Surprise Billing

A key group advising Congress on how to prevent surprise bills for consumers after taking emergency transport is skeptical of applying the dispute resolution process that’s the status quo for resolving other out-of-network disputes to ground ambulances.

The No Surprises Act passed in 2020 created independent dispute resolution, or IDR, as the method health insurers and providers have to follow to resolve billing disagreements that used to result in consumers receiving unexpected charges.

Ground ambulances were a notable exception in the legislation, as a large proportion of emergency rides result in surprise bills. However, No Surprises did call for an advisory committee to review options for restricting surprise ambulance bills.

Members of that ground ambulance and patient billing advisory committee in a Wednesday meeting said IDR wouldn’t translate well to resolving billing disputes over emergency medical services.

“I do worry about shoehorning ground ambulance providers into an existing IDR structure where the vast majority of ground ambulance providers would not have the resources or the time to dispute those,” said Adam Beck, SVP of commercial product and employer policy at health insurance lobby AHIP. “I don’t want to create a system where we’re kind of setting folks up for failure.”

IDR is baseball-style arbitration, in which a third-party arbiter picks one payment offer, submitted by either side, as the final payment amount.

In 2023, it cost $350 to initiate dispute resolution, though the HHS is reconsidering that fee after a district judge ruled with providers earlier this month, finding the price made it cost-prohibitive to access IDR for smaller claims. Previously, it cost $50 to kick off the process.

IDR is also time intensive. It can take more than six months for a provider to receive payment after initiating the process.

The investment needed to embark upon IDR would be difficult for most ambulance providers, given their low volume, committee members said.

Roughly two-thirds of ground ambulance providers do fewer than 2,500 transports a year, according to Asbel Montes, managing partner of healthcare reimbursement consultancy the Solutions Group and chairperson of the committee.

Emergency medical services organizations are also mostly public sector entities. It’s difficult to imagine local governments and fire departments having the time and resources to pursue IDR, Loren Adler, associate director of the Brookings Schaeffer Initiative on Health Policy, said on Wednesday.

Other pieces of the No Surprises Act would create difficulties if applied to ground ambulances, committee members argued.

The qualifying payment amount, a metric arbiters consider in the IDR process, is based on the median in-network rate in a geographic area. However, in-network negotiations in the ambulance setting are rare, and rates vary greatly between regions.

To calculate the QPA, there needs to be a minimum of three contracts for the service in question. There are plenty of areas in the U.S. where that isn’t possible, committee members said.

“Only something like 20% of ground ambulance emergency transports are in-network to begin with. So using that as some sort of actual guidepost seems pretty difficult when we’re talking about the ground ambulance context,” Adler said. “It’s also — if you were to look at the network rates that insurers are allowing today across the country, it’s very, very based on what the local regulation scheme is. To cement that in perpetuity I think seems risky.”

What is appropriate?

Committee members seemed to agree that IDR isn’t the solution for protecting consumers from surprise bills following an emergency transport, but didn’t arrive at a final recommendation for how to prevent them.

Other ideas, like allowing state and local authorities to set their own rates, are problematic because there are flaws to relying on amounts that are allowed today, committee members said.

One risk is that payers could raise in-network coinsurance requirements on patients, while still complying with keeping cost-sharing to in-network levels, Adler said.

Letting local rate setting define how much insurers have to reimburse could increase overall costs to the system, according to Patricia Kelmar, director of healthcare campaigns at nonprofit advocacy organization Public Interest Research Groups.

If the committee ends up recommending some sort of benchmarking system, it should enact national standards for what those rates must consider to assure some level of cost containment, Kelmar said.

“I’m just not convinced that letting every community set its own rates is going to get us to a level where we’re assured that the prices reflect the costs,” Kelmar said.

One potential solution would be for the committee to pick specific dollar amounts for codes, or yoke payment to some percentage of Medicare, plus an additional amount for non-transport services like treatment in place, Adler suggested.

Some states and local governments have stepped in to regulate billing on patients, though they don’t have authority over self-funded employer plans.

Some of those tie state-regulated health plan payments to out-of-network ground ambulances to Medicare. Colorado, for example, requires the plans reimburse private ambulance providers at 325% of Medicare rates, and limits how much patients can pay out-of-pocket.

The committee is scheduled to meet again in October and will send its policy recommendations to Congress later this fall.

Dive Brief:

• A Texas judge has vacated portions of the No Surprises Act dispute resolution process after the state’s medical group argued it was illegal and overly favorable to health insurers, leading the HHS to once again suspend arbitrations until further notice.
• Judge Jeremy Kernodle for the Eastern District of Texas on Thursday vacated regulators’ increase of the dispute resolution administrative fee to $350, and the “batching rule,” which allowed arbitration processes only on claims with the same service code.
• The judgment removes barriers for providers to file dispute resolution claims, and will likely increase the volume of claims, especially from physician groups and hospital outpatient departments, according to a health lawyer.

