Payer/provider relationships

Health insurers are steadily expanding their control over the U.S. primary care market — especially in areas with a lot of seniors eligible for Medicare Advantage plans, according to new research.

In 2023, payer-operated practices accounted for 4.2% of the national Medicare primary care market by service volume, up from 0.8% in 2016, the study published in Health Affairs Scholar found. It’s the first concrete estimate of insurer ownership of physician practices nationwide, and suggests that vertical consolidation is being driven by the potential for profits in nudging MA members to owned clinics, researchers said.

The paper could also intensify the microscope on UnitedHealth as lawmakers and regulators scrutinize the healthcare behemoth’s outsized control over the industry. UnitedHealth-owned Optum was the largest operator of primary care clinics of all the insurers included in the analysis, holding more than 2.7% of market share nationally and more than 35% in several large counties.

Health insurers have been steadily snapping up physician practices despite rising concerns from provider groups, patient advocates and some lawmakers.

Payers say that owning medical offices allows them to better coordinate care for their members, especially in value-based arrangements, improving outcomes and steering patients to lower-cost settings.

But critics are concerned that vertical integration may allow insurers to steer patients toward their own doctors at the expense of other practitioners, disadvantage rival insurers by shutting in-house providers out of their networks and allow other anticompetitive behavior, potentially leading to higher prices and less choice for patients.

Worries about vertical consolidation have snowballed over the last few years as major payers increased M&A to catch up with Optum, which kicked off the vertical integration trend more than one decade ago.

Last spring, then-UnitedHealth CEO Andrew Witty said that Optum has grown to employ “just under 10,000” doctors — roughly 1% of all physicians in the U.S. — and be affiliated with another 80,000.

But UnitedHealth’s peers, including Humana, Elevance and CVS’ Aetna, have also grown their reach though large-scale M&A, quiet acquisitions of standalone practices and organic expansion.

Of the more than 381,000 primary care doctors billing Medicare in 2023, 6.4% worked for a payer-operated practice, according to the new study from researchers with the nonprofit Brookings Institution and Cornell Medical College’s Health Policy Center.

Compared to hospitals, which own more than one-third of all doctor’s offices nationwide, that’s a relatively small share. But it could be a slight underestimate based on how researchers defined ownership, according to Loren Adler, the associate director of the Brookings Institution’s Center on Health Policy and author of the study.

And payers controlling more than 4.2% of the Medicare primary care market is still a “pretty healthy number” that’s “been growing pretty rapidly,” Adler said.

“If it just completely stopped now, it may only be so big of a story, but if it continues expanding as it’s been, I think it becomes a very large story,” he added. “The fact that it’s only 4% — it means the broad, systemwide effects are probably smaller than some people were thinking, at least so far. There’s only so much 4% of the market can do. But that being said, they are big in certain areas.”

Insurer control is significantly more concentrated in certain counties: Overall, more than 15% of the U.S. population lived in counties where payers owned more than 10% of the primary care market in 2023, the study found.

More than 10% lived in counties where Optum alone exceeded that threshold.

And there are pronounced outliers. In 2023, Optum controlled almost 45% of the primary care market in Snohomish County, Washington; more than 40% in Contra Costa County, California; and almost 36% in Clark County, Nevada, according to the research.

Notably, payers were significantly more likely to own primary care practices in areas where MA was more prevalent. Clinics owned by payers also delivered a substantially larger share of primary care services in MA as compared to traditional Medicare, the study found.

That suggests payers may be driven to purchase physician practices because of the chance to expand profits in the privatized Medicare plans, which tends to be more lucrative than other types of insurance, Adler said.

The calculus goes like this.

By increasing members’ access to primary care providers and heading off worse health outcomes (and higher medical costs) down the line, MA insurers can keep a greater share of premiums as profit. MA insurers can also lean on in-house doctors to diagnose their MA members with more conditions to inflate their reimbursement from the federal government, a much-maligned practice called upcoding.

The temptation to increase upcoding could be spurring insurers to expand their medical networks, according to Adler.

“A lot of this seems to be a Medicare Advantage story,” Adler said. “Certainly we already have a fair amount of evidence that vertically integrated payers tend to be able to code their enrollees more intensely and are able to make their enrollees look sicker ... and the way Medicare Advantage pays, you get paid more money the sicker your patients look.”

Rising evidence of upcoding has fueled calls for MA reform, especially as the program grows. MA has swelled to cover 33 million people, more than half of all seniors in Medicare coverage.

The growth has exacerbated concerns about Medicare’s fiscal integrity. Congressional advisory group MedPAC estimates that CMS will pay MA insurers $84 billion more this year than the government would have if those members had been in traditional Medicare. Upcoding was responsible for almost half of those overpayments.

