Manipulating the No Surprises Act – A recent study noted “that the median IDR decision is at least 3.7 times what Medicare would pay” and “that IDR entities are selecting the provider’s offer more than three-quarters of the time.”
By Doug Aldeen
On December 23, 2024, Aetna (part of CVS Health) filed a lawsuit (Aetna v. Radiology Partners) against Radiology Partners and its private equity backers in the U.S. District Court for the Middle District of Florida – Jacksonville Division. The suit claims Radiology Partners, one of the nation’s largest imaging groups, manipulated the No Surprises Act (NSA) and its dispute resolution process to boost payments improperly. Aetna’s filing called this a “multiphase healthcare fraud scheme” that defrauded Aetna of “tens of millions” of dollars.
Radiology Partners motion to dismiss remains pending.
Why would Radiology Partners pursue such an alleged “multiphase healthcare fraud scheme” strategy? One theory might be that the level of reimbursement for successful NSA claims is 3.7x Medicare and the chance of winning the IDR process if you are a provider is almost 84%. More to the point, providers owned by P/E firms won 90% of the time. You don’t need a direct contract. Rather you just need NSA eligible claims, and the ATM machine runs 24/7… .
Background and General Thoughts:
The NSA was signed into law on December 27, 2020, as part of the Consolidated Appropriations Act of 2021 and took effect on January 1, 2022. Briefly and by way of background, when an insurer offers a payment amount to an out-of-network provider, the provider can challenge the amount that was offered. If the provider challenges, a one-month negotiation period follows and if there is no resolution, the matter can be sent to Independent Dispute Resolution (IDR). The provider and the insurer propose figures to the IDR who then chooses one price or the other in a baseball style arbitration. The arbiter simply picks one number or the other. Winner takes all. The resolution is binding.
While this process has helped to protect patients, there is increasing unhappiness from insurers about the process with many claiming administrative hassles and providers getting big paydays. A recent study noted “that the median IDR decision is at least 3.7 times what Medicare would pay” and “that IDR entities are selecting the provider’s offer more than three-quarters of the time.” Healthcare providers with private equity investors won 90% of billing disputes in 2023 (compared with 39% for other providers) which have lead some to claim that the NSA encourages providers to sell themselves to private equity groups.
Bottom Line: Are You a Price Maker or Price Taker?
At a median IDR award of 3.7 x Medicare, the IDR award is, by a large margin, the best payer in the commercial market bar none. By simply initiating the IDR process for NSA eligible claims, P/E firms have a 90% chance of winning with the plan sponsor on the hook. There is zero incentive to contract for any NSA eligible services.
The IDR process is sanctioned employer balance billing.
RELATED ARTICLE: CVS-owned insurer Aetna sues Radiology Partners alleging multiphase ‘fraud scheme’