Dive Insight:

The Texas Medical Association filed the lawsuit in February, taking issue with the HHS increasing the administrative fee for arbitration processes from $50 to $350 at the start of the year. Regulators said the increase was necessary due to a surge in the volume of disputes and subsequent increase in costs for conducting the independent dispute resolution, or IDR, process.

The lawsuit argued the change made IDR not only “significantly more expensive for all IDR participants, but ... cost-prohibitive for many providers to access IDR at all,” and benefited insurers by making it more expensive for providers to initiate IDR.

Providers who bill small value claims, like radiology, were particularly hurt, because most claims billed are less than $350, according to the suit.

The lawsuit also challenged restrictions on batching claims, which allows multiple items and services to be considered in a single IDR determination. Regulators only allowed batching if those items and services were billed under the same or comparable code.

As a result of the restrictions, providers had to go through a separate payment dispute process for each claim related to an individual’s care episode. That, coupled with the high administrative fee, would limit providers’ ability to pursue dispute resolution, the TMA argued.

Judge Kernodle ruled in favor of the TMA on Thursday, finding the fee increase and batching rule violated the Administrative Procedure Act by being made without notice, and resulted in harm to providers.

“By permitting batching only if items or services share the ‘same service code,’ the Rule severely limits what claims providers and insurers may batch,” Kernodle wrote in his opinion. “And submitting separate claims to separate arbitrators (or IDRs) requires paying separate administrative fees — a costly and sometimes cost-prohibitive consequence of the Rule.”

The judge did not award the TMA requested relief from administrative fees or an extension of IDR deadlines, something doctors wanted to allow providers who didn’t submit claims to IDR during the suit to pursue those claims.

The decision will likely increase the number of smaller claims in the IDR process, according to Wolfe Pincavage lawyer Becky Greenfield. 

Greenfield, who mostly represents hospitals, said her clients were able to bundle inpatient claims that were worth the higher administrative expense even if they didn’t win IDR, but that outpatient claims were “extremely difficult to pursue” because of the now-defunct requirements.

It’s the TMA’s fourth lawsuit against the No Surprises Act, a law meant to protect consumers against pricey and unexpected medical bills that went into effect on January 2022. Judge Kernodle has ruled in favor of the TMA in two of its past challenges to No Surprises, over particular metrics used in IDR.

Another challenge filed by the TMA at the end of 2022 over the metrics arbiters consider during IDR is still ongoing.

The HHS had to pause and revamp the process multiple times following the judge’s decisions.

Now, the process is once again on hold, according to an HHS notice sent to providers on Friday shared with Healthcare Dive. 

The CMS did not respond to a request for comment on how long IDR will be on hold while regulators hash out updated guidance.

For the administrative fee, regulators might have to revert back to $50 while they initiate the rulemaking process, including a notice-and-comment period, Greenfield said.

”All of this is a moving target,” Greenfield said. “I understand why the agencies increased the fee — they totally missed the ball on how many IDRs are going to be pursued, and I’m sure it’s expensive to manage ... but at the same time, they just didn’t do it the right way, according to the court.”

Increasing claims could put more stress on regulators, which are currently dealing with a backlog in disputes after they received more requests for IDR than anticipated.

Even for an industry rife with complex regulations, complying with the ban on surprise billing may prove especially "daunting" for healthcare providers, experts say.

The No Surprises Act passed by Congress went into effect earlier this year, tackling one of the most vexing problems in healthcare: unexpected medical bills that leave patients stuck in the middle between payers and providers.

It has been a persistent issue for American consumers receiving care from hospitals or doctors outside of their insurance networks.

The bill is best known for its signature achievement that protects patients from out-of-network bills in emergencies. It also shields them if they go to an in-network facility for a procedure but are unknowingly treated by an out-of-network clinician.

Complying with the law, which now bans most forms of surprise billing, certainly won't be a cakewalk for healthcare systems, according to experts.

Implementation will be "very daunting," said Manatt professional services firm partner Harvey Rochman, who has likened the legislation to a "small ACA," the landmark healthcare bill from 2010 that reshaped the industry.

That's because there are lesser-known requirements of the bill that may come as a shock to some practices and are onerous to put in place, compliance experts said.

Strict rules, deadlines for providing good-faith estimates

"If you had to single out one thing that is really the most complex and difficult ... it's the good-faith estimate," said Rochman, who is working directly with provider clients on compliance.

The bill goes beyond outlawing balance bills from fly-by out-of-network doctors, air ambulances and emergency rooms.

A much broader range of providers are required to hand over a "good-faith estimate," or a cost estimate for a procedure, for uninsured and self-pay patients when they ask. Practices are also required to alert patients they're entitled to such an estimate.