Both the Biden and the Trump administrations have taken action to crack down on upcoding, while bipartisan members of Congress have expressed interest in pursuing legislation to prevent profiteering in the program. Republicans’ sweeping domestic policy bill was seen as a vehicle to potentially pass such reform, but the final version passed into law by President Donald Trump on July 4 included no curbs on bad behavior in MA.

Adler said it’s worthwhile for Congress to limit overpayments in MA, but that the complexity of the issue could continue to hamstring meaningful policymaking from Washington.

”We kind of know what [insurers are] taking advantage of. And to the extent that you can go after that, or even just sort of limit any overpayments, that at least takes away some of the low-hanging fruit here and probably right-sizes or sort of shrinks the desire to compile a ton of practices under an insurer’s umbrella,” Adler said. “There is a chance, given that there are some policies that both parties, most people, actually like. They’re just politically difficult.”

Providers’ struggles with claims denials have worsened compared with two years ago, according to Experian Health’s 2024 State of Claims survey released in September 2024. 

Prior authorizations and missing or inaccurate data were the leading reasons for claims denials in 2024, according to the global data and technology firm. Respondents said frequent changes to payer policies also created reimbursement challenges.

As denials tick up, 77% of providers report they are moderately to extremely concerned payers won’t ultimately foot the bill for healthcare as promised.

Providers have recently sounded the alarm over growing strife in their relations with payers.

The Experian Health report, which surveyed 210 healthcare staff between June and July of 2024, confirms an escalation of tensions.

Nearly three in four respondents said claims denials have increased. Two years ago, less than half of respondents said claims denials were on the rise. Nearly 40% of those respondents say their claims are denied at least 10% of the time, while 11% of respondents said their claims were denied at least 15% of the time.

And, even when reimbursements come through, the wait to be reimbursed is increasing, according to 67% of respondents.

Reasons for claims denials vary, and can include incomplete or incorrect data collection, coding errors, staffing shortages or poor training of staff, late submissions and payer policies.

“We had hoped to see a decrease in claim denials from our previous survey, but it’s clear these significant challenges are continuing, adding immense pressure on providers to improve their revenue cycle management processes,” said Clarissa Riggins, chief product officer at Experian, in a release accompanying the report. “This growing crisis is a sign that traditional approaches are no longer enough, and providers should adopt more proactive strategies and the latest technology to navigate this volatility.”

Reducing denials is now a priority for 84% organizations surveyed, and 73% have evaluated their claims process within the past year, according to the survey.

However, healthcare providers have not been jumping to automate claims processing. Only 31% of providers surveyed are using automation or artificial intelligence in claims processing — down from 62% in 2022. 

The data suggests a “retreat from the broader embrace of automation” that occurred during and after the pandemic, according to the study. 

Paradoxically, as hype has grown around AI, researchers said the “comfort gap” has plummeted. Those that are very or extremely confident in understanding automation, machine learning and AI fell to 28% compared to 68% in 2022.

Providers’ reluctance to harness AI in claims processing stands in contrast to payers, who automate claims review and denials.

Cigna, UnitedHealth and Humana are among the nation’s largest payers that have all used algorithms to review claims en masse. 

The payers tout the technology as a boon for efficiency, arguing that it cuts down on time to review claims and is standard across the industry.

But payers have been hit with lawsuits for claims algorithms. UnitedHealth and Humana were accused of ending Medicare Advantage members’ care prematurely via algorithmic denial, while Cigna was accused of violating a California insurance law that requires manual review of claims.

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By ProviderTrust

The healthcare industry is full of surprises, and this year, the ProviderTrust team encountered a big one. In March 2025, ProviderTrust partnered with Healthcare Dive to survey 150 executives at enterprise-level payer organizations about their provider data processes. As the survey results came in, the original goal—to gain a better sense of payers’ main challenges and processes—quickly fell by the wayside.

Instead of highlighting key obstacles and trends, the survey results uncovered an uncomfortable truth: most payers don’t seem to know they have a provider data problem. Survey respondents overwhelmingly described their provider data as “clean, complete, and accurate,” with very little room for improvement.

Yet at ProviderTrust, we see cracks in the foundation of these payers’ provider data daily. So, instead of simply reporting the survey results, we’ve broken down how these responses don’t match up to our boots-on-the-ground experience working with provider data at a range of enterprise payers nationwide.

Data Integrity: Fact or Fiction?

