Provider groups are challenging findings that the federal mechanism for settling disputes over out-of-network bills is generating tens of billions of dollars in extra spending, arguing the estimate is based on unsound data.
On Wednesday, researchers with Georgetown University published a report estimating that the independent dispute resolution process set up by the No Surprises Act has created more than $22 billion in unnecessary spending over the past four years, with the lion’s share — almost $16 billion — attributable to awards to providers above comparable in-network rates.
The $22 billion figure represents a significant acceleration in IDR costs, given the process generated an estimated $5 billion in its first two years. Study authors chalked the snowballing spending up to the avalanche of claims submitted by U.S. doctors and medical groups, and the increasingly generous payouts they’re able to secure through arbitration.
The report lends more credence to concerns that No Surprises, passed in 2020 to curtail unexpected medical spending for American patients, could actually be inflating the country’s medical costs.
But the $22 billion estimate is fundamentally flawed, the American Society of Anesthesiologists, the American College of Emergency Physicians and the American College of Radiology argued in a joint statement Thursday.
The groups — which represent three of the specialties most likely to issue surprise bills to patients before No Surprises went into effect at the start of 2022 — challenged researchers’ use of the qualifying payment amount, a metric meant to represent median in-network rates for a particular service in a given geography, as the foundation for estimating extra costs.
QPAs aren’t an accurate representation of what providers should be paid, given insurers keep them artificially low, the groups argued.
“The report’s cost claim is built on a deeply flawed premise: that the insurer-calculated Qualifying Payment Amount (QPA) is accurate and represents an appropriate in-network payment rate,” the ASA, ACEP and ACR wrote. “The evidence is overwhelmingly clear that QPAs are often inaccurate and unreasonably low.”
The clapback from the ASA, ACEP and ACR is the latest effort from providers to cast doubt on QPAs in order to argue that providers aren’t profiteering from IDR, and instead are finally getting paid what they should.
However, some studies cast doubt on the argument that QPAs invariably underestimate the fair market rate for medical services.
Research published in February from the Congressional Research Service found the QPA was less than a different metric of median in-network rates in six states. But it was larger than the alternative in eight, according to the report.
And the Georgetown research accounted for providers’ belief that QPAs are too low, pointed out Jack Hoadley, a professor with Georgetown’s Center on Health Insurance Reforms and an author of the study.
Hoadley and his co-author re-ran their analysis of extra costs based on 150% and 200% of the QPA, to see how a higher measure of in-network rates would affect the outcome. If payment awards were 150% or 200% of the QPA, costs for 2025 would be reduced by about $1.1 billion and $2.3 billion, respectively.
But “our total estimate is $22 billion, and we still think that’s a good estimate,” Hoadley said. “There are features in the data that may cause that to be an underestimate, and features in the data that may cause that to be an overestimate.”
Much of the war between providers and insurers over the implementation of No Surprises has centered over the QPA — how it’s calculated, and to what degree arbiters can consider it in making payment determinations.
Providers argue that their outsized win rates in IDR prove that insurer offers are unfairly low. Federal court decisions in providers’ favor are also evidence that QPAs are distorted, they say.
Earlier this month, a federal court struck down the existing methodology for calculating QPAs, agreeing with providers that insurers had been allowed to include factors that could be depressing the metric. Insurers will have to recalculate their QPAs as a result of the decision, which could result in even more money flowing to providers in IDR.
It’s a concerning prospect for payers, health policy reseachers, regulators and lawmakers who point to data that certain providers, especially those backed by private equity, are gaming IDR to inflate their profits, and that providers’ incentive to contact directly with insurers is shrinking with each sky-high award they secure through arbitration.
“Clearly it’s an opportunity to rethink the QPA and decide if there’s a better measure,” Hoadley said. “I’m certainly comfortable with the idea that we should be looking into alternatives. But at the moment, it’s what we have.”