It's this requirement that may catch some practices off guard, according to compliance experts.

A dermatology practice is a good example, according to Varsha Gadani, an attorney at law firm McGuireWoods, who is working directly with provider clients on compliance.

Dermatology practice leaders may think they're not subject to the No Surprises Act because they don't provide emergency services at hospitals, Gadani said. While they may not be subject to that particular aspect of the law, they would be subject to providing good-faith estimates.

"The No Surprises Act is a lot more convoluted than you initially realize," Gadani said.

On the face of it, providing cost estimates to patients may seem like a small hurdle to clear, but there are additional wrinkles that make it more complex and harder to put into practice.

Providers are under strict time constraints and must hand over an estimate within one business day after the procedure is scheduled in some situations. In situations where the procedure is 10 days or more after scheduling, providers may have three days to draw up an estimate.

In addition, providers soon will be responsible for anticipating other services a patient may need as part of the procedure and will have to collect cost estimates from other providers to include in the overall estimate. Regulators decided to delay enforcement of this provision in 2022 because it's so complicated, Rochman said.

The "convening provider" will be responsible for assembling an overall estimate, but experts say it's not always clear who should play the role of convening provider. It can be the provider who schedules the procedure — but is that the surgeon or the hospital?

"So this is a very complex obligation, and it all has to be done in an extremely short amount of time — days at best," Rochman said.

In a letter to the CMS, the American Hospital Association said putting these measures in place have been difficult even for the most sophisticated hospitals. It's not an easy process to automate because the estimates need to be tailored to each patient.

"The regulation grossly underestimates the administrative burden of these requirements," the AHA said in a letter to the CMS dated March 4.

Making it even more confusing is that people with insurance could be considered uninsured in certain circumstances, according to Deborah Kantar Gardner, partner with law firm Ropes & Gray, who also is working on compliance with provider clients.

If insurance doesn't cover a particular benefit such as a cosmetic procedure, that patient would be considered uninsured in this circumstance and entitled to a good-faith estimate. At the same time, a patient who decides not to use their insurance benefits would also be entitled to an estimate, according to the American Medical Association.

"Even that determination about whether or not somebody has a benefit actually could be very difficult to figure out," Kantar Gardner said

Dive Brief:

• Doctors are accusing health insurers of ignoring surprise billing decisions passed down by third-party arbiters, or declining to pay them in full, according to Americans for Fair Health Care.
• AFHC, a recently formed clinician advocacy group, surveyed medical providers and found payers didn’t reimburse doctors in more than half of all awards from surprise billing decisions.
• Doctors also said payers rejected independent dispute resolution determinations as “unenforceable” and “not binding.”

Dive Insight:

The survey of more than 48,000 physicians in 45 states found payers are delaying award payments and sometimes completely denying them, which AFHC said risks destabilizing the No Surprises Act passed by Congress that went into effect early 2022.

No Surprises aims to protect consumers from pricey medical bills resulting from disputes between providers and payers, particularly when patients unknowingly receive care from an out-of-network provider at in-network facility.

The law creates a process for providers and insurers to resolve payment disputes by entering into baseball-style arbitration. A third-party arbiter picks one payment offer, submitted by either side, as part of the independent dispute resolution process.

That process started last year but quickly ran into a number of roadblocks, including a backlog in disputes that can push decisions (and subsequent reimbursement for providers) back months as regulators received a tsunami of requests for intervention in billing disputes. In addition, provider groups have filed a string of litigation challenging the system that forced regulators to revamp how providers and insurers hash out disputes earlier this year.

According to AFHC’s survey, after the dispute resolution process, 33% of all claims paid were made in an incorrect amount; 52% of arbitration-determined payment amounts weren’t paid at all; and 49% of claims that were paid were ultimately paid late.

It’s the latest poll of physicians alleging insurers aren’t complying with arbitration decisions. Another survey of emergency room doctors conducted last year also found payers were ignoring or delaying dispute resolution claims.

The CMS did not respond to a request for comment on how many complaints they’ve received regarding the arbitration process.

Payers argue that No Surprises has also proved a significant burden on them, due to doctors appealing a large volume of billing decisions and requirements that they to update provider directories.

The law has not been entirely effective in preventing surprise bills, as one in five Americans still report receiving them. That’s in part due to exceptions to the law, including its exclusion of ground ambulances, despite them being a common source of out-of-network bills.

A committee formed by No Surprises to advise the HHS on how to prevent ground ambulance balance billing on consumers will meet later this month.

Federal regulators said the portal used to resolve payment disputes between healthcare providers and insurers has been inundated with requests for a third-party to intervene.

The volume of disputes filed in a five-month window exceeded the amount the departments initially anticipated receiving for a full year, according to a report authored by three federal agencies, including the HHS.