As a whole, our survey respondents think very highly of their provider data integrity. Respondents almost universally agreed that the terms “accurate and error-free” (94%) and “complete (no missing information)” (96%) describe provider data at their organization.

Despite these quite positive answers, only 51% of respondents answered that the phrase “verified against the primary source” described their provider data very well. If half of payers’ provider data isn’t consistently verified against the primary source, how accurate and complete can it be? 

This wide gap between payers’ perceptions of their provider data and reality is alarming but not shocking to the ProviderTrust team. We’ve uncovered every kind of error, including providers with NPIs that were supposedly born in 2024 and the 1800s. 

This kind of hidden provider data error has all kinds of downstream effects, both for patient safety and for the organization’s bottom line. For another major payer client, we discovered that 2% of their participating provider population had licensure issues that made them ineligible to provide care. That small fraction of their population added up to $15 million in claims that this payer couldn’t recoup due to provider ineligibility.

Moving Beyond Basic Automation

The quality (or lack thereof) of most automated provider data solutions contributes greatly to poor data integrity. Rather than moving the same static data pieces from A to B, an effective automated provider data solution should include methods of regularly cleansing and verifying data to ensure freshness.

Though 75% of survey respondents answered that their provider data solutions are automated, many of the market’s automation tools lack depth. There’s no standardized provider data framework across the industry, so these solutions piece together disparate fields, shorthands, requirements, and many more variations across primary sources. Basic automation does very little to improve these inconsistencies, so they typically remain in each payer’s dataset for the long haul.

At ProviderTrust, we see the pitfalls of basic automation all the time. We recently performed a proof of concept exercise for a potential client with more than 15 million members and 700,000 participating providers. We found that 9% of this payer’s active participating providers had at least one license issue, including licenses that had been revoked, surrendered, carried board actions, and more.

This payer had another “leading” automated provider data solution in place, yet they had no idea these errors were hidden in their data. This not only puts members at risk but also poses great risk to the payer organization and costs many millions in claims that can’t be recouped.

Throwing Out the Status Quo

To solve the provider data problem, payers will need to completely rework their approach to provider data. There’s no quick fix, but it’s possible to make changes over time that will make a world of difference. 

Unfortunately, the pull of maintaining the status quo is strong. When we asked our survey respondents what could drive their organization to focus more on improving provider data integrity, the clear winner was “easier access to better automated technologies.” The ease of access factor outweighed “changes in compliance/regulation” by 10% and “decreasing provider friction” by 15%, too.

We can’t stop working toward a better future just because implementing a new tech tool is difficult. Even regulatory standards can only go so far if payers remain unaware of the issues within their provider data. Payers need to understand the root of the problem and make it a top priority to overhaul the systems that are currently holding them back.

It’s time to start building a healthcare ecosystem where clean, accurate, up-to-date provider data is a true priority. When you’re ready to begin, ProviderTrust is here.

In an escalating technology arms race, providers are beginning to adopt the same technology they say insurers are using to deny claims in masse — artificial intelligence — to combat claims disputes. 

Insurers so far have the upper hand in the race to implement AI into the claims review process, panelists at HLTH said in October 2024. Some of the nation’s largest insurers, including UnitedHealth, Humana and Cigna, already leverage algorithmic decision tools when deciding what care to cover. 

Nonprofit Blue Shield of California said it will also test claims automation technology in early 2025, through a partnership with Salesforce. The insurer billed the tool as way to alleviate provider and patient frustration with the prior authorization process, saying it would cut down decision time from weeks or days to seconds.

Payers argue the tools — which have mostly been applied to the prior authorization process— allow them to quickly flag services that do not align with coverage criteria and plan terms.

However, providers’ experience with current tools — supported by investigations and reports from lawmakers — suggest that when AI enters the equation, more claims are denied.

Providence CFO Greg Hoffman told Healthcare Dive that his nonprofit health system noticed underpayments or initial denials increased by more than 50% over a two-year period when payers began to more heavily adopt AI tools to review claims.

The surge forced Providence to increase its number of human “touches per claim” by over 50% because physicians had to submit additional documents, the executive said.

A Senate subcommittee report in October 2024 alleged three of the nation’s largest Medicare Advantage insurers — UnitedHealthcare, Humana and CVS — use predictive technology to systematically deny patients access to post-acute care in order to increase their profits.

The largest offender was UnitedHealth, which increased its post-acute services denial rate from 8.7% in 2019 to 22.7% in 2022, alongside the roll out of its predictive tool, NaviHealth-backed nH Predict.

In some sense, payers are forcing an “AI arms race,” said Jeffrey Cribbs, a distinguished vice president analyst on consultancy Gartner’s healthcare team.

