Dive Brief:

• Many claims that providers submit for dispute resolution under the No Surprises Act are actually ineligible for the process, according to a new survey from health insurance groups.
• AHIP and the Blue Cross Blue Shield Association found plans identified 39% of the out-of-network disputes lodged for arbitration as ineligible. However, arbiters themselves decided only 17% of cases were improper, meaning more than half of ineligible cases resulted in binding payment determinations, according to the groups.
• The findings are notable given disputes processed through surprise billing arbitration are more frequently won by providers and often result in payments well above in-network rates. As a result, providers are incentivized to submit as many disputes as possible — even if they don’t qualify — which may be driving up premiums and other spending for the healthcare system, according to the survey and other research.

Dive Insight:

Since becoming law in 2020, the No Surprises Act has shielded millions of consumers from unexpected medical bills. The law requires insurers and providers that can’t agree on reimbursement for an out-of-network claim to submit to independent dispute resolution, or IDR.

During IDR, a third-party arbiter decides which party’s offer — the insurer’s or the provider’s — is fair, taking into account rates in the area, a provider’s quality and other factors.

But what exactly “fair” entails has been a hot topic of debate between insurers and providers. Providers in particular have filed numerous lawsuits attempting to revamp IDR to eliminate perceived bias towards insurers. It hasn’t helped that regulators are still ironing out operational kinks — including how to address ongoing concerns about ineligible disputes cluttering the system.

Now, the new survey from AHIP, the top lobby for the insurance industry, and the BCBSA, which represents independent Blues plans, puts numbers around the frequency with which ineligible disputes slip through the system.

The survey, which includes data from 25 health plans covering 154 million Americans — almost three-fourths of the entire commercial market — found independent mediators flagged fewer than half of the claims submissions that should have been found ineligible.

Specifically, arbiters decided that 15% of emergency disputes, 19% of non-emergency disputes and 10% of air ambulance disputes were ineligible.

But the plans themselves found percentages more than twice as high: at 33%, 45% and 23%, respectively.

As a result, insurers had to pay out at least 184,500 improper disputes last year, the survey found.

Disputes were ineligible for a range of reasons. Plans most often found that claims were submitted for IDR out of the allowed timeframe, were missing key information, were subject to surprise billing resolution under state law or were for services not included under No Surprises.

Leaders at AHIP and the BCBSA blamed a small number of provider groups, many backed by private equity, for gaming the arbitration process to force insurers to pay them inflated amounts for out-of-network care.

“The same private equity-backed outfits that created the surprise billing business model have turned to arbitration abuse as their new strategy to gouge consumers and employers,” Mike Tuffin, AHIP president and CEO, said in a statement.

Some research supports the groups’ accusations. Since IDR begin in 2022, the process has been swamped by a significantly higher level of complaints than regulators initially expected. A small number of private equity-backed medical groups are responsible for the lion’s share of those claims: Radiology Partners and Team Health together accounted for 43% of all resolved claims in 2023 and 2024, according to analyses of federal data.

Providers win the majority of disputes, and on average earn roughly four times above what insurers would have for paid in-network services, research has found.

Providers argue they’re forced to submit lots of claims into IDR and enjoy high win rates due to unfairly low payment offers from insurers.

But overall, IDR drives $2 billion to $2.5 billion in wasteful spending each year due to high submissions of ineligible disputes and other flaws with and abuses of the system, according to estimates from Georgetown University’s Center on Health Insurance Reforms.

AHIP and the BCBSA called for policymakers to address the issue, including through better oversight and accountability. Lawmakers and regulators in Washington are aware of the issues with IDR, but near-term reform is unlikely given the ongoing government shutdown.

The industry is still waiting for the CMS to finalize a rule from 2023 that both providers and insurers say would improve the dispute resolution portal, including by amending dispute eligibility review. Though the CMS said its rulemaking cadence could be affected by the shutdown, the agency recalled its furloughed employees on Monday to help with operations during enrollment periods for government health plans.