Health Billing Disputes Pile Up; Arbitration Guidance Urged

A trio of federal agencies is being urged to issue guidance and jump-start the stalled arbitration process for resolving billing disputes between health-care providers and insurers as tens of thousands of cases continue to pile up in the wake of a federal court decision.

The decision voided the agencies’ standards for deciding such cases, and now arbitrators are often not following the No Surprises Act, according to individuals supporting providers as well as those backing the employers and health insurers that pay the bills.

How payment disputes are settled could ultimately affect health insurance premiums and out-of-pocket costs. In the meantime, many medical providers are being squeezed financially as the logjam of cases causes them to go unpaid.

“If this IDR process doesn’t get up and running immediately and efficiently, we’re going to be looking at the closure of thousands of medical practices around the country,” Christopher Sheeron, president of Action for Health, said in an interview. Action for Health describes itself as advocating for “fair outcomes for critical healthcare issues,” and it supports providers regarding arbitration issues.

“Because of the logjam in these IDR processes, independent physicians, smaller hospitals aren’t getting paid a dime,” and health plans aren’t making payments even when providers win, and the CMS isn’t taking enforcement action, Sheeron said.

The Centers for Medicare & Medicaid Services should be retraining the organizations that conduct independent dispute resolution (IDR) under the No Surprises Act, he said. “There’s a lot of confusion” among arbitrators about the standards that should be followed, he said.

A CMS spokesperson said in an email that the three agencies implementing the No Surprises Act—the departments of Health and Human Services, Labor, and the Treasury— “look forward to sharing guidance updates soon.”

Dispute Process Briefly Halted

The No Surprises Act was enacted as part of the Consolidated Appropriations Act of 2021 (Public Law 116-260). It prohibits providers from charging patients out-of-network rates for emergencies and for services provided at network facilities.

The CMS briefly halted the payment dispute process following a Feb. 6 ruling by the US District Court for the Eastern District of Texas voiding standards the agency had adopted for settling payment disputes between providers and health plans.

In that case, the Texas Medical Association led the fight by doctors and other medical providers against CMS rules on what factors arbitrators should consider in deciding payment disputes.

Health plans and insurers want standards based on median network contract rates, called the qualifying payment amount, while providers want arbitrators to consider a wider range of factors to be given equal consideration, such as the complexity of a procedure or the education and training of the provider.

On Feb. 24, CMS issued a notice resuming the process for disputes for services performed before Oct. 25, 2022, which the CMS says are not affected by the court ruling.

Between April 15 and Sept. 30, 2022, more than 90,000 disputes were initiated between health-care providers and insurance plans, according to a December 2022 report from the CMS. The agencies enforcing the law had initially estimated about 17,000 cases would be filed for all of 2022. Only 3,576 disputes had been settled, the report said.

Many of the cases filed have been found to be ineligible for arbitration, a Treasury official said in January. The CMS report didn’t draw conclusions on why so many cases are ineligible, but it said eligibility depends on several factors, including determining state vs. federal jurisdiction, correct bundling of more than one claim in a dispute with similar claims, compliance with applicable time periods, and completion of open negotiations.

Sheeron said that in some dispute resolution decisions, arbitrators are rejecting provider arguments unless they are related to factors listed in the No Surprises Act. The law allows parties to offer arguments other than the factors listed in the statute, he said.

In addition to the logjam of cases for services before Oct. 25, 2022, there is no guidance for claims since then. The CMS needs to issue new guidance quickly, Sheeron said.

Wins for Air Ambulance Companies

Information on how the settled disputes are being resolved is anecdotal.

Health insurers are prevailing in many disputes on the grounds that the cases aren’t eligible for arbitration, but air ambulance companies appear to be winning awards that go through the process, said Christine Cooper, CEO of Aequum LLC in Cleveland, which provides legal services to health plan administrators as well as plan participants. Aequum has common ownership with the Koehler Fitzgerald LLC law firm, which represents health plans in the independent dispute resolution process.

Cooper said she also thinks arbitrators are confused about the standards that are supposed to be followed in settling payment disputes, and she agrees the CMS needs to issue more guidance.

“A lot needs to be done,” she said. “Payers and providers alike need clear guidance that falls within the scope of the actual legislation.”

Cooper concurred that payment decisions from arbitrators aren’t “consistent with the statutory language or the language carried out in the rules.” She cited decisions in air ambulance cases, most of which she said are being decided in favor of the air ambulance companies with awards of $20,000 to $40,000 per claim.

Return of Billed Charges

The No Surprises Act prohibits arbitrators from deciding payments based on either government rates, such as Medicare, or the list price billed by providers, known as “billed charges,” which are typically higher than the rates paid by health insurers.

But Adam Beck, senior vice president of commercial policy for AHIP, said, “We do have arbitrators that are essentially considering a form of billed charges, and providers that are finding sneaky ways to get their prior billed charges taken into consideration.” AHIP represents most health insurers in the US.

In some cases, providers are asking for payments “well above billed charges,” or they are asking for consideration of prior payment amounts before the No Surprises Act took effect, Beck said. Before the law was enacted, to protect their enrollees from surprise medical bills, health plans would pay those charges, which don’t reflect market rates, he said.

Beck called for “clear rules of the road” on how the arbitration process is going to work.

Those rules should “ensure that the independent dispute resolution process is something that’s used as a last resort or in complex cases, and not just the way that certain providers or certain billing companies or staffing firms handle all of their out-of-network claims going forward,” Beck said.