About 90,000 disputes were submitted to the federal independent dispute resolution portal between April 15 and Sept. 30. About 26% of those disputes have been considered closed, with 15%, or about 3,570 reaching a payment decision.

Regulators said the delay in processing disputes is due to the complexity of determining whether the submissions are eligible for the federal dispute resolution process that relies on third-party arbiters to mediate issues.

Last year marked the first year surprise medical bills were banned in most cases after lawmakers passed the No Surprises Act the year before.

After being caught between provider and payer pricing disputes, patients were sometimes left with the remaining balance of a medical bill when a provider was out of network and the insurer would only pay some — or none — of the bill. Patients were sometimes surprised by these bills after going to an in-network facility and unknowingly being treated by an out-of-network clinician. Patients are no longer on the hook for paying the balance in most cases.

The law creates a process for providers and insurers to resolve payment disputes by entering into baseball-style arbitration. A third-party arbiter picks one payment offer, submitted by either side, as part of the independent dispute resolution process.

The report from regulators provides insight on how the arbitration system is faring so far. It helps paint a picture of how frequently the portal is being used and the types of services payers and providers found themselves fighting over. It also shows what providers have initiated the most disputes.

The vast majority of disputes originated from emergency room visits.

About 81% of disputes (excluding air ambulance services) started in the emergency room.

The entities that initiated the most disputes were mainly physician staffing and revenue cycle management firms, including TeamHealth and Envision Healthcare, private equity backed practices that staff emergency rooms around the country. As a business strategy, the two work out of network, which can lead to surprise billing if the hospital remains in network, according to a prior study from Yale researchers.

TeamHealth and Envision refute the findings of the Yale study.

TeamHealth said it has never engaged in an out-of-network or balance billing strategy. Envision said it does not employ an out-of-network strategy. 

The 10 groups that submitted the most disputes accounted for 75% of all the disputes involving out-of-network emergency services and non-emergency items.

SCP Health, formerly the Schumacher Group, a physician staffing firm that also staffs emergency rooms, filed the most disputes compared to the more than 500 entities that sent in a submittal to initiate the arbitration process.

SCP Health filed more than 28,100 disputes during the reporting period, more than twice the amount of R1 Revenue Cycle Management, which filed the second most disputes.

On the other hand, UnitedHealthcare was involved in one quarter of disputes. Aetna followed behind UnitedHealthcare and was involved in 14% of disputes excluding air ambulances.

Air ambulance services represented a small percentage of the disputes filed.

Texas, Florida, Georgia, Tennessee and North Carolina accounted for 60% of all submissions.

Editor’s note: This story has been updated to include comments from TeamHealth and Envision.

Dive Brief:

• One in five American adults reported receiving a surprise or unexpected medical bill this year even though the federal ban on surprise bills went into effect Jan. 1.        
• Morning Consult found 21% of surveyed adults said they received a surprise or unexpected bill from an out-of-network provider at an in-network facility, and 32% said the unexpected bill originated from lab work collected at an in-network facility and sent out-of-network. 
• The survey, conducted in June of more than 2,200 people, found 22% of adults paid more $1,000 on unexpected medical bills this year.     

Dive Insight:

A majority of adults surveyed by Morning Consult said they know nothing about the law that went into effect this year, which protects consumers from getting saddled with surprise medical bills in most cases.  

And 38% adults feel somewhat confident they would be able to resolve a surprise bill with either their provider or insurer, according to the survey, while 25% felt very confident. 

The No Surprises Act shields patients from surprise medical bills in most instances. The legislation tackled a nagging problem in the nation's healthcare system: patients stuck between payers and providers over payment disputes. 

It protects patients from owing the balance of a medical bill, like when a patient goes into an in-network facility for care but is unknowingly treated by an out-of-network physician. That physician sends the bill to the insurer, which only pays for a portion and leaves the patient with the remainder of the surprise out-of-network  bill. 

The survey results point to the complexity and weaknesses in the existing law.

Patients are not protected from surprise bills related to lab work in all instances. A patient is not protected from a balance bill if a physician in a doctor’s office orders blood work as part of a routine annual exam but that blood work is sent to an out-of-network lab. 

However, the law protects patients when the patient is at a hospital, hospital outpatient department or ambulatory surgical center, and services like blood work are sent out of network, according to the law.

A doctor’s office seems to fall outside of that scope, and underscores how these subtleties in facility definitions may prove confusing to patients.  

The prompt asked whether patients received a surprise bill for "lab work at an in-network hospital or health care facility that was sent to an out-of-network lab for assessment.”

While the law protects patients in this instance, respondents may have answered in the affirmative if they received blood work at the doctor’s office given they may consider that a healthcare facility.  

Of the respondents who said they did receive a surprise bill, the second most cited reason was in-network care that resulted in lab work sent out-of-network.