“We will see more efficient coding, more efficient submission of authorization claims and then resubmission of claims,” he said. “And then on the other side, we will see more efficient extraction of exceptions and things that might be cause for denial of those claims.”

Providers say they’re currently behind payers in that race — though they’re dedicated to catching up.

During a HLTH panel on provider and payers’ use of AI, Sara Vaezy, EVP and chief strategy and digital officer at Providence said providers lag payers in developing large language models, but are likely to have sophisticated options soon. 

The executive urged providers to form coalitions to share data and develop standards around AI in the claims process to better compete in the space.

Once providers catch up, experts believe AI could ultimately help them in prior authorizations.

“It’s still early innings, but I think the technology is actually going to go a long way to leveling that playing field, from a provider's perspective,” said Amit Phull, chief physician experience officer for online networking service Doximity, during the panel.

He said the tech will ultimately offer providers “a leg up” in claims disputes and cut down time it takes to complete claims documentation.

Bill Fera, a principal consultant at Deloitte, agreed.

“Plans have been building for longer. They have the the upper hand right now. Providers are newer to thinking this way and building these tools,” Fera said during an interview. But he said AI will be an equalizer, because it will help providers quickly go through massive amounts of data to find a “truth” about whether the patient ought to qualify for a service under their plan’s terms.

“Policies will now be available to a provider. I wouldn't go to read a policy in full, but ... now we're surfacing all that knowledge. We're taking the mystery away,” Fera said. “And there is a fact base. There's a core piece of information that can be interrogated. It's just now, it can be interrogated very quickly.”

Still, health systems are contending with payers that are ready to apply AI right now, and many don’t have the AI know-how to build competing models today.

Providence decided to outsource its revenue cycle management to compete in the short-term, Hoffman said. The nonprofit entered a 10-year partnership with R1, a revenue cycle management company, in January 2024, in part to combat rising claims denials associated with payers’ increased use of AI tools.

“As we began to look at our technology roadmap for us to respond quickly and so forth, we realized that it would take us two to three years to build the technology roadmap to be more efficient in this area,” Hoffman said. “And that's where we've now leaned into our partnership with R1 to leverage equivalent technologies.”

The biggest health insurance companies in the U.S. have pledged to reform much-maligned prior authorization policies, which require doctors and hospitals to get their go-ahead before providing certain services.

The changes were announced in June by insurer lobby AHIP and the Blue Cross Blue Shield Association and are backed by almost 50 health insurers, including UnitedHealthcare, Aetna, Cigna, Elevance and Humana.

The commitments include a promise to reduce the number of claims subject to prior authorization by 2026. They should result in faster access to treatments for patients and fewer administrative hoops for providers — though, compliance is voluntary, raising questions about accountability for payers that have signed on.

Regulators in the Trump administration took credit for spearheading the charge to reform prior authorizations during a press conference the same day. CMS Administrator Dr. Mehmet Oz said that the government would be tracking compliance closely and is open to regulation if insurers fail to meet the new standards.

But for now, “the pledge is not a mandate. It’s not a bill or rule. This is not legislated. This is an opportunity for industry to show itself,” Oz said.

Six commitments to ameliorate prior authorizations

Health insurers are still struggling to manage the outpouring of public anger that followed the killing of UnitedHealthcare CEO Brian Thompson in December. In the wake of the deadly shooting, payers have defended their business practices as necessary to contain spiking medical costs while taking some accountability for what they can improve.

That includes prior authorization, a utilization management strategy loathed by providers which say onerous preauthorization policies contribute to burnout, slow down the provision of medical care and can lead to worse health outcomes.

Now, a coalition of 48 influential for-profit and nonprofit insurers are promising reform. The changes, which apply across all forms of insurance over the next two years, could benefit more than 250 million Americans given the reach of the insurers involved, AHIP and the BCBSA said.

Specifically, the companies pledged to eliminate some prior authorization requirements; honor existing prior authorization approvals from a member’s previous health plan if they change coverage as part of a 90-day transition period; and explain prior authorization decisions and provide guidance on how to appeal denials by the start of 2026.

By 2027, the payers said they would standardize data and submission requirements for electronic prior authorizations. And, at least 80% of electronic prior authorization approvals will be answered in real-time by that year, according to the release.

Payers also promised that all prior authorization denials will be reviewed by medical professionals.

“The health care system remains fragmented and burdened by outdated manual processes, resulting in frustration for patients and providers alike. Health plans are making voluntary commitments to deliver a more seamless patient experience and enable providers to focus on patient care, while also helping to modernize the system,” Mike Tuffin, AHIP’s president and CEO, said in a statement.

It’s the biggest pledge yet from the health insurance industry to do better following Thompson’s death. Since December, major payers have announced internal changes to their policies that they say will make accessing healthcare easier and more affordable to their members, including UnitedHealthcare, Humana and Cigna.

Empty promises or concrete reform?

Yet hospitals and doctors are wary that the pledge may be little more than lip service on the part of insurers. For example, major payer and provider groups agreed on the need to improve prior authorizations in 2018. But seven years later, getting treatment approval is still a huge problem for providers, many of which say prior authorization requirements have actually been increasing in recent years.

Coverage adjudications cost providers almost $20 billion annually, group purchasing organization Premier said in 2024. Meanwhile, more than half of denials by private insurers were ultimately overturned upon appeal.

“While this commitment is a step in the right direction, we will ultimately measure its impact by real changes in the day-to-day experiences of patients and the physicians who care for them,” Shawn Martin, the CEO of the American Academy of Family Physicians, said in a statement.

Premier agreed that the announcement was a positive development, but called on policymakers to lock in real reform.

“Voluntary pledges aren’t the same as enforceable protections,” Soumi Saha, Premier’s top lobbyist, said in a statement.

Insurers say they’re holding themselves to a higher standard with the commitments. But it’s worth noting that some of the pledges are not yoked to specific targets — including how many prior authorizations insurers will cut, though participating payers plan to release specific reduction plans by next year.

Other changes have already been set in motion by the CMS.

For example, a rule finalized in 2024 requires federally regulated insurers to turn around prior authorization decisions much more quickly and give more details about why requests were denied beginning in 2026. By 2027, payers will have to implement standards for electronic prior authorizations.

Another rule finalized in 2023 requires Medicare Advantage insurers to honor existing prior authorization approvals for at least 90 days when an enrollee switches coverage.

However, one differentiator is that the new commitments extend into the commercial market, meaning they’ll reach a significantly greater number of Americans than those in public programs.

The goal of real-time determinations for electronic prior authorization requests is also faster than existing deadlines in regulation.

Trump administration’s role

The commitments came about after the Trump administration started engaging with health insurance companies earlier this year on how they could pare back preauthorizations — and asked physicians, health systems, patient advocates and legislators how they’d tackle the issue as well, top federal health officials said during the press conference.

“We have spoken to these folks and others in the industry about the desire for them to maybe adopt a different strategy, one that actually is discussed in the Bible, and it says that the meek shall inherit the earth,” Oz said. “Once in a while, we have to get together, even if we’re competitors, and agree, and that’s what these insurance companies and hospital systems have done. They’ve agreed to sheathe their swords, to be meek for a while, and to come up with a better solution to a problem that plagues us all.”

Regulators acknowledged that insurers could buck their commitments given the initiative is voluntary. But insurers appear to be taking the pledges seriously, they said.

For example, AHIP plans to publish a dashboard on its website to help ensure accountability, Chris Klomp, the CMS’ Medicare director, said. The dashboard will include insurer information around prior authorization policies and reductions, including the number or percentage of codes that no longer need preapproval and adherence to timeliness standards, according to Klomp.

In addition, the commitments in most cases include specific deliverables and deadlines, which should make compliance easier to monitor, according to HHS Secretary Robert F. Kennedy, Jr.

“In the past, the insurance industry has made commitments to prior authorization, but they have not kept them. And this case, we think is very, very different,” Kennedy said.

Another thing that’s changed since past efforts?

“There’s violence in the streets over these issues,” Oz said. “This is not something that is a passively accepted reality anymore.”

The Center for Medicare and Medicaid Innovation is revamping its strategy aimed at driving down costs and improve quality in government healthcare programs, with a focus on preventing chronic disease.

The CMMI’s new approach breaks down into three pillars: promoting the prevention of illness and helping patients manage chronic conditions; helping beneficiaries reach health goals through access to data and technology; and supporting competition and choice for healthcare services, like ensuring independent and rural providers can participate in payment models and designing demonstrations on Medicare Advantage.

The strategy aligns with HHS Secretary Robert F. Kennedy Jr.’s Make America Healthy Again agenda, which focuses on chronic disease, CMMI Director Abe Sutton said during a call in May. “Our system is facing unsustainable cost pressures,” he said. “We are pouring resources into treating disease after onset, rather than tackling the root causes and preventing it.”

The CMMI was established under the Affordable Care Act 15 years ago to test new healthcare payment and delivery models, with the goal of lowering costs and improving quality in government programs like Medicare and Medicaid. 

However, the agency has faced some pushback from lawmakers, particularly Republicans, who argue the innovation center hasn’t made enough progress on its cost savings and quality goals. 

In April, Republicans on the House Ways and Means Committee sent a letter to Sutton and CMS Administrator Dr. Mehmet Oz, arguing the center should reprioritize. The letter added that the CMMI has previously promoted a political agenda, such as improving health equity, ahead of reducing healthcare spending.

Research has shown CMMI hasn’t always generated savings for the federal government. A 2023 analysis by the Congressional Budget Office found the CMMI’s activities increased direct spending by $5.4 billion, or about 0.1% of the net spending on Medicare, between 2011 and 2020.

Still, the agency has already made some changes during the second Trump administration. In March, the CMMI said it would halt four payment models early and cancel two demonstrations before they could start. 

In May, the CMMI took another step toward revamping its operations. The strategy uses what the agency has learned since its inception to overhaul the American healthcare system, which has been burdened by growing costs and low-value care, Sutton wrote in a blog post. 

New model designs and reviewed demonstrations could require all alternative payment models to involve downside risk, and push more Medicare and Medicaid beneficiaries into arrangements with financial risk for providers, according to a white paper on the strategy.

Disease prevention is a key focus of the plan, too, and will be incorporated into every model. The focus could include health and nutrition counseling or smoking cessation, early detection of conditions like cancer and disease management services to slow the progression of chronic conditions, like diabetes and blood pressure control, according to a white paper. 

Additionally, the strategy aims to help people achieve health goals by providing them with greater access to data. That could include patient-facing mobile apps to help them manage their care or data transparency tools that could give them information about provider costs and performance, Sutton said. 

The final focus of the plan involves promoting patient choice and competition among providers. The CMMI wants providers who typically haven’t participated in the agency’s payment models to join, including rural clinicians and independent practices, Sutton said.

The center will also try to simplify and standardize its portfolio of models where possible, limiting administrative burden and making participation less complex, he added. 

Plus, the agency will move to promote site neutrality — offering the same Medicare reimbursement regardless of where services are delivered — and “confronting” uncompetitive state Certificate of Need laws, which require providers to get regulatory approval for major expenditures and projects, Sutton said. 

Medicare Advantage, the privatized option for Medicare beneficiaries, is also on the agenda. The CMMI could test changes to payment for MA plans or updates to quality measures that might better align with better health, according to a white paper. 

The new strategy at the CMMI comes as the Trump administration and congressional Republicans have moved to reshape large parts of the nation’s healthcare sector. 

In May, the House Energy and Commerce Committee, which oversees Medicare and Medicaid, proposed its plan to cut Medicaid spending, including work requirements and a freeze on provider tax arrangements that states use to fund their share of spending. 

The plan will result in millions of people losing coverage, likely preventing them from accessing healthcare services and hitting providers’ bottom lines, experts and providers say. 

A provider lobby is catalogueing the ways insurers are allegedly taking advantage of federal legislation preventing surprise bills in the latest industry salvo over the implementation of the No Surprises Act.

Americans for Fair Health Care, an advocacy group for providers around surprise billing issues, published a report surveying more than 30,000 physicians about their experiences dealing with insurers in 2023.

AFHC found a number of concerning statistics, including insurers failing to honor payment determinations or delaying reimbursement and stretching out the negotiation process, essentially requiring providers to float them revenue in the meantime.

Insurers are also continuing to cancel contracts with providers, forcing them out of network, according to the survey. As a result, many providers have to rely on the framework for billing negotiations set up by No Surprises, called independent dispute resolution or IDR, for reimbursement, AFHC said.

“Insurers’ persistent contract terminations, payment cuts and delays, patient burdens, and compliance failures are forcing physicians to seek fair treatment through the IDR process,” said Eric Berger, AFHC executive director, in a statement.

No Surprises, which went into effect in early 2022, protects consumers from unexpected medical bills after receiving out-of-network care at an in-network facility or other surprise situations. It does so by holding them blameless for any charges, and requiring insurers and providers to decide how much the provider should be reimbursed for a member’s care.

If they can’t do so themselves, the dispute comes before a third-party arbiter, who reviews a payment offer submitted by each side before picking one of the two amounts.

In the first half of 2023, providers won more than three-fourths of payment determinations.

Yet the AFHC survey found that many insurers are still failing to pay IDR awards altogether, though the rate has lessened somewhat from the prior year’s survey.

In 2022, providers reported that insurers failed to pay 52% of determinations. That fell to 22% in 2023, though the finding is still illustrative of continued abuse, the AFHC spokesperson said.

Powerful insurance lobby AHIP implied the AFHC’s results could be skewed due to the group’s backing. AFHC is comprised of physician practices such as Envision Healthcare and TeamHealth that have been accused of remaining out of network with insurers as a business strategy.

“Americans for Fair Health Care is run by the private equity-backed provider groups that are directly benefiting from arbitration,” an AHIP spokesperson said over email.

For their part, insurers have accused providers of sending large numbers of claims through IDR to try and garner higher reimbursement than the fair market value of their services.

AFHC’s survey also found that 94% of insurers were submitting qualifying payment amounts — an important metric that helps determine how much providers eventually get paid —  at or below Medicare rates.

Providers have argued IDR’s reliance on QPAs, which represent the median in-network charge for a service in a specific geographic area, skews the process toward insurers, since insurers are the ones setting the rates.

How heavily the QPA factors into the dispute resolution process has been at the center of multiple suits against the government.

As a result of the lawsuits, regulators have had to pause and restart the dispute resolution process multiple times. That’s contributed to a backlog in claims, putting more stress on the IDR system. Regulators say they’re facing a growing mountain of disputes, after receiving more requests for arbitration than anticipated.

Insurers’ actions are forcing providers into IDR, according to AFHC. However, the group’s second annual analysis of No Surprises also found some insurer actions were abating compared to 2022, especially around the threat of termination.

In 2022, 100% of providers said insurers threatened to end their contract. That fell to 53% in 2023, AFHC found.

The group attributed the decline to fewer contracts benefiting providers surviving 2022’s cull. Contract negotiations are traditionally hammered out behind closed doors, but more disputes between payers and providers have been bubbling into the public sphere, a trend providers chalk up to increasingly contentious debates over fair rates.

“Insurers did so much damage to in-network contracts and reimbursement in 2022 that there simply weren’t as many relationships and rates they could disrupt in 2023,” a spokesperson for the group said. “Contract terminations are just one part of the story.”

Medicare’s largest value-based care program saved the government more than $2.1 billion in 2023 — an all-time record, according to the CMS.

Accountable care organizations, groups of providers that join together to manage the care of a patient population, also benefited, receiving performance payments of $3.1 billion in 2023. That’s also a historic high since the Medicare Shared Savings Program was formed more than one decade ago.

The quality of ACOs is also rising, the CMS said. Regulators specifically called out improvement in measures related to diabetes and blood pressure control, statin therapy for cardiovascular diseases and screening for depression, fall risk and breast and colorectal cancers.

The Medicare Shared Savings Program, or MSSP, is the largest ACO program in Medicare with almost 11 million beneficiaries covered by 480 ACOs.

Participating ACOs receive a portion of the savings they generate compared to a benchmark, while ACOs with spending exceeding the benchmark might have to pay a penalty. The goal is to improve outcomes and lower healthcare costs by incentivizing providers to better manage patient care.

The CMS in October 2024 lauded seven straight years of savings in MSSP. Under the Biden administration, the agency has gone all-in on accountable care — its goal is to bring all 34 million beneficiaries in traditional Medicare into value-based arrangements by 2030.

In 2023, 453 of the 480 ACOs participating in MSSP achieved total savings of $5.2 billion, according to the CMS. Medicare retained $2.1 billion while another $3.1 billion was divvied out in shared savings. In comparison, in 2022 Medicare saved $1.8 billion while ACOs earned $2.5 billion.

In 2023, Citrus ACO in Central West Florida had the highest shared savings rate of 19.44%, while Health Connect Partners — the MSSP ACO operated by nonprofit hospital giant Providence — had the highest net savings of $137 million, according to CMS data.

AnewCare Collaborative in east Tennessee had the worst shared savings rate of -6.91%, while Northwestern Medicine Physician Network ACO in Chicago had the steepest losses, at $19 million.

ACOs led by primary care clinicians had higher savings than other ACOs, the CMS said. The finding is important in light of a shift toward hospital-owned ACOs, which earn more revenue when patients are admitted, giving them less of an incentive to reduce pricey hospital care, according to congressional scorekeepers.

Despite continued savings, MSSP has had an uncertain budgetary impact on the CMS over its tenure. The program was associated with net losses of between $775 million and $2.1 billion from 2013 to 2021, according to research in JAMA Health Forum.

The CMS has also had difficulty prodding providers to join MSSP. Participation has trended down over the past several years, after peaking in 2018 with 561 ACOs.

Regulators recently revamped MSSP in a bid to revitalize provider interest, adding benefits like up-front payments to certain providers and making changes to promote more risk-sharing. In a Medicare payment rule expected to be finalized in October 2024, the CMS also proposed prepaying ACOs a portion of shared savings each quarter to encourage them to invest in staffing and infrastructure.

Commissioners on the Medicare Payment Advisory Commission expressed broad support last year for linking annual changes to physician reimbursement to inflation, a measure which — if approved by Congress — would give U.S. doctors more financial predictability and stability.

The backing of the influential congressional advisory board is a cause for optimism for the industry. Doctors have long lobbied Washington to increase Medicare reimbursement, citing lackluster pay as a driver behind practice consolidation and closures.

And insufficient payment could threaten access to care for the 68 million Americans, mostly seniors, on Medicare, according to MedPAC and other program experts. Those concerns have risen as the gap between annual payment updates and doctors’ costs grows.

“We need to keep up. I am more concerned than a couple of folks in here about falling behind, because I think once we do and once it becomes apparent it becomes really, really difficult to fix,” said Commissioner Gregory Poulsen, senior vice president at Utah-based health system Intermountain Healthcare, during MedPAC’s meeting in November.

Medicare reimbursement for physician services has declined 29% from 2001 to 2024 when adjusted for inflation, according to the American Medical Association.

That’s due to how Medicare reimburses outpatient physicians: an annual payment rule called the physician fee schedule, or PFS, which pays for about 9,000 different clinician services across doctor’s offices and hospitals nationwide.

PFS doesn’t include an adjustment for inflation, unlike other Medicare payment systems. And, a statutory requirement requiring changes to PFS remain budget neutral makes it impossible for regulators to increase reimbursement to the levels physicians say they need.

In November, MedPAC commissioners bandied about different solutions with one theme in common: tying physicians’ annual payment update to the Medicare Economic Index or MEI, a measure of cost inflation for physician services.

“I really agree with this notion of an MEI-based update,” said Commissioner Amol Navathe, associate director of the Center for Health Incentives and Behavioral Economics at the Perelman School of Medicine.

“It’s hard to perfectly read the tea leaves, but I think this is striking a good balance between what we understand from the evidence and what we’re worried about from the perspective of access for beneficiaries,” Navathe said.

In previous reports to Congress, MedPAC has suggested an annual conversion factor update linked to 50% of the MEI; or to the MEI minus 1 percentage point, with a minimum floor for the update.

Multiple commissioners said they supported the latter change.

“The MEI minus one ... is a great threading of multiple needles. It puts some predictable increases for physicians who are going to be hurt realistically by unpredictable inflation year to year. And I think there’s fiscal prudence in the minus one, so it’s an excellent compromise and approach,” said Commissioner Scott Sarran, the chief medical officer of dementia care startup Harmonic Health.

However, some commissioners raised concerns that linking payments to inflation would significantly raise costs with uncertain effects on access. That’s because — despite physicians slamming Medicare pay as unsustainable — a large majority of U.S. doctors accept Medicare.

Medicare beneficiaries’ access to clinician care is as good as or better than that of privately insured individuals, despite commercial rates being roughly 40% higher than those of Medicare, according to Brian O’Donnell, a principal policy analyst with MedPAC.

“The problem we’re trying to solve in terms of access to me seems very hypothetical. And it’s expensive to solve,” said Commissioner Tamara Konetzka, a professor of public health sciences at the University of Chicago.

Physician associations want Congress to go even further than MedPAC’s suggestions. The AMA and other clinician groups have argued Congress should adopt a 100% MEI update, which would result in even higher annual rate hikes.

But commissioners agreed any reforms should be conservative. Some floated the idea of including a ceiling, as well as a floor, for annual rate updates to avoid runaway costs.

Instead of MEI minus 1 percentage point, Congress could elect to tie annual changes to a percentage of the index, like 75%, said Poulsen.

“If [inflation gets to a] really high number, 1% minus [0.10 percentage points] is a lot less than 1% minus one [percentage point],” Poulsen said. “It seems to me that 75% of MEI or something like that may be an easier and less troubling mechanism over time, because we don’t know what MEI is going to be next year or five years from now.”

Despite a back-and-forth over specifics, most commissioners agreed it’s not an option to wait until the PFS is even more out of step with physician costs. It’s an opinion shared by lawmakers in Congress, with members on both sides of the aisle expressing support for reforming doctor reimbursement in hearings and in public letters.

“This whole aspect around, ‘Because there’s not necessarily an access problem compared with commercial, is there an urgency to problem-solve this’? I don’t think we want to wait until there’s an access problem because when there’s an access problem it’s going to be really difficult to course correct,” said Commissioner Robert Cherry, the chief medical and quality officer at UCLA Health.

“We want to really start thinking about this much more proactively,” Cherry said.