The Trump administration has booted two arbiters from the federal process used to resolve disputes between doctors and insurers over out-of-network bills, a move critics of the law applauded as a long-needed crackdown on allegedly biased referees.
The CMS disclosed on Wednesday that it had denied applications from Island Peer Review Organization and Network Medical Review Company to be recertified. Both organizations have served as arbiters in the independent dispute resolution, or IDR, process for the past five years, settling hundreds of thousands of billing disputes between health plans and doctors.
IDR was created by the No Surprises Act, a law passed in 2020 to protect patients from being hit with a surprise medical bill when they unknowingly received care from an out-of-network provider. In IDR, insurers and providers both submit what they believe to be a fair reimbursement amount to an arbiter, which then picks one of the two offers.
The process was meant to be a backstop, used in rare cases when providers and payers can’t figure out reimbursement themselves. But medical groups and physicians have flooded IDR with significantly more disputes than regulators expected. And providers are overwhelmingly prevailing, winning more than 85% of cases last year, according to government data.
Meanwhile, doctors are often awarded three or four times above comparable in-network rates when they win. In one instance, a plastic surgeon was paid $440,000 for a breast reduction that normally costs around $20,000, according to New York Times reporting earlier this year.
Providers argue their disproportionate win rates reflect insurers’ egregiously low offer amounts. But insurers and other critics argue that award amounts are ridiculous, and that a small group of medical groups — many backed by private equity firms — are packing IDR full of ineligible disputes to generate huge payouts.
Blame is also increasingly falling on the 17 arbiters that contract with the government to settle NSA disputes.
That’s because arbiters are paid by dispute, earning between $425 and $800 for each case they decide. They’re not paid if a dispute is deemed ineligible. As a result, arbiters are incentivized to find cases eligible — and rule in favor of providers so they keep filing them, researchers say.
Island Peer Review Organization, one of the arbiters that lost its certification this week, has one of the highest provider win rates at almost 97%, according to data from price transparency firm Turquoise Health. The company has benefited heavily from its work in IDR, almost tripling its revenues during its tenure in the process, according to an investigation by Stat News.
IPRO tops the list of provider-friendly arbiters
Network Medical Review Company, the other ousted arbiter, sides with providers about 70% of the time, a lower rate than many of its peers. However, the company has been featured in New York Times reporting about extreme provider awards, granting half of the $440,000 breast reduction payout cited earlier in this article.
It’s not immediately clear why the organizations were ousted. The CMS notice said the two arbiters failed to meet performance standards, and a spokesperson for the agency did not respond to a request for comment.
Possible grounds for dismissal include not making timely decisions, inaccurate eligibility and payment determinations and conflicts of interest with disputing parties, according to a July FAQ.
“To remain certified, IDR entities must continue to meet the standards for certification set out in the NSA and regulations, including requirements related to timeliness, accuracy, and independence and impartiality in making payment determinations,” the CMS wrote in the Wednesday notice.
IPRO and NMRC both declined to comment on why they were decertified.
But “we are disappointed with the decision,” a spokesperson for IPRO said, saying the firm has “worked hard to deliver fair and impartial decisions in support of the program.”
“We are confident that Network Medical Review is a high quality independent dispute resolution entity and reviews claims in a comprehensive, balanced, and efficient manner,” an NMRC spokesperson said.
Both arbiters said they are considering an appeal. The CMS gives decertified entities 30 days to contest the decision.
But in the meantime, IPRO and NMRC can’t take on any new disputes. The CMS said it would reach out to companies with ongoing cases with the arbiters regarding next steps.
The Coalition Against Surprise Medical Billing, a group made up of insurers and employers that lobbies for IDR reform, cheered the news, saying that arbiters have allowed providers to turn IDR into a “gold rush.”
“The Departments’ actions reinforce the clear need for greater accountability, transparency, and oversight of IDR entities,” the CASMB said in a statement Thursday. The group reiterated its plea for the CMS to pause recertifications until it creates more rigorous standards for arbiters.
The agency is currently reviewing recertification requests for eight other arbiters.
Citing concerns that IDR is spiraling out of control, some insurers have turned to the courts or stopped paying out awards they disagree with. Lawmakers have also expressed interest in closing alleged loopholes in IDR, with Rep. Frank Pallone Jr., D-NJ, introducing a bill last month that would throw out the arbitration process altogether.
Pallone, an architect of the NSA, has also sent oversight letters to arbiters requesting more information on how they make decisions.
