients from receiving unexpected bills from out-of-network providers. "The law lays out a process for determining how much out-of-network providers should get paid, but it's been a subject of much controversy and ongoing legal action," Bannow notes.

One particular challenge the federal government is facing is determining whether a dispute qualifies for the IDR process.

Currently, 22 states have laws or agreements that protect consumers from surprise bills—but it is often unclear whether a dispute should go through the federal process or the state one. According to the new report, more than two-thirds of disputes came from states with their own surprise billing laws.

Among the approximately 11,000 disputes closed by Sept. 30 that were challenged based on eligibility, 80% were declared ineligible for the federal IDR process. 

Notably, the top 10 companies that filed disputes through the federal government initiated 75% of all disputes, excluding air ambulance cases.

According to Bannow, "[p]art of the reason the backlog is so high is the Biden administration changed the law's instructions for determining the appropriate out-of-network payment amount in August after a federal judge in Texas invalidated the previous method." In the ruling, the judge sided with the Texas Medical Association, which challenged the law's claim that arbiters should use the median in-network contracted rate for a service and deny providers a chance to dispute.

Harvey Rochman, a partner with Manatt Health, noted that this change may have slowed the resolution process. Without the presumption that median in-network rates would serve as payment amounts in out-of-network disputes, arbiters are required to conduct more detailed assessments of the evidence and documentation submitted with each case.

"The revised rule does not require arbiters to select the payment offer closest to the median in-network rate," Bannow writes. "Rather, it says they should consider a variety of factors, like the provider's level of training and market share." 

Stakeholders express concern over case backlog

According to Zachary Baron, associate director of the Health Policy and the Law Initiative at Georgetown University's O'Neill Institute, many stakeholders have expressed concerned about the dispute backlog. 

"If you're not able to resolve these IDR disputes in a timely manner, you're not able to achieve the mission of the law," Baron said. 

In particular, "[p]roviders also argue the backlog disproportionately harms providers, who are left waiting on payment, and gives leverage to insurers, who can use the backlog to pressure them to go in- network at lower rates to avoid the backlog," Bannow writes.

"It creates significant unearned leverage that was not intended by the law," said Patrick Velliky, Envision Healthcare's VP of government affairs. "That is leverage that the payer can then use to say, 'You can come in-network at a much lower rate and all this cash flow pain can go away.'" 

Separately, Adam Buckalew, a consultant who helped create the No Surprises Act, said the surprise billing ban is likely the most widespread change the health care system has undergone in the past decade, adding that it will take time to streamline the process. 

"You don't turn the Titanic around on a dime," Buckalew said. "I'm confident they'll shake off the cobwebs and get it to a good place." (Bannow, STAT+ [subscription required], 12/30)